UNDERWRITING AGREEMENT between NEW AGE BEVERAGES CORPORATION and EURO PACIFIC CAPITAL, INC., doing business as as Representative of the Several Underwriters NEW AGE BEVERAGES CORPORATION UNDERWRITING AGREEMENT
Exhibit 1.1
between
NEW AGE BEVERAGES CORPORATION
and
EURO PACIFIC CAPITAL, INC.,
doing business as
A.G.P./ALLIANCE GLOBAL PARTNERS,
as Representative of the Several Underwriters
NEW AGE BEVERAGES CORPORATION
April
10, 2018
Euro
Pacific Capital, Inc.,
doing
business as A.G.P./Alliance Global Partners
As
Representative of the several Underwriters named on Schedule 1
attached hereto
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▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
The
undersigned, New Age Beverages Corporation, a corporation formed
under the laws of the State of Washington (collectively with its
subsidiaries and affiliates, including, without limitation, all
entities disclosed or described in the Registration Statement (as
hereinafter defined) as being subsidiaries or affiliates of New Age
Beverages Corporation (the “Company”), hereby confirms its
agreement (this “Agreement”) with Euro Pacific
Capital, Inc., doing business as A.G.P./Alliance Global Partners
(hereinafter referred to as “you” (including its
correlatives) or the “Representative”) and with the
other underwriters named on Schedule 1 hereto for which the
Representative is acting as representative (the Representative and
such other underwriters being collectively called the
“Underwriters”
or, individually, an “Underwriter”) as
follows:
1.
Purchase and Sale
of Securities.
1.1 Firm
Shares.
1.1.1. Nature
and Purchase of Firm Shares.
(i) On
the basis of the representations and warranties herein contained,
but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to the several Underwriters, an
aggregate of 2,285,715 shares (“Firm
Shares”) of the Company’s common stock, par value
$0.001 per share (the “Common Stock”).
(ii) The
Underwriters, severally and not jointly, agree to purchase from the
Company the number of Firm Shares set forth opposite their
respective names on Schedule 1 attached hereto and
made a part hereof at a purchase price of $1.645 per share (94% of the
per Firm Shares offering price). The Firm Shares are to be offered
initially to the public at the offering price set forth on the
cover page of the Prospectus (as defined in Section 2.1.1
hereof).
1.1.2. Securities
Payment and Delivery.
(i) Delivery
and payment for the Firm Shares shall be made at 10:00 a.m.,
Eastern time, on April 12, 2018 or at such earlier time as shall be
agreed upon by the Representative and the Company, at the offices
of ▇▇▇▇ ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(“Representative Counsel”), or at such other place (or
remotely by facsimile or other electronic transmission) as shall be
agreed upon by the Representative and the Company. The hour and
date of delivery and payment for the Firm Shares is called the
“Closing Date.”
(ii) Payment
for the Firm Shares shall be made on the Closing Date by wire
transfer in Federal (same day) funds, payable to the order of the
Company upon delivery of the certificates (in form and substance
satisfactory to the Underwriters) representing the Firm Shares (or
through the facilities of the Depository Trust Company
(“DTC”)) for the account of the Underwriters. The Firm
Shares shall be registered in such name or names and in such
authorized denominations as the Representative may request in
writing at least two (2) full Business Days prior to the Closing
Date. The Company shall not be obligated to sell or deliver the
Firm Shares except upon tender of payment by the Representative for
all of the Firm Shares. The term “Business Day” means
any day other than a Saturday, a Sunday or a legal holiday or a day
on which banking institutions are authorized or obligated by law to
close in New York, New York.
1.2 Over-allotment
Option.
1.2.1. Option
Shares. For the
purposes of covering any over-allotments in connection with the
distribution and sale of the Firm Shares, the Company hereby grants
to the Underwriters an option (the “Over-Allotment
Option”) to purchase up to 342,857 additional shares of
Common Stock, representing fifteen percent (15%) of the Firm Shares
sold in the offering, from the Company (the “Option
Shares”). Such 342,857 additional shares of
Common Stock, the net proceeds of which will be deposited with the
Company’s account, are hereinafter referred to as
“Option Shares.” The purchase price to be paid per
Option Share shall be equal to the price per Firm Share set forth
in Section 1.1.1 hereof. The Firm Shares and the Option Shares are
hereinafter referred to together as the
“Public Securities.” The offering and sale of the
Public Securities is hereinafter referred to as the
“Offering.”
1.2.2. Exercise
of Option. The
Over-allotment Option granted pursuant to Section 1.2.1 hereof may
be exercised by the Representative as to all (at any time) or any
part (from time to time) of the Option Shares within 45 days after
the date of the Prospectus (as defined below). The Underwriters
shall not be under any obligation to purchase any Option Shares
prior to the exercise of the Over-allotment Option. The
Over-allotment Option granted hereby may be exercised by the giving
of oral notice to the Company from the Representative, which must
be confirmed in writing by overnight mail or facsimile or other
electronic transmission setting forth the number of Option Shares
to be purchased and the date and time for delivery of and payment
for the Option Shares (the “Option Closing Date”),
which shall not be later than five (5) full Business Days after the
date of the notice or such other time as shall be agreed upon by
the Company and the Representative, at the offices of
Representative Counsel or at such other place (including remotely
by facsimile or other electronic transmission) as shall be agreed
upon by the Company and the Representative. If such delivery and
payment for the Option Shares does not occur on the Closing Date,
the Option Closing Date will be as set forth in the notice. Upon
exercise of the Over-allotment Option with respect to all or any
portion of the Option Shares, subject to the terms and conditions
set forth herein, (i) the Company shall become obligated to sell to
the Underwriters the number of Option Shares specified in such
notice and (ii) each of the Underwriters, acting severally and not
jointly, shall purchase that portion of the total number of Option
Shares then being purchased as set forth in Schedule 1 opposite the name of
such Underwriter.
1.2.3. Payment
and Delivery. Payment
for the Option Shares shall be made on the Option Closing Date by
wire transfer in Federal (same day) funds, payable to the order of
the Company upon delivery to you of certificates (in form and
substance satisfactory to the Underwriters) representing the Option
Shares (or through the facilities of DTC) for the account of the
Underwriters. The Option Shares shall be registered in such name or
names and in such authorized denominations as the Representative
may request in writing at least two (2) full Business Days prior to
the Option Closing Date. The Company shall not be obligated to sell
or deliver the Option Shares except upon tender of payment by the
Representative for applicable Option Shares.
2.
Representations and
Warranties of the Company. The Company represents and warrants to
the Underwriters as of the Applicable Time (as defined below), as
of the Closing Date and as of the Option Closing Date, if any, as
follows:
2.1 Filing
of Registration Statement.
2.1.1. Pursuant
to the Securities Act. The Company has filed with the U.S.
Securities and Exchange Commission (the “Commission”) a
“shelf” registration statement on Form S-3 (File No.
333-219341), including any related prospectus or prospectuses,
which registration statement was declared effective on October 16,
2017, for the registration of the sale of certain securities of the
Company, including the Public Securities, under the Securities Act
of 1933, as amended (the “Securities Act”), which
registration statement was prepared by the Company and is in all
material respects in conformity with the requirements of the
Securities Act and the rules and regulations of the Commission
promulgated thereunder (the “Securities Act
Regulations”) and contains and will contain all material
statements that are required to be stated therein in accordance
with the Securities Act and the Securities Act Regulations. Except
as the context may otherwise require, such registration statement
on file with the Commission at any given time, including any
amendments thereto at such time, the exhibits and schedules thereto
at such time, documents filed as a part thereof or incorporated
pursuant to Item 12 of Form S-3 under the Securities Act at such
time and the documents and information otherwise deemed to be a
part thereof or included therein pursuant to Rule 430B of the
Securities Act Regulations (the “Rule 430B
Information”) or otherwise pursuant to the Securities Act
Regulations at such time, is referred to herein as the
“Registration Statement”. The Registration Statement at
the time it originally became effective is referred to herein as
the “Initial Registration Statement.” If the Company
files any registration statement with the Commission pursuant to
Rule 462(b) of the Securities Act Regulations relating to the
Securities, then, after such filing, any reference herein to the
Registration Statement shall also be deemed to include such
registration statement filed pursuant to Rule 462(b).
The
prospectus in the form in which it was filed with the Commission in
connection with the Initial Registration Statement is herein called
the “Base Prospectus.” Each preliminary prospectus
supplement to the Base Prospectus (including the Base Prospectus as
so supplemented) that described the Public Securities and the
Offering and omitted Rule 430B Information and that was used prior
to the filing of the final prospectus supplement referred to in the
following paragraph is herein called a “Preliminary
Prospectus.”
Promptly after the
execution and delivery of this Agreement, the Company will prepare
and file with the Commission a final prospectus supplement to the
Base Prospectus relating to the Public Securities and the Offering
in accordance with the provisions of Rule 430B (“Rule
430B”) and Rule 424(b) (“Rule 424(b)”) of the
Securities Act Regulations. Such final prospectus supplement
(including the Base Prospectus as so supplemented), in the form
filed with the Commission pursuant to Rule 424(b) under the
Securities Act is herein called the
“Prospectus.”
Any
reference in this Agreement to the Registration Statement, the Base
Prospectus, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated or deemed
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”), and the rules and
regulations of the Commission promulgated thereunder (the
“Exchange Act Regulations”), on or before the date of
this Agreement, or the issue date of the Base Prospectus, any
Preliminary Prospectus or the Prospectus, as the case may be; and
any reference in this Agreement to the terms “amend,”
“amendment” or “supplement” with respect to
the Registration Statement, the Base Prospectus, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the
date of this Agreement, or the issue date of the Base Prospectus,
any Preliminary Prospectus or the Prospectus, as the case may be,
deemed to be incorporated therein by reference. All references in
this Agreement to financial statements and schedules and any other
information which is “contained, “included,”
“described,” “referenced,” “set
forth” or “stated” in the Registration Statement,
the Base Prospectus, any Preliminary Prospectus or the Prospectus
(and all other references of like import) to mean and include all
such financial statements and schedules and any other information
which is or is deemed to be incorporated by reference in the
Registration Statement, the Base Prospectus, any Preliminary
Prospectus or the Prospectus, as the case may be.
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“Applicable
Time” means 8:30 a.m., Eastern Time, on the date of 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
Public 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 Public 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).
“Issuer
General Use Free Writing Prospectus” means any Issuer Free
Writing Prospectus that is intended for general distribution to
prospective investors (other than a “bona fide electronic road show,”
as defined in Rule 433 (the “Bona Fide Electronic Road
Show”)), as evidenced by its being specified in Schedule 2-B
hereto.
“Issuer
Limited Use Free Writing Prospectus” means any Issuer Free
Writing Prospectus that is not an Issuer General Use Free Writing
Prospectus.
“Pricing
Disclosure Package” means any Issuer General Use Free Writing
Prospectus issued at or prior to the Applicable Time, the
Preliminary Prospectus dated April 9, 2018 and the information
included on Schedule
2-A hereto, all considered together.
2.1.2. Pursuant
to the Exchange Act.
The shares of Common Stock are registered pursuant to Section 12(b)
under the Exchange Act. The Company has taken no action designed
to, or likely to have the effect of, terminating the registration
of the shares of Common Stock under the Exchange Act, nor has the
Company received any notification that the Commission is
contemplating terminating such registration.
2.2 S-3
Eligibility. The Company and
the transactions contemplated by this Agreement meet the
requirements for, and comply with the conditions for the use of,
Form S-3 under the Securities Act. The aggregate market value of
the outstanding voting and non-voting common equity (as defined in
Rule 405 of the Securities Act Regulations) of the Company held by
persons other than affiliates of the Company (pursuant to Rule 144
of the Securities Act Regulations, those that directly, or
indirectly through one or more intermediaries, control, or are
controlled by, or are under common control with, the Company) (the
“Non-Affiliate Shares”), was equal to or greater than
$75 million
(calculated by multiplying (x) the highest price at which the
common equity of the Company closed on the Exchange (as defined
below) within 60 days of the date of this Agreement times (y) the
number of Non-Affiliate Shares). The Company is not a shell company
(as defined in Rule 405 of the Securities Act Regulations) and has
not been a shell company for at least 12 calendar months previously
and if it has been a shell company at any time previously, has
filed current Form 10 information (as defined in Instruction I.B.6
of Form S-3) with the Commission at least 12 calendar months
previously reflecting its status as an entity that is not a shell
company.
2.3 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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2.4 Stock
Exchange Listing. The shares of Common Stock are listed on
The Nasdaq Capital Market (“Nasdaq” or the
“Exchange”), and the Company has taken no action
designed to, or likely to have the effect of delisting the shares
of Common Stock from Nasdaq, nor has the Company received any
notification that Nasdaq is contemplating terminating such listing.
To the Company’s knowledge, it is in compliance with all
applicable listing requirements of Nasdaq.
2.5 Disclosures
in Registration Statement.
2.5.1. Compliance
with Securities Act and 10b-5 Representation.
(i) Each
of the Registration Statement and any post-effective amendment
thereto, at the time it became effective (including each deemed
effective date pursuant to Rule 430B or otherwise under the
Securities Act), complied in all material respects with the
requirements of the Securities Act and the Securities Act
Regulations. Each Preliminary Prospectus, including the Base
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 it was filed with the Commission,
complied in all material respects with the requirements of the
Securities Act and the Securities Act Regulations. Each Preliminary
Prospectus delivered to the Underwriters for use in connection with
this Offering and the Prospectus was or will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
(ii) Neither
the Registration Statement nor any amendment thereto, at its
effective time, as of the Applicable Time, at the Closing Date or
at any Option Closing Date (if any), 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.
(iii) The
Pricing Disclosure Package, as of the Applicable Time, as of the
date of this Agreement, at the Closing Date or at any Option
Closing Date (if any), did not, does not and will not include an
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; and each Issuer Limited Use Free Writing Prospectus
hereto does not conflict with the information contained in the
Registration Statement, any Preliminary Prospectus or the
Prospectus, and each such Issuer Limited Use Free Writing
Prospectus, as supplemented by and taken together with the
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 the light of
the circumstances under which they were made, not misleading;
provided however, that this representation and warranty shall not
apply to statements made or statements omitted in reliance upon and
in conformity with written information furnished to the Company
with respect to the Underwriters by the Representative expressly
for use in the Registration Statement, the Pricing Disclosure
Package, any Preliminary Prospectus or the Prospectus or any
amendment thereof or supplement thereto. The parties acknowledge
and agree that such information provided by or on behalf of any
Underwriter consists solely of the following disclosure contained
in the “Underwriting” section of the Prospectus: (a)
the information set forth under the sub-captions “Discounts
and Commissions,” “ Stabilization,” and
“Passive Market Making,” and (b) the table showing the
number of securities to be purchased by each Underwriter (the
“Underwriters’ Information”).
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(iv) Neither
the Prospectus nor any amendment or supplement thereto (including
any prospectus wrapper), as of its issue date, at the time of any
filing with the Commission pursuant to Rule 424(b), at the Closing
Date or at any Option 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; and
(v) The
documents incorporated by reference in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, when they became
effective or were filed with the Commission, as the case may be,
conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder and none of such
documents contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and any
further documents so filed and incorporated by reference in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, when such documents become effective or are filed with
the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder, and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not
misleading.
2.5.2. 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 or incorporated by reference therein, and there
are no agreements or other documents required by the Securities Act
and the Securities Act Regulations to be described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus or to be filed with the Commission as exhibits to the
Registration Statement or to be incorporated by reference in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, that have not been so described or filed or
incorporated by reference. Each agreement or other instrument
(however characterized or described) to which the Company is a
party or by which it is or may be bound or affected and
(i) that is referred to or incorporated by reference 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, is in full force and effect in all material respects and
is enforceable against the Company and, to the Company’s
knowledge, the other parties thereto, in accordance with its terms,
except (x) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally, (y) as enforceability of
any indemnification or contribution provision may be limited under
the federal and state securities laws, and (z) that the remedy
of specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought. None of such agreements or instruments has been assigned
by the Company, and neither the Company nor, to the Company’s
knowledge, any other party is in default thereunder and, to the
Company’s knowledge, no event has occurred that, with the
lapse of time or the giving of notice, or both, would constitute a
default thereunder. To the best of the Company’s knowledge,
performance by the Company of the material provisions of such
agreements or instruments will not result in a violation of any
existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign,
having jurisdiction over the Company or any of its assets or
businesses (each, a “Governmental Entity”), including,
without limitation, those relating to environmental laws and
regulations.
2.5.3. 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
Prospectus.
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2.5.4. Regulations.
The disclosures in the Registration Statement, the Pricing
Disclosure Package and the Prospectus concerning the effects of
federal, state, local and all foreign regulation on the Offering
and the Company’s business as currently contemplated are
correct in all material respects and no other such regulations are
required to be disclosed in the Registration Statement, the Pricing
Disclosure Package and the Prospectus which are not so
disclosed.
2.5.5. No
Other Distribution of Offering Materials. The Company has
not, directly or indirectly, distributed and will not distribute
any offering material in connection with the Offering other than
any Preliminary Prospectus, the Pricing Disclosure Package, the
Prospectus and other materials, if any, permitted under the
Securities Act and consistent with Section 3.2 below.
2.6 Changes
After Dates in Registration Statement.
2.6.1. No
Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement, the
Pricing Disclosure Package and the Prospectus, except as otherwise
specifically stated therein: (i) there has been no material
adverse change in the financial position or results of operations
of the Company, nor any change or development that, singularly or
in the aggregate, would involve a material adverse change or a
prospective material adverse change, in or affecting the condition
(financial or otherwise), results of operations, business, assets
or prospects of the Company (a “Material Adverse
Change”); (ii) there have been no material transactions
entered into by the Company, other than as contemplated pursuant to
this Agreement; and (iii) no officer or director of the
Company has resigned from any position with the
Company.
2.6.2. 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.
2.7 Disclosures
in Commission Filings. Since April 18, 2014, (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.
2.8 Independent
Accountants. To the knowledge of the Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇
LLP and Accell Audit & Compliance, P.A. (the
“Auditors”), whose reports are filed with the
Commission and included or incorporated by reference in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, are 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. The
Auditors have 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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2.9 Financial
Statements, etc. The financial statements, including the
notes thereto and supporting schedules included or incorporated by
reference in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, fairly present the financial position
and the results of operations of the Company at the dates and for
the periods to which they apply; and such financial statements have
been prepared in conformity with 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 included
in the Registration Statement, the Pricing Disclosure Package and
the Prospectus fairly present 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 Securities Act, the Securities
Act Regulations, the Exchange Act or the Exchange 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 Securities Act, the
Securities Act Regulations, the Exchange Act and the Exchange Act
Regulations and fairly present the information shown therein, and
the assumptions used in the preparation thereof are reasonable and
the adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein. All disclosures
contained in the Registration Statement, the Pricing Disclosure
Package or the Prospectus, or incorporated or deemed incorporated
by reference therein, regarding “non-GAAP financial
measures” (as such term is defined by the rules and
regulations of the Commission), if any, comply with Regulation G of
the Exchange Act and Item 10 of Regulation S-K of the Securities
Act, to the extent applicable. Each of the Registration Statement,
the Pricing Disclosure Package and the Prospectus discloses all
material off-balance sheet transactions, arrangements, obligations
(including contingent obligations), and other relationships of the
Company with unconsolidated entities or other persons that may have
a material current or future effect on the Company’s
financial condition, changes in financial condition, results of
operations, liquidity, capital expenditures, capital resources, or
significant components of revenues or expenses. Except as disclosed in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, (a) the Company
has not incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions other than in
the ordinary course of business, (b) the Company has not declared
or paid any dividends or made any distribution of any kind with
respect to its capital stock, (c) there has not been any change in
the capital stock of the Company, or, other than in the course of business, any
grants under any stock compensation plan, and (d) there has not been any material adverse
change in the Company’s long-term or short-term
debt.
2.10 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, as of
the Applicable Time and on the Closing Date and any Option 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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2.11 Valid
Issuance of Securities, etc.
2.11.1. Outstanding
Securities. All issued and outstanding securities of the
Company issued prior to the transactions contemplated by this
Agreement have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof have no rights
of rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of any
holders of any security of the Company or similar contractual
rights granted by the Company. The authorized shares of Common
Stock 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, options, warrants and other
rights purchase or exchange such securities for shares of Common
Stock were at all relevant times either registered under the
Securities Act and the applicable state securities or “blue
sky” laws or, based in part on the representations and
warranties of the purchasers of such Shares, exempt from such
registration requirements. The description of the Company’s
stock option, stock bonus and other stock plans or arrangements,
and the options or other rights granted thereunder, as described in
the Registration Statement, the Pricing Disclosure Package and the
Prospectus, accurately and fairly present, in all material
respects, the information required to be shown with respect to such
plans, arrangements, options and rights.
2.11.2. Securities
Sold Pursuant to this Agreement. The Public Securities have
been duly authorized for issuance and sale and, when issued and
paid for, will be validly issued, fully paid and non-assessable;
the holders thereof are not and will not be subject to personal
liability by reason of being such holders; the Public Securities
are not and will not be subject to the preemptive rights of any
holders of any security of the Company or similar contractual
rights granted by the Company; and all corporate action required to
be taken for the authorization, issuance and sale of the Public
Securities has been duly and validly taken. The Public Securities
conform in all material respects to all statements with respect
thereto contained in the Registration Statement, the Pricing
Disclosure Package and the Prospectus.
2.12 Registration
Rights of Third Parties. Except as set forth in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus and pursuant to that certain Registration Rights
Agreement dated as of March 23, 2017, by and among the Company and
the Initial Holders named therein, no holders of any securities of
the Company or any rights exercisable for or convertible or
exchangeable into securities of the Company have the right to
require the Company to register any such securities of the Company
under the Securities Act or to include any such securities in a
registration statement to be filed by the Company.
2.13 Validity
and Binding Effect of Agreements. This Agreement has been
duly and validly authorized by the Company, and, when executed and
delivered, will constitute, the valid and binding agreements 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.
2.14 No
Conflicts, etc. The execution, delivery and performance by
the Company of this Agreement and all ancillary documents, the
consummation by the Company of the transactions herein and therein
contemplated and the compliance by the Company with the terms
hereof and thereof do not and will not, with or without the giving
of notice or the lapse of time or both: (i) result in a
material breach of, or conflict with any of the terms and
provisions of, or constitute a material default under, or result in
the creation, modification, termination or imposition of any lien,
charge or encumbrance upon any property or assets of the Company
pursuant to the terms of any agreement or instrument to which the
Company is a party; (ii) result in any violation of the
provisions of the Company’s Articles 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 Entity as of the date
hereof.
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2.15 No
Defaults; Violations. No material default exists in the due
performance and observance of any term, covenant or condition of
any material license, contract, indenture, mortgage, deed of trust,
note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any
other material agreement or instrument to which the Company is a
party or by which the Company may be bound or to which any of the
properties or assets of the Company is subject. The Company is not
in violation of any term or provision of its Charter or by-laws, or
in violation of any franchise, license, permit, applicable law,
rule, regulation, judgment or decree of any Governmental
Entity.
2.16 Corporate
Power; Licenses; Consents.
2.16.1. Conduct
of Business. Except as described in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, the
Company has all requisite corporate power and authority, and has
all necessary authorizations, approvals, orders, licenses,
certificates and permits of and from all governmental regulatory
officials and bodies that it needs as of the date hereof to conduct
its business purpose as described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus.
2.16.2. Transactions
Contemplated Herein. The Company has all corporate power and
authority to enter into this Agreement and to carry out the
provisions and conditions hereof, and all consents, authorizations,
approvals and orders required in connection therewith have been
obtained. No consent, authorization or order of, and no filing
with, any court, government agency or other body is required for
the valid issuance, sale and delivery of the Public Securities and
the consummation of the transactions and agreements contemplated by
this Agreement and as contemplated by the Registration Statement,
the Pricing Disclosure Package and the Prospectus, except with
respect to applicable federal and state securities laws and the
rules and regulations of the Financial Industry Regulatory
Authority, Inc. (“FINRA”).
2.17 D&O
Questionnaires. To the Company’s knowledge, all
information contained in the questionnaires (the
“Questionnaires”) completed by each of the
Company’s directors and officers immediately prior to the
Offering (the “Insiders”) as supplemented by all
information concerning the Company’s directors, officers and
principal shareholders as described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, as well as in
the Lock-Up Agreement (as defined herein), 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
the information disclosed in the Questionnaires to become
materially inaccurate and incorrect.
2.18 Litigation;
Governmental Proceedings. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or
governmental proceeding pending or, to the Company’s
knowledge, threatened against, or involving the Company or, to the
Company’s knowledge, any 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 Public
Securities on the Exchange.
2.19 Good
Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of
the State of Washington 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.
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2.20 Insurance.
The Company 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.
2.21 Transactions
Affecting Disclosure to FINRA.
2.21.1.
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 Public
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.
2.21.2.
Payments Within
Twelve (12) Months. Except as described in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, the
Company has not made any direct or indirect payments (in cash,
securities or otherwise) to: (i) any person, as a
finder’s fee, consulting fee or otherwise, in consideration
of such person raising capital for the Company or introducing to
the Company persons who raised or provided capital to the Company;
(ii) any FINRA member; or (iii) any person or entity that has
any direct or indirect affiliation or association with any FINRA
member, within the twelve (12) months prior to the date of this
Agreement, other than the payment to the Underwriters as provided
hereunder in connection with the Offering.
2.21.3. 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.
2.21.4.
FINRA
Affiliation. Neither the Company nor any of its affiliates
(within the meaning of FINRA’s Conduct Rule 5121(f)(1))
directly or indirectly controls, is controlled by, or is under
common control with, or is an associated person (within the meaning
of Article I, Section 1(ee) of the By-laws of FINRA) of, any member
firm of FINRA.
2.21.5.
Information.
All information provided by the Company in its FINRA questionnaire
to Representative Counsel specifically for use by Representative
Counsel in connection with its Public Offering System filings (and
related disclosure) with FINRA is true, correct and complete in all
material respects.
2.22 Foreign
Corrupt Practices Act. Neither the Company nor, to the
Company’s knowledge, any director, officer, agent, employee
or affiliate of the Company or any other person acting on behalf of
the Company, has, directly or indirectly, given or agreed to give
any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or
official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was,
is, or may be in a position to help or hinder the business of the
Company (or assist it in connection with any actual or proposed
transaction) that (i) might subject the Company to any damage
or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, might have had a
Material Adverse Change or (iii) if not continued in the
future, might adversely affect the assets, business, operations or
prospects of the Company. The Company has taken reasonable steps to
ensure that its accounting controls and procedures are sufficient
to cause the Company to comply in all material respects with the
Foreign Corrupt Practices Act of 1977, as amended.
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2.23 Compliance
with OFAC. Neither the Company n or, to the Company’s
knowledge, any director, officer, agent, employee or affiliate of
the Company or any other person acting on behalf of the Company, is
currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Department of the Treasury
(“OFAC”), and the Company will not, directly or
indirectly, use the proceeds of the Offering hereunder, or lend,
contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other person or entity, for
the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
2.24 Money
Laundering Laws. The operations of the Company are and have
been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any Governmental
Entity (collectively, the “Money Laundering Laws”); and
no action, suit or proceeding by or before any Governmental Entity
involving the Company with respect to the Money Laundering Laws is
pending or, to the best knowledge of the Company,
threatened.
2.25 Officers’
Certificate. Any certificate signed by any duly authorized
officer of the Company and delivered to you or to Representative
Counsel shall be deemed a representation and warranty by the
Company to the Underwriters as to the matters covered
thereby.
2.26 Lock-Up
Agreements.
Schedule 3 hereto
contains a complete and accurate list of the Company’s
officers and (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.
2.27 Subsidiaries.
All direct and indirect subsidiaries of the Company are duly
organized and in good standing under the laws of the place of
organization or incorporation, and each subsidiary is in good
standing in each jurisdiction in which its ownership or lease of
property or the conduct of business requires such qualification,
except where the failure to qualify would not have a material
adverse effect on the assets, business or operations of the Company
taken as a whole. The Company’s ownership and control of each
subsidiary is as described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus.
2.28 Related
Party Transactions. There are no business relationships or
related party transactions involving the Company or any other
person required to be described or incorporated by reference in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus that have not been described or incorporated by
reference as required.
2.29 Board
of Directors. The Board of Directors of the Company is
comprised of the persons described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus. 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 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the
rules promulgated thereunder (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”)
applicable to the Company and the listing rules of the Exchange. At
least one member of the Audit Committee of the Board of Directors
of the Company qualifies as an “audit committee financial
expert,” as such term is defined under Regulation S-K and the
listing rules of the Exchange. In addition, at least a majority of
the persons serving on the Board of Directors qualify as
“independent,” as defined under the listing rules of
the Exchange.
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2.30 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Compliance.
2.30.1. Disclosure
Controls. The Company has developed and currently maintains
disclosure controls and procedures that 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.
2.30.2. Compliance.
The Company is, or at the Applicable Time and on the Closing Date
will be, in material compliance with the provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
2.31 Accounting
Controls. The Company maintains systems of “internal
control over financial reporting” (as defined under Rules
13a-15 and 15d-15 under the Exchange Act Regulations) that comply
with the requirements of the Exchange Act and have been designed
by, or under the supervision of, their respective principal
executive and principal financial officers, or persons performing
similar functions, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP,
including, but not limited to, internal accounting controls
sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as disclosed in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, the
Company is not aware of any material weaknesses in its internal
controls. The Company’s auditors and the Audit Committee of
the Board of Directors of the Company have been advised of: (i) 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 that have adversely
affected or are reasonably likely to adversely affect the
Company’ ability to record, process, summarize and report
financial information; and (ii) any fraud 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.
2.32 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.
2.33 No
Labor Disputes. No labor dispute with the employees of the Company
exists or, to the knowledge of the Company, is
imminent.
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2.34 Intellectual
Property Rights. The Company owns or possesses or has valid
rights to use all patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service ▇▇▇▇
registrations, copyrights, licenses, inventions, trade secrets and
similar rights (“Intellectual Property Rights”)
necessary for the conduct of the business of the Company 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
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. The
Company has not 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; (B) there is no
pending or, to the knowledge of the Company, threatened action,
suit, proceeding or claim by others challenging the rights of the
Company in or to any such Intellectual Property Rights, and the
Company is unaware 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 2.34, 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 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
the Company is unaware 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 2.34,
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 infringes, misappropriates or otherwise violates any
Intellectual Property Rights or other proprietary rights of others,
the Company has not 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 2.34,
reasonably be expected to result in a Material Adverse Change; and
(E) to the Company’s knowledge, no employee of the Company 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 actions undertaken by the employee while employed
with the Company 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 which has not been
patented has been kept confidential. The Company is not 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 has been obtained or
is being used by the Company in violation of any contractual
obligation binding on the Company or, to the Company’s
knowledge, any of its officers, directors or employees, or
otherwise in violation of the rights of any persons.
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2.35 Taxes.
The Company has filed all returns (as hereinafter defined) required
to be filed with taxing authorities prior to the date hereof or has
duly obtained extensions of time for the filing thereof. The
Company has paid all taxes (as hereinafter defined) shown as due on
such returns that were filed and has paid all taxes imposed on or
assessed against the Company. The provisions for taxes payable, if
any, shown on the financial statements filed with or as part of the
Registration Statement are sufficient for all accrued and unpaid
taxes, whether or not disputed, and for all periods to and
including the dates of such consolidated financial statements.
Except as disclosed in writing to the Underwriters, (i) no issues
have been raised (and are currently pending) by any taxing
authority in connection with any of the returns or taxes asserted
as due from the Company, and (ii) no waivers of statutes of
limitation with respect to the returns or collection of taxes have
been given by or requested from the Company. The term
“taxes” mean all federal, state, local, foreign and
other net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, lease, service,
service use, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, windfall profits, customs,
duties or other taxes, fees, assessments or charges of any kind
whatever, together with any interest and any penalties, additions
to tax or additional amounts with respect thereto. The term
“returns” means all returns, declarations, reports,
statements and other documents required to be filed in respect to
taxes.
2.36 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.
2.37 Compliance
with Laws. The Company: (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
(“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 FDA Form 483, notice of
adverse finding, warning letter, untitled letter or other
correspondence or notice from the U.S. Food and Drug Administration
or any other 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 operation 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,
“dear doctor” letter, or other notice or action
relating to the alleged lack of safety or efficacy of any product
or any alleged product defect or violation and, to the
Company’s knowledge, no third party has initiated, conducted
or intends to initiate any such notice or action.
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2.38 Intentionally
Omitted.
2.39 Smaller
Reporting Company. As of the time of filing of the
Registration Statement and as of the filing of the Company’s
most recent Annual Report on Form 10-K, the Company was a
“smaller reporting company,” as defined in
Rule 12b-2 of the Exchange Act.
2.40 Emerging
Growth Company. The Company is
an “emerging growth company,” as defined in Section
2(a) of the Securities Act (an “Emerging Growth
Company”).
2.41 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 Securities Act or institutions that
are accredited investors within the meaning of Rule 501 under the
Securities 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 2-C hereto.
“Written Testing-the-Waters Communication” means any
Testing-the-Waters Communication that is a written communication
within the meaning of Rule 405 under the Securities
Act.
2.42 Industry
Data. The statistical and market-related data included
in each of the Registration Statement, the Pricing Disclosure
Package and the Prospectus are based on or derived from sources
that the Company reasonably and in good faith believes are reliable
and accurate or represent the Company’s good faith estimates
that are made on the basis of data derived from such
sources.
2.43 Margin
Securities. The Company owns no “margin
securities” as that term is defined in Regulation U of the
Board of Governors of the Federal Reserve System (the
“Federal Reserve Board”), and none of the proceeds of
Offering will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of
reducing or retiring any indebtedness which was originally incurred
to purchase or carry any margin security or for any other purpose
which might cause any of the shares of Common Stock to be
considered a “purpose credit” within the meanings of
Regulation T, U or X of the Federal Reserve Board.
2.44
Forward-Looking
Statements. No forward-looking statement (within the meaning
of Section 27A of the Securities Act and Section 21E of the
Exchange Act) contained in the Registration Statement, the Pricing
Disclosure Package or the Prospectus has been made or reaffirmed by
the Company without a reasonable basis or has been disclosed by the
Company other than in good faith.
2.45 Exchange
Act Reports. The Company has filed in a timely manner all
reports required to be filed pursuant to Sections 13(a), 13(e), 14
and 15(d) of the Exchange Act during the preceding 12 months
(except to the extent that Section 15(d) requires reports to be
filed pursuant to Sections 13(d) and 13(g) of the Exchange Act,
which shall be governed by the next clause of this sentence); and
the Company has filed within the time periods required by the
Exchange Act (including as allowed to be extended pursuant to Form
12b-25 or otherwise under the Exchange Act) all reports required to
be filed pursuant to Sections 13(d) and 13(g) of the Exchange Act
since April 18, 2014, except where the failure to timely file could
not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
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2.46 Integration.
Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any
security, under circumstances that would cause the Offering to be
integrated with prior offerings by the Company for purposes of the
Securities Act that would require the registration of any such
securities under the Securities Act.
2.47 Title
to Real and Personal Property. The Company owns
or leases all such properties as are necessary to the conduct of
its business as presently operated and as proposed to be operated
as described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus. The Company has good and marketable
title in fee simple to all real property and good and marketable
title to all personal property owned by it, in each case free and
clear of any and all Liens except such as are described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus or such as do not (individually or in the aggregate)
materially affect the value of such property or materially
interfere with the use made or proposed to be made of such property
by the Company; and any real property and buildings held under
lease or sublease by the Company are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material to, and do not materially interfere with, the use made and
proposed to be made of such property and buildings by the Company.
The Company has not received any notice of any claim adverse to its
ownership of any real or personal property or of any claim against
the continued possession of any real property, whether owned or
held under lease or sublease by the Company.
2.48 Confidentiality
and Non-Competitions. To the Company’s knowledge, no
director, officer, key employee or consultant of the Company is
subject to any confidentiality, non-disclosure, non-competition
agreement or non-solicitation agreement with any employer or prior
employer that could materially affect his ability to be and act in
his respective capacity of the Company or be expected to result in
a Material Adverse Change.
2.49 Corporate
Records. The minute books of the Company have been made
available to the Underwriters and Representative’s Counsel,
and such books (i) contain minutes of all material meetings and
actions of the board of directors (including each board committee)
and stockholders of the Company, and (ii) reflect all material
transactions referred to in such minutes.
2.50 No
Stabilization. Neither the Company nor any of its affiliates
(within the meaning of Rule 144 under the Securities Act) has
taken, directly or indirectly, any action which constitutes or is
designed to cause or result in, or which could reasonably be
expected to constitute, cause or result in, the stabilization or
manipulation of the price of any security to facilitate the sale or
resale of the Public Securities or to result in a violation of
Regulation M under the Exchange Act.
3.
Covenants of the
Company. The Company covenants and agrees as
follows:
3.1 Amendments
to Registration Statement. The Company shall deliver to the
Representative, prior to filing, any amendment or supplement to the
Registration Statement or Prospectus proposed to be filed after the
date of this Agreement and not file any such amendment or
supplement to which the Representative shall reasonably object in
writing.
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3.2 Federal
Securities Laws.
3.2.1. Compliance.
The Company, subject to Section 3.2.2, shall comply with the
requirements of Rule 424(b) and Rule 430B, and will notify the
Representative promptly, and confirm the notice in writing,
(i) when any post-effective amendment to the Registration
Statement or any amendment or supplement to any Preliminary
Prospectus, the Disclosure Package or the Prospectus shall have
been filed and when any post-effective amendment to the
Registration Statement shall become effective; (ii) of the
receipt of any comments from the Commission; (iii) of any
request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to any Preliminary
Prospectus, the Disclosure Package or the Prospectus, including any
document incorporated or deemed to be incorporated by reference
therein, or for additional information; (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment or of
any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus, or of the suspension of the
qualification of the Public Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes or of any examination pursuant
to Section 8(d) or 8(e) of the Securities Act concerning the
Registration Statement and (v) if the Company becomes the
subject of a proceeding under Section 8A of the Securities Act
in connection with the Offering of the Public Securities. The
Company shall effect all filings required under Rule 424(b) of the
Securities Act Regulations, in the manner and within the time
period required by Rule 424(b) (without reliance on Rule
424(b)(8)), and shall take such steps as it deems necessary to
ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission
and, in the event that it was not, it will promptly file such
prospectus. The Company shall use its best efforts to prevent the
issuance of any stop order, prevention or suspension and, if any
such order is issued, to obtain the lifting thereof at the earliest
possible moment.
3.2.2. Continued
Compliance. The Company shall comply with the Securities
Act, the Securities Act Regulations, the Exchange Act and the
Exchange Act Regulations so as to permit the completion of the
distribution of the Public Securities as contemplated in this
Agreement and in the Registration Statement, the Pricing Disclosure
Package and the Prospectus. If at any time when a prospectus
relating to the Public Securities is (or, but for the exception
afforded by Rule 172 of the Securities Act Regulations (“Rule
172”), would be) required by the Securities Act to be
delivered in connection with sales of the Public Securities, any
event shall occur or condition shall exist as a result of which it
is necessary, in the opinion of counsel for the Underwriters or for
the Company, to (i) amend the Registration Statement in order
that the Registration Statement will not include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; (ii) amend or supplement the Pricing
Disclosure Package or the Prospectus in order that the Pricing
Disclosure Package or the Prospectus, as the case may be, will not
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time
it is delivered to a purchaser or (iii) amend the Registration
Statement or amend or supplement the Pricing Disclosure Package or
the Prospectus, as the case may be, in order to comply with the
requirements of the Securities Act or the Securities Act
Regulations, the Company will promptly (A) give the
Representative notice of such event; (B) prepare any amendment
or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement, the Pricing
Disclosure Package or the Prospectus comply with such requirements
and, a reasonable amount of time prior to any proposed filing or
use, furnish the Representative with copies of any such amendment
or supplement and (C) file with the Commission any such
amendment or supplement; provided that the Company shall not file
or use any such amendment or supplement to which the Representative
or counsel for the Underwriters shall reasonably object. The
Company will furnish to the Underwriters such number of copies of
such amendment or supplement as the Underwriters may reasonably
request. The Company has given the Representative notice of any
filings made pursuant to the Exchange Act or the Exchange Act
Regulations within 48 hours prior to the Applicable Time. The
Company shall give the Representative notice of its intention to
make any such filing from the Applicable Time until the later of
the Closing Date and the exercise in full or expiration of the
Over-allotment Option specified in Section 1.2 hereof and will
furnish the Representative with copies of the related document(s) a
reasonable amount of time prior to such proposed filing, as the
case may be, and will not file or use any such document to which
the Representative or counsel for the Underwriters shall reasonably
object.
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3.2.3. Testing-the-Waters
Communications. If at any time following the distribution of
any Written Testing-the-Waters Communication there occurred or
occurs an event or development as a result of which such Written
Testing-the-Waters Communication included or would include an
untrue statement of a material fact or omitted or would omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at that
subsequent time, not misleading, the Company shall promptly notify
the Representative and shall promptly amend or supplement, at its
own expense, such Written Testing-the-Waters Communication to
eliminate or correct such untrue statement or
omission.
3.3 Delivery
to the Underwriters of Registration Statements. The Company
has delivered or made available or shall deliver or make available
to the Representative and counsel for the Representative, without
charge, signed copies of the Registration Statement as originally
filed and each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents
incorporated or deemed to be incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will
also deliver to the Underwriters, without charge, a conformed copy
of the Registration Statement as originally filed and each
amendment thereto (without exhibits) for each of the Underwriters.
The copies of the Registration Statement and each amendment thereto
furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
3.4 Delivery
to the Underwriters of Prospectuses. The Company has
delivered or made available or will deliver or make available to
each Underwriter, without charge, as many copies of each
Preliminary Prospectus as such Underwriter reasonably requested,
and the Company hereby consents to the use of such copies for
purposes permitted by the Securities Act. The Company will furnish
to each Underwriter, without charge, during the period when a
prospectus relating to the Public Securities is (or, but for the
exception afforded by Rule 172, would be) required to be delivered
under the Securities Act, such number of copies of the Prospectus
(as amended or supplemented) as such Underwriter may reasonably
request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
3.5 Renewal
of Registration Statement. The date of this Agreement is not
more than three years subsequent to the initial effective date of
the Registration Statement. If, immediately prior to the third
anniversary of the such initial effective date of the Registration
Statement (the “Registration Expiration Date”), any
Public Securities remain unsold by the Underwriters and a
prospectus is required to be delivered or made available by the
Underwriters under the Securities Act, the Securities Act
Regulations, the Exchange Act or the Exchange Act Regulations in
connection with the sale of such Public Securities, the Company
shall, prior to such Registration Expiration Date and subject to
Section 3.2.2 above, file, if it has not already done so, a new
shelf registration statement or, if it is eligible to do so, an
automatic shelf registration statement relating to such Securities,
and, if such registration statement is not an automatic shelf
registration statement, shall use its best efforts to cause such
registration statement to be declared effective within 180 days
after the Registration Expiration Date, and shall take all other
reasonable actions necessary or appropriate to permit the public
offer and sale of such Securities to continue as contemplated in
the expired registration statement relating to such Securities. In
such event, references herein to the “Registration
Statement” shall include such new shelf registration
statement or automatic shelf registration statement, as the case
may be.
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3.6 Review
of Financial Statements. For a period of five (5)
years after the date of this Agreement, the Company, at its
expense, shall cause its regularly engaged independent registered
public accounting firm to review (but not audit) the
Company’s financial statements for each of the three fiscal
quarters immediately preceding the announcement of any quarterly
financial information.
3.7 Listing.
The Company shall use its best efforts to maintain the listing of
the shares of Common Stock (including the Public Securities) on the
Exchange for at least three years from the date of this
Agreement.
3.8 Financial
Public Relations Firm. The Company has
engaged a financial public relations firm reasonably acceptable to
the Representative and shall retain such firm or another firm
reasonably acceptable to the Representative for a period of not
less than two (2) years after the Effective Date. The
Representative acknowledges that the Company’s current
financial public relations firm is acceptable to the
Representative.
3.9 Reports
to the Representative.
3.9.1. Periodic
Reports, etc. For a period of three (3) years after the date
of this Agreement, the Company shall furnish to the Representative
copies of such financial statements and other periodic and special
reports as the Company from time to time furnishes generally to
holders of any class of its securities and also promptly furnish to
the Representative: (i) a copy of each periodic report the Company
shall be required to file with the Commission under the Exchange
Act and the Exchange Act Regulations; (ii) a copy of every press
release and every news item and article with respect to the Company
or its affairs which was released by the Company; (iii) a copy of
each Form 8-K prepared and filed by the Company; (iv) five copies
of each registration statement filed by the Company under the
Securities Act; and (v) such additional documents and information
with respect to the Company and the affairs of any future
subsidiaries of the Company as the Representative may from time to
time reasonably request; provided the Representative shall sign, if
requested by the Company, a Regulation FD compliant confidentiality
agreement which is reasonably acceptable to the Representative and
Representative Counsel in connection with the
Representative’s receipt of such information. Documents filed
with the Commission pursuant to its ▇▇▇▇▇ system shall be deemed to
have been delivered to the Representative pursuant to this Section
3.9.1.
3.9.2. Transfer
Agent; Transfer Sheets. For a period of three (3) years
after the date of this Agreement, the Company shall retain a
transfer agent and registrar acceptable to the Representative
(the “Transfer Agent”) and shall furnish to the
Representative at the Company’s sole cost and expense such
transfer sheets of the Company’s securities as the
Representative may reasonably request, including the daily and
monthly consolidated transfer sheets of the Transfer Agent and DTC.
ClearTrust, LLC is acceptable to the Representative to act as
Transfer Agent for the shares of Common Stock.
3.9.3. Trading
Reports. During such time as the Public Securities are
listed on the Exchange, the Company shall provide to the
Representative, at the Company’s expense, such reports
published by Exchange relating to price trading of the Public
Securities, as the Representative shall reasonably
request.
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3.10 Payment
of Expenses
3.10.1. General
Expenses Related to the Offering. The Company agrees to pay
on each of the Closing Date and the Option Closing Date, if any, to
the extent not paid at 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 Public
Securities to be sold in this Offering (including the Option
Shares) with the Commission; (b) all Public Filing System filing
fees associated with the review of the Offering by FINRA; (c) all
fees and expenses relating to the listing of such Public Securities
on the Exchange and on such other stock exchanges as the Company
and Representative together determine; (d) all fees, expenses and
disbursements relating to the registration or qualification of the
Public Securities offered under the “blue sky”
securities laws of such states and other jurisdictions as the
Representative may reasonably designate (including, without
limitation, all filing and registration fees, and the reasonable
fees of “blue sky” counsel); (e) all fees, expenses and
disbursements relating to the registration, qualification or
exemption of the Public Securities under the securities laws of
such foreign jurisdictions as the Representative may reasonably
designate; (f) the costs of all mailing and printing of the
underwriting documents (including, without limitation, the
Underwriting Agreement, any Blue Sky Surveys and, if 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 Representative may
reasonably deem necessary; (g) the costs and expenses of its public
relations firm; (h) the costs of preparing, printing and delivering
certificates representing the Public Securities to be offered in
this offering; (i) fees and expenses of the transfer agent for the
securities; (j) stock transfer and/or stamp taxes, if any, payable
upon the transfer of securities from the Company to the
Representative; (; (; (k) the fees and expenses of the
Company’s accountant; (l) the fees and expenses of the
Company’s legal counsel and other agents and representatives;
(m) the fees and expense of the Representative’s legal
counsel, not to exceed $50,000; and (n) the $8,000 cost associated
with the use of Ipreo’s book-building, prospectus tracking
and compliance software for this offering. The Representative may
deduct from the net proceeds of the Offering payable to the Company
on the Closing Date or the Option Closing Date, if any, the
expenses set forth herein to be paid by the Company to the
Underwriters; provided, however, that in the event that the
Offering is terminated, the Company agrees to reimburse the
Underwriters pursuant to Section 8.3 hereof. Notwithstanding the
foregoing, our obligations to reimburse the representative for any
out of pocket expenses will not exceed $58,000 in the
aggregate.
3.10.2. Advisory
Fee. The Company further agrees that, in addition to the
expenses payable pursuant to Section 3.10.1, on the Closing Date it
shall pay to the Representative an advisory fee of $150,000 (the
“Advisory Fee”); provided that such amount shall be
reduced as necessary to comply with the rules and regulations of
FINRA. The Representative may deduct the Advisory Fee from
the net proceeds of the Offering payable to the Company on the
Closing Date; provided, however, that in the event that the
Offering is terminated, the Company agrees to pay the Advisory Fee
to the Underwriters pursuant to Section 8.3 hereof.
3.11 Application
of Net Proceeds. The Company shall apply the net proceeds
from the Offering received by it in a manner consistent with the
application thereof described under the caption “Use of
Proceeds” in the Registration Statement, the Pricing
Disclosure Package and the Prospectus.
3.12 Delivery
of Earnings Statements to Security Holders. The Company
shall make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth
(15th)
full calendar month following the date of this Agreement, an
earnings statement (which need not be certified by independent
registered public accounting firm unless required by the Securities
Act or the Securities Act Regulations, but which shall satisfy the
provisions of Rule 158(a) under Section 11(a) of the Securities
Act) covering a period of at least twelve (12) consecutive months
beginning after the date of this Agreement.
3.13 Stabilization.
Neither the Company nor, to its knowledge, any of its employees,
directors or shareholders (without the consent of the
Representative) has taken or shall take, directly or indirectly,
any action designed to or that has constituted or that might
reasonably be expected to cause or result in, under Regulation M of
the Exchange Act, or otherwise, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of the Public Securities.
3.14
Internal
Controls. The Company shall maintain a system of internal
accounting controls sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with
management’s general or specific authorization;
(ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with GAAP and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any
differences.
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3.15 Accountants.
As of the date of this Agreement, the Company shall retain an
independent registered public accounting firm reasonably acceptable
to the Representative, and the Company shall continue to retain a
nationally recognized independent registered public accounting firm
for a period of at least three (3) years after the date of this
Agreement. The Representative acknowledges that the Auditor is
acceptable to the Representative.
3.16
FINRA. The
Company shall advise the Representative (who shall make an
appropriate filing with FINRA) if it is or becomes aware that
Company or any of its affiliates (within the meaning of
FINRA’s Conduct Rule 5121(f)(1)) directly or indirectly
controls, is controlled by, or is under common control with, or is
an associated person (within the meaning of Article I, Section
1(ee) of the By-laws of FINRA) of, any member firm of
FINRA.
3.17 No
Fiduciary Duties. The Company acknowledges and agrees that
the Underwriters’ responsibility to the Company is solely
contractual in nature and that none of the Underwriters or their
affiliates or any selling agent shall be deemed to be acting in a
fiduciary capacity, or otherwise owes any fiduciary duty to the
Company or any of its affiliates in connection with the Offering
and the other transactions contemplated by this
Agreement.
3.18 Company
Lock-Up Agreements.
3.18.1. Restriction
on Sales of Capital Stock. The Company, on behalf of itself
and any successor entity, agrees that, without the prior written
consent of the Representative, it will not, for a period of 90 days
after the date of this Agreement (the “Lock-Up
Period”), (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any
shares of capital stock of the Company or any securities
convertible into or exercisable or exchangeable for shares of
capital stock of the Company; (ii) file or cause to be filed any
registration statement with the Commission relating to the offering
of any shares of capital stock of the Company or any securities
convertible into or exercisable or exchangeable for shares of
capital stock of the Company; or (iii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of capital stock of the
Company, whether any such transaction described in clause (i), (ii)
or (iii) above is to be settled by delivery of shares of capital
stock of the Company or such other securities, in cash or
otherwise.
The
restrictions contained in this Section 3.18.1 shall not apply to
(i) the shares of Common Stock to be sold hereunder, (ii) the
issuance by the Company of shares of Common Stock upon the exercise
of a stock option or warrant or the conversion of a security
outstanding on the date hereof, of which the Representative has
been advised in writing or (iii) the issuance by the Company of
stock options or shares of capital stock of the Company under any
equity compensation plan of the Company.
3.19 Termination
of At Market Issuance Sales Agreement. The Company shall
terminate the At Market Issuance Sales Agreement, dated as of March
23, 2018, by and between the Company and ▇. ▇▇▇▇▇ FBR, Inc., prior
to the Closing.
3.20 Release
of D&O Lock-up Period. If the Representative, in its
sole discretion, agrees to release or waive the restrictions set
forth in the Lock-Up Agreements described in Section 2.26 hereof
for an officer or director of the Company and provide the Company
with notice of the impending release or waiver at least three (3)
Business Days before the effective date of the release or waiver,
the Company agrees to announce the impending release or waiver by a
press release substantially in the form of Exhibit B hereto through a
major news service at least two (2) Business Days before the
effective date of the release or waiver.
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3.21 Blue
Sky Qualifications. The Company shall use its best efforts,
in cooperation with the Underwriters, if necessary, to qualify the
Public Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions (domestic or
foreign) as the Representative may designate and to maintain such
qualifications in effect so long as required to complete the
distribution of the Public Securities; provided, however, that the
Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so
qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so
subject.
3.22 Reporting
Requirements. The Company, during the period when a
prospectus relating to the Public Securities is (or, but for the
exception afforded by Rule 172, would be) required to be delivered
under the Securities Act, will file all documents required to be
filed with the Commission pursuant to the Exchange Act within the
time periods required by the Exchange Act and Exchange Act
Regulations. Additionally, the Company shall report the use of
proceeds from the issuance of the Public Securities as may be
required under Rule 463 under the Securities Act
Regulations.
3.23 Emerging
Growth Company Status. The Company shall promptly notify the
Representative if the Company ceases to be an Emerging Growth
Company at any time prior to the later of (i) completion of the
distribution of the Public Securities within the meaning of the
Securities Act and (ii) fifteen (15) days following the completion
of the Lock-Up Period.
4.
Conditions of
Underwriters’ Obligations. The obligations of the
Underwriters to purchase and pay for the Public Securities, as
provided herein, shall be subject to (i) the continuing accuracy of
the representations and warranties of the Company as of the date
hereof and as of each of the Closing Date and the Option Closing
Date, if any; (ii) the accuracy of the statements of officers of
the Company made pursuant to the provisions hereof; (iii) the
performance by the Company of its obligations hereunder; and (iv)
the following conditions:
4.1 Regulatory
Matters.
4.1.1. Effectiveness
of Registration Statement; Rule 430B Information. The
Registration Statement has been declared effective by the
Commission under the Securities Act and, at each of the Closing
Date and any Option Closing Date, no stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereto has been issued under the Securities Act, no
order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus has been issued and no proceedings for
any of those purposes have been instituted or are pending or, to
the Company’s knowledge, contemplated by the Commission. The
Company has complied with each request (if any) from the Commission
for additional information. The Prospectus containing the Rule 430B
Information shall have been filed with the Commission in the manner
and within the time frame required by Rule 424(b) (without reliance
on Rule 424(b)(8)) or a post-effective amendment providing such
information shall have been filed with, and declared effective by,
the Commission in accordance with the requirements of Rule
430B.
4.1.2. FINRA
Clearance. On or before the date of this Agreement, the
Representative shall have received clearance from FINRA as to the
amount of compensation allowable or payable to the Underwriters as
described in the Registration Statement.
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4.1.3. Exchange
Stock Market Clearance. On the Closing Date, the
Company’s shares of Common Stock, including the Firm Shares,
shall have been approved for listing on the Exchange, subject only
to official notice of issuance. On the first Option Closing Date
(if any), the Company’s shares of Common Stock, including the
Option Shares, shall have been approved for listing on the
Exchange, subject only to official notice of issuance.
4.2 Company
Counsel Matters.
4.2.1. Closing
Date Opinion of Counsel. On the Closing Date, the
Representative shall have received the favorable opinion of
Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, counsel to the Company, dated
the Closing Date and addressed to the Representative, in form and
substance reasonably satisfactory to the
Representative.
4.2.2. Option
Closing Date Opinions of Counsel. On the Option Closing
Date, if any, the Representative shall have received the favorable
opinions of counsel listed in Section 4.2.1, dated the Option
Closing Date, addressed to the Representative and in form and
substance reasonably satisfactory to the Representative, confirming
as of the Option Closing Date, the statements made by such counsels
in their respective opinions delivered on the Closing
Date.
4.2.3. Reliance.
In rendering such opinions, such counsel may rely: (i) as to
matters involving the application of laws other than the laws of
the United States and jurisdictions in which they are admitted, to
the extent such counsel deems proper and to the extent specified in
such opinion, if at all, upon an opinion or opinions (in form and
substance reasonably satisfactory to the Representative) of other
counsel reasonably acceptable to the Representative, familiar with
the applicable laws; and (ii) as to matters of fact, to the
extent they deem proper, on certificates or other written
statements of officers of the Company and officers of departments
of various jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company, provided that
copies of any such statements or certificates shall be delivered to
Representative Counsel if requested. The opinion of Sichenzia ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP and any opinion relied upon by Sichenzia ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP shall include a statement to the effect that it
may be relied upon by Representative Counsel in its opinion
delivered to the Underwriters.
4.3 Comfort
Letters. At each of the Closing Date and the Option Closing
Date, if any, you shall have received a cold comfort letter
containing statements and information of the type customarily
included in accountants’ comfort letters with respect to the
financial statements and certain financial information contained or
incorporated or deemed incorporated by reference in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, addressed to the Representative and in form and
substance satisfactory in all respects to you and to the Auditor,
dated as of the date of this Agreement.
4.4 Officers’
Certificates.
4.4.1. Officers’
Certificate. The Company shall have furnished to the
Representative a certificate, dated the Closing Date and any Option
Closing Date (if such date is other than the Closing Date), of its
Executive Chairman of the Board, its Chief Executive Officer, its
President and its Chief Financial Officer stating that (i) such
officers have carefully examined the Registration Statement, the
Pricing Disclosure Package, any Issuer Free Writing Prospectus and
the Prospectus and, in their opinion, the Registration Statement
and each amendment thereto, as of the Applicable Time and as of the
Closing Date (or any Option Closing Date if such date is other than
the Closing Date) did not include any untrue statement of a
material fact and did not omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and the Pricing Disclosure Package, as of the
Applicable Time and as of the Closing Date (or any Option Closing
Date if such date is other than the Closing Date), any Issuer Free
Writing Prospectus as of its date and as of the Closing Date (or
any Option Closing Date if such date is other than the Closing
Date), the Prospectus and each amendment or supplement thereto, as
of the respective date thereof and as of the Closing Date, did not
include any untrue statement of a material fact and did not omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances in which they were made,
not misleading, (ii) since the Applicable Time, no event has
occurred which should have been set forth in a supplement or
amendment to the Registration Statement, the Pricing Disclosure
Package or the Prospectus, (iii) to the best of their knowledge
after reasonable investigation, as of the Closing Date (or any
Option Closing Date if such date is other than the Closing Date),
the representations and warranties of the Company in this Agreement
are true and correct and the Company has complied with all
agreements and satisfied all conditions on its part to be performed
or satisfied hereunder at or prior to the Closing Date (or any
Option Closing Date if such date is other than the Closing Date),
and (iv) there has not been, subsequent to the date of the most
recent audited financial statements included or incorporated by
reference in the Pricing Disclosure Package, any Material Adverse
Change in the financial position or results of operations of the
Company, or any change or development that, singularly or in the
aggregate, would involve a Material Adverse Change or a prospective
Material Adverse Change, in or affecting the condition (financial
or otherwise), results of operations, business, assets or prospects
of the Company, except as set forth in the Prospectus.
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4.4.2. Chief
Financial Officer’s Certificate. At each of the
Closing Date and the Option Closing Date, if any, the
Representative shall have received a certificate executed by the
Chief Financial Officer of the Company, dated as of such date, in
form and substance satisfactory to the Representative.
4.4.3. Secretary’s
Certificate. At each of the Closing Date and the Option
Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Secretary of the Company,
dated the Closing Date or the Option Date, as the case may be,
respectively, certifying: (i) that each of the Charter and
Bylaws is true and complete, has not been modified and is in full
force and effect; (ii) that the resolutions of the
Company’s Board of Directors relating to the Offering are in
full force and effect and have not been modified; (iii) as to the
accuracy and completeness of all correspondence between the Company
or its counsel and the Commission; and (iv) as to the
incumbency of the officers of the Company. The documents referred
to in such certificate shall be attached to such
certificate.
4.5 No
Material Changes. Prior to and on each of the Closing Date
and each Option Closing Date, if any: (i) there shall have
been no Material Adverse Change or development involving a
prospective Material Adverse Change in the condition or prospects or
the business activities, financial or otherwise, of the Company
from the latest dates as of which such condition is set forth in
the Registration Statement, the Pricing Disclosure Package and the
Prospectus; (ii) no action, suit or proceeding, at law or in
equity, shall have been pending or threatened against the Company
or any Insider before or by any court or federal or state
commission, board or other administrative agency wherein an
unfavorable decision, ruling or finding may materially adversely
affect the business, operations, prospects or financial condition
or income of the Company, except as set forth in the Registration
Statement, the Pricing Disclosure Package and the Prospectus;
(iii) no stop order shall have been issued under the
Securities Act and no proceedings therefor shall have been
initiated or threatened by the Commission; and (iv) the
Registration Statement, the Pricing Disclosure Package and the
Prospectus and any amendments or supplements thereto shall contain
all material statements which are required to be stated therein in
accordance with the Securities Act and the Securities Act
Regulations and shall conform in all material respects to the
requirements of the Securities Act and the Securities Act
Regulations, and neither the Registration Statement, the Pricing
Disclosure Package nor the Prospectus nor any amendment or
supplement thereto shall contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not
misleading.
4.6 No
Material Misstatement or Omission. The Underwriters shall
not have discovered and disclosed to the Company on or prior to the
Closing Date and any Option Closing Date that the Registration
Statement or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the
Underwriters, is material or omits to state any fact which, in the
opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not
misleading, or that the Registration Statement, the Disclosure
Package, any Issuer Free Writing Prospectus or the Prospectus or
any amendment or supplement thereto contains an untrue statement of
fact which, in the opinion of such counsel, is material or omits to
state any fact which, in the opinion of such counsel, is material
and is necessary in order to make the statements, in the light of
the circumstances under which they were made, not
misleading.
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4.7 Delivery
of Agreements.
4.7.1. Lock-Up
Agreements. On or before the date of this Agreement, the
Company shall have delivered to the Representative executed copies
of the Lock-Up Agreements from each of the persons listed in
Schedule 3
hereto.
4.8 Additional
Documents. At the Closing Date and at each Option Closing
Date (if any) Representative Counsel shall have been furnished with
such documents and opinions as they may require for the purpose of
enabling Representative Counsel to deliver an opinion to the
Underwriters, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of the Public
Securities as herein contemplated shall be satisfactory in form and
substance to the Representative and Representative
Counsel.
5.
Indemnification.
5.1 Indemnification
of the Underwriters.
5.1.1. General.
Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Underwriter, its affiliates and
each of its and their respective directors, officers, members,
employees, representatives and agents and each person, if any, who
controls any such Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act (collectively
the “Underwriter Indemnified Parties,” and each an
“Underwriter Indemnified Party”), against any and all
loss, liability, claim, damage and expense whatsoever (including
but not limited to any and all legal or other expenses reasonably
incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever,
whether arising out of any action between any of the Underwriter
Indemnified Parties and the Company or between any of the
Underwriter Indemnified Parties and any third party, or otherwise)
to which they or any of them may become subject under the
Securities Act, the Exchange Act or any other statute or at common
law or otherwise or under the laws of foreign countries, arising
out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in (i) the Registration
Statement, the Pricing Disclosure Package, the Preliminary
Prospectus, the Prospectus, or in any Written Testing-the-Waters
Communication (as from time to time each may be amended and
supplemented); (ii) any materials or information provided to
investors by, or with the approval of, the Company in connection
with the marketing of the Offering, including any “road
show” or investor presentations made to investors by the
Company (whether in person or electronically); or (iii) any
application or other document or written communication (in this
Section 5, collectively called “application”) executed
by the Company or based upon written information furnished by the
Company in any jurisdiction in order to qualify the Public
Securities under the securities laws thereof or filed with the
Commission, any state securities commission or agency, the Exchange
or any other national securities exchange; or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading,
unless such statement or omission was made in reliance upon, and in
conformity with, the Underwriters’ Information. With respect
to any untrue statement or omission or alleged untrue statement or
omission made in the Pricing Disclosure Package, the indemnity
agreement contained in this Section 5.1.1 shall not inure to the
benefit of any Underwriter Indemnified Party to the extent that any
loss, liability, claim, damage or expense of such Underwriter
Indemnified Party results from the fact that a copy of the
Prospectus was not given or sent to the person asserting any such
loss, liability, claim or damage at or prior to the written
confirmation of sale of the Public Securities to such person as
required by the Securities Act and the Securities Act Regulations,
and if the untrue statement or omission has been corrected in the
Prospectus, unless such failure to deliver the Prospectus was a
result of non-compliance by the Company with its obligations under
Section 3.3 hereof.
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5.1.2. Procedure.
If any action is brought against an Underwriter Indemnified Party
in respect of which indemnity may be sought against the Company
pursuant to Section 5.1.1, such Underwriter Indemnified Party shall
promptly notify the Company in writing of the institution of such
action and the Company shall assume the defense of such action,
including the employment and fees of counsel (subject to the
reasonable approval of such Underwriter Indemnified Party) and
payment of actual expenses. Such Underwriter Indemnified Party
shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the
expense of such Underwriter Indemnified Party unless (i) the
employment of such counsel at the expense of the Company shall have
been authorized in writing by the Company in connection with the
defense of such action, or (ii) the Company shall not have employed
counsel to have charge of the defense of such action, or (iii) such
indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different
from or additional to those available to the Company (in which case
the Company shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of
which events the reasonable fees and expenses of not more than one
additional firm of attorneys selected by the Underwriter
Indemnified Party (in addition to local counsel) shall be borne by
the Company. Notwithstanding anything to the contrary contained
herein, if any Underwriter Indemnified Party shall assume the
defense of such action as provided above, the Company shall have
the right to approve the terms of any settlement of such action,
which approval shall not be unreasonably withheld.
5.2 Indemnification
of the Company. Each Underwriter, severally and not jointly,
agrees to indemnify and hold harmless the Company, its directors,
its officers who signed the Registration Statement and persons who
control the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any and
all loss, liability, claim, damage and expense described in the
foregoing indemnity from the Company to the several Underwriters,
as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Pricing
Disclosure Package or Prospectus or any amendment or supplement
thereto or in any application, in reliance upon, and in strict
conformity with, the Underwriters’ Information. In case any
action shall be brought against the Company or any other person so
indemnified based on any Preliminary Prospectus, the Registration
Statement, the Pricing Disclosure Package or Prospectus or any
amendment or supplement thereto or any application, and in respect
of which indemnity may be sought against any Underwriter, such
Underwriter shall have the rights and duties given to the Company,
and the Company and each other person so indemnified shall have the
rights and duties given to the several Underwriters by the
provisions of Section 5.1.2. The Company agrees promptly to notify
the Representative of the commencement of any litigation or
proceedings against the Company or any of its officers, directors
or any person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange
Act, in connection with the issuance and sale of the Public
Securities or in connection with the Registration Statement, the
Pricing Disclosure Package, the Prospectus, or any Written
Testing-the-Waters Communication.
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5.3 Contribution.
5.3.1. Contribution
Rights. If the indemnification provided for in this Section
5 shall for any reason be unavailable to or insufficient to hold
harmless an indemnified party under Section 5.1 or 5.2 in respect
of any loss, claim, damage or liability, or any action in respect
thereof, referred to therein, then each indemnifying party shall,
in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of
such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect
the relative benefits received by the Company, on the one hand, and
the Underwriters, on the other, from the Offering of the Public
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 the Underwriters, on the other, with respect to
the statements or omissions that resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits
received by the Company, on the one hand, and the Underwriters, on
the other, with respect to such Offering shall be deemed to be in
the same proportion as the total net proceeds from the Offering of
the Public Securities purchased under this Agreement (before
deducting expenses) received by the Company, as set forth in the
table on the cover page of the Prospectus, on the one hand, and the
total underwriting discounts and commissions received by the
Underwriters with respect to the shares of the Common Stock
purchased under this Agreement, as set forth in the table on the
cover page of the Prospectus, on the other hand. The relative fault
shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by the
Company or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 5.3.1 were to be determined
by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation
that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 5.3.1
shall be deemed to include, for purposes of this Section 5.3.1, any
legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 5.3.1 in
no event shall an Underwriter be required to contribute any amount
in excess of the amount by which the total underwriting discounts
and commissions received by such Underwriter with respect to the
Offering of the Public Securities exceeds the amount of any damages
that such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
5.3.2. Contribution
Procedure. Within fifteen (15) days after receipt by any
party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if
a claim for contribution in respect thereof is to be made against
another party (“contributing party”), notify the
contributing party of the commencement thereof, but the failure to
so notify the contributing party will not relieve it from any
liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit or proceeding
is brought against any party, and such party notifies a
contributing party or its representative of the commencement
thereof within the aforesaid 15 days, the contributing party will
be entitled to participate therein with the notifying party and any
other contributing party similarly notified. Any such contributing
party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding
affected by such party seeking contribution on account of any
settlement of any claim, action or proceeding affected by such
party seeking contribution without the written consent of such
contributing party. The contribution provisions contained in this
Section 5.3.2 are intended to supersede, to the extent permitted by
law, any right to contribution under the Securities Act, the
Exchange Act or otherwise available. Each Underwriter’s
obligations to contribute pursuant to this Section 5.3 are several
and not joint.
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6.
Default by an
Underwriter.
6.1 Default
Not Exceeding 10% of Firm Shares or Option Shares. If any
Underwriter or Underwriters shall default in its or their
obligations to purchase the Firm Shares or the Option Shares, if
the Over-allotment Option is exercised hereunder, and if the number
of the Firm Shares or Option Shares with respect to which such
default relates does not exceed in the aggregate 10% of the number
of Firm Shares or Option Shares that all Underwriters have agreed
to purchase hereunder, then such Firm Shares or Option Shares to
which the default relates shall be purchased by the non-defaulting
Underwriters in proportion to their respective commitments
hereunder.
6.2 Default
Exceeding 10% of Firm Shares or Option Shares. In the event
that the default addressed in Section 6.1 relates to more than 10%
of the Firm Shares or Option Shares, you may in your discretion
arrange for yourself or for another party or parties to purchase
such Firm Shares or Option Shares to which such default relates on
the terms contained herein. If, within one (1) Business Day after
such default relating to more than 10% of the Firm Shares or Option
Shares, you do not arrange for the purchase of such Firm Shares or
Option Shares, then the Company shall be entitled to a further
period of one (1) Business Day within which to procure another
party or parties satisfactory to you to purchase said Firm Shares
or Option Shares on such terms. In the event that neither you nor
the Company arrange for the purchase of the Firm Shares or Option
Shares to which a default relates as provided in this Section 6,
this Agreement will automatically be terminated by you or the
Company without liability on the part of the Company (except as
provided in Sections 3.9 and 5 hereof) or the several Underwriters
(except as provided in Section 5 hereof); provided, however, that
if such default occurs with respect to the Option Shares, this
Agreement will not terminate as to the Firm Shares; and provided,
further, that nothing herein shall relieve a defaulting Underwriter
of its liability, if any, to the other Underwriters and to the
Company for damages occasioned by its default hereunder.
6.3 Postponement
of Closing Date. In the event that the Firm Shares or Option
Shares to which the default relates are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another
party or parties as aforesaid, you or the Company shall have the
right to postpone the Closing Date or Option Closing Date for a
reasonable period, but not in any event exceeding five (5) Business
Days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement, the Pricing Disclosure
Package or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any amendment
to the Registration Statement, the Pricing Disclosure Package or
the Prospectus that in the opinion of counsel for the Underwriter
may thereby be made necessary. The term “Underwriter”
as used in this Agreement shall include any party substituted under
this Section 6 with like effect as if it had originally been a
party to this Agreement with respect to such shares of Common
Stock.
7.
Additional
Covenants.
7.1 Board
Composition and Board Designations. The Company shall ensure
that: (i) the qualifications of the persons serving as members
of the Board of Directors and the overall composition of the Board
comply with the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, with the Exchange Act and with
the listing rules of the Exchange or any other national securities
exchange, as the case may be, in the event the Company seeks to
have its Public Securities listed on another exchange or quoted on
an automated quotation system, and (ii) if applicable, at
least one member of the Audit Committee of the Board of Directors
qualifies as an “audit committee financial expert,” as
such term is defined under Regulation S-K and the listing rules of
the Exchange.
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7.2 Prohibition
on Press Releases and Public Announcements. The Company
shall not issue press releases or engage in any other publicity,
without the Representative’s prior written consent, for a
period ending at 5:00 p.m., Eastern time, on the first
(1st)
Business Day following the forty-fifth (45th) day after the
Closing Date, other than normal and customary releases issued in
the ordinary course of the Company’s business.
8.
Effective Date of
this Agreement and Termination Thereof.
8.1 Effective
Date. This Agreement shall become effective when both the
Company and the Representative have executed the same and delivered
counterparts of such signatures to the other party.
8.2 Termination.
The Representative shall have the right to terminate this Agreement
at any time prior to any Closing Date, (i) if any domestic or
international event or act or occurrence has materially disrupted,
or in your opinion will in the immediate future materially disrupt,
general securities markets in the United States; or (ii) if
trading on the New York Stock Exchange or the Nasdaq Stock Market
LLC shall have been suspended or materially limited, or minimum or
maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required by FINRA or by
order of the Commission or any other government authority having
jurisdiction; or (iii) if the United States shall have become
involved in a new war or an increase in major hostilities; or
(iv) if a banking moratorium has been declared by a New York
State or federal authority; or (v) if a moratorium on foreign
exchange trading has been declared which materially adversely
impacts the United States securities markets; or (vi) if the
Company shall have sustained a material loss by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity
or malicious act which, whether or not such loss shall have been
insured, will, in your opinion, make it inadvisable to proceed with
the delivery of the Firm Shares or Option Shares; or (vii) if
the Company is in material breach of any of its representations,
warranties or covenants hereunder; or (viii) if the
Representative shall have become aware after the date hereof of
such a Material Adverse Change in the conditions or prospects of
the Company, or such adverse material change in general market
conditions as in the Representative’s judgment would make it
impracticable to proceed with the offering, sale and/or delivery of
the Public Securities or to enforce contracts made by the
Underwriters for the sale of the Public Securities.
8.3 Expenses.
Notwithstanding anything to the contrary in this Agreement, except
in the case of a default by the Underwriters, pursuant to Section
6.2 above, in the event that this Agreement is terminated prior to
the Closing Date for any reason whatsoever, within the time
specified herein or any extensions thereof pursuant to the terms
herein, the Company shall be obligated to pay to the Underwriters
their actual and accountable out-of-pocket expenses related to the
transactions contemplated herein then due and payable (including
the fees and disbursements of Representative Counsel) up to $58,000
plus the Advisory Fee, and upon demand the Company shall pay the
full amount thereof to the Representative on behalf of the
Underwriters; provided, however, that such expense cap in no way
limits or impairs the indemnification and contribution provisions
of this Agreement. Notwithstanding the foregoing, any advance
received by the Representative for out-of pocket accountable
expenses will be reimbursed to the Company to the extent not
actually incurred in compliance with FINRA Rule
5110(f)(2)(C).
8.4 Indemnification.
Notwithstanding any contrary provision contained in this Agreement,
any election hereunder or any termination of this Agreement, and
whether or not this Agreement is otherwise carried out, the
provisions of Section 5 shall remain in full force and effect and
shall not be in any way affected by, such election or termination
or failure to carry out the terms of this Agreement or any part
hereof.
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8.5 Representations,
Warranties, Agreements to Survive. All representations,
warranties and agreements contained in this Agreement or in
certificates of officers of the Company submitted pursuant hereto,
shall remain operative and in full force and effect regardless of
(i) any investigation made by or on behalf of any Underwriter
or its Affiliates or selling agents, any person controlling any
Underwriter, its officers or directors or any person controlling
the Company or (ii) delivery of and payment for the Public
Securities.
9.
Miscellaneous.
9.1 Notices.
All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed
(registered or certified mail, return receipt requested),
personally delivered or sent by facsimile transmission and
confirmed and shall be deemed given when so delivered or faxed and
confirmed or if mailed, two (2) days after such
mailing.
If to
the Representative:
Euro
Pacific Capital, Inc.
doing
business as A.G.P./Alliance Global Partners
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Managing Director, Investment
Banking
Fax
No.: ▇▇▇-▇▇▇-▇▇▇▇
with a
copy (which shall not constitute notice) to:
▇▇▇▇
▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax
No.: ▇▇▇-▇▇▇-▇▇▇▇
If to
the Company:
New Age
Beverages Corporation
▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇
▇▇▇▇▇▇
Fax No:
▇▇▇-▇▇▇-▇▇▇▇
with a
copy (which shall not constitute notice) to:
Sichenzia ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
1185
Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Fax No:
▇▇▇-▇▇▇-▇▇▇▇
9.2 Headings.
The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of
this Agreement.
9.3 Amendment.
This Agreement may only be amended by a written instrument executed
by each of the parties hereto.
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9.4 Entire
Agreement. This Agreement (together with the other
agreements and documents being delivered pursuant to or in
connection with this Agreement) constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and
thereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter
hereof.
9.5 Binding
Effect. This Agreement shall inure solely to the benefit of
and shall be binding upon the Representative, the Underwriters, the
Company and the controlling persons, directors and officers
referred to in Section 5 hereof, and their respective successors,
legal representatives, heirs and assigns, and no other person shall
have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or
any provisions herein contained. The term “successors and
assigns” shall not include a purchaser, in its capacity as
such, of securities from any of the Underwriters.
9.6 Governing
Law; Consent to Jurisdiction; Trial by Jury. This Agreement
shall be governed by and construed and enforced in accordance with
the laws of the State of New York, without giving effect to
conflict of laws principles thereof. The Company hereby agrees that
any action, proceeding or claim against it arising out of, or
relating in any way to this Agreement shall be brought and enforced
in the New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York, and
irrevocably submits to such jurisdiction, which jurisdiction shall
be exclusive. The Company hereby waives any objection to such
exclusive jurisdiction and that such courts represent an
inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 9.1
hereof. Such mailing shall be deemed personal service and shall be
legal and binding upon the Company in any action, proceeding or
claim. The Company agrees that the prevailing party(ies) in any
such action shall be entitled to recover from the other party(ies)
all of its reasonable attorneys’ fees and expenses relating
to such action or proceeding and/or incurred in connection with the
preparation therefor. The Company (on its behalf and, to the extent
permitted by applicable law, on behalf of its stockholders and
affiliates) and each of the Underwriters hereby irrevocably waives,
to the fullest extent permitted by applicable law, any and all
right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated
hereby.
9.7 Execution
in Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but
all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts
has been signed by each of the parties hereto and delivered to each
of the other parties hereto. Delivery of a signed counterpart of
this Agreement by facsimile or email/pdf transmission shall
constitute valid and sufficient delivery thereof.
9.8 Waiver,
etc. The failure of any of the parties hereto to at any time
enforce any of the provisions of this Agreement shall not be deemed
or construed to be a waiver of any such provision, nor to in any
way effect the validity of this Agreement or any provision hereof
or the right of any of the parties hereto to thereafter enforce
each and every provision of this Agreement. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions
of this Agreement shall be effective unless set forth in a written
instrument executed by the party or parties against whom or which
enforcement of such waiver is sought; and no waiver of any such
breach, non-compliance or non-fulfillment shall be construed or
deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
[Signature
Page Follows]
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If the
foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall
constitute a binding agreement between us.
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By:
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s/ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇ |
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Title: Chief Executive Officer |
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Confirmed as of the
date first written
above
mentioned, on behalf of itself and as
Representative of
the several Underwriters
named
on Schedule 1
hereto:
EURO
PACIFIC CAPITAL, INC.,
doing
business as A.G.P./ALLIANCE GLOBAL PARTNERS
By:/s/ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇
Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
Managing Director, Investment Banking
SCHEDULE 1
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Underwriter
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Total
Number of
Firm
Shares to be Purchased
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Number
of Additional Shares to be Purchased if the Over-Allotment Option
is Fully Exercised
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A.G.P./Alliance
Global Partners
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1,371,429
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205,715
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Maxim Group
LLC
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914,286
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137,142
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TOTAL
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2,285,715
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342,857
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Sch.
1-1
SCHEDULE 2-A
Pricing Information
Number
of Firm Shares: 2,285,715
Number
of Option Shares: 342,857
Public
Offering Price per Security: $1.75
Underwriting
Discount per Security: $0.105
Proceeds
to Company per Security (before expenses): $1.645
Sch.
2-1
SCHEDULE 2-B
Issuer General Use Free Writing Prospectus
Sch.
2-2
SCHEDULE 2-C
Written Testing-the-Water Communications
Sch.
2-3
SCHEDULE 3
List of Lock-Up Parties
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Fea
Sch.
3-1
EXHIBIT A
Form of Lock-Up Agreement
April
9, 2018
Euro
Pacific Capital, Inc.
doing
business as A.G.P./Alliance Global Partners
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▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
The
undersigned understands that Alliance Global Partners (the
“Representative”) proposes to enter
into an Underwriting Agreement (the “Underwriting Agreement”) with New
Age Beverages Corporation, a Washington corporation (the
“Company”),
providing for the public offering (the “Public Offering”) of shares of
common stock, par value $0.001 per share, of the Company (the
“Shares”).
To
induce the Representative to continue its efforts in connection
with the Public Offering, the undersigned hereby agrees that,
without the prior written consent of the Representative, the
undersigned will not, during the period commencing on the date
hereof and ending 90 days after the date of the final prospectus
(the “Prospectus”) relating to the
Public Offering (the “Lock-Up
Period”), (1) offer, pledge, sell, contract to sell,
grant, lend, or otherwise transfer or dispose of, directly or
indirectly, any Shares or any securities convertible into or
exercisable or exchangeable for Shares, whether now owned or
hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition
(collectively, the “Lock-Up
Securities”); (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of the Lock-Up Securities,
whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Lock-Up Securities, in cash or
otherwise; (3) make any demand for or exercise any right with
respect to the registration of any Lock-Up Securities; or (4)
publicly disclose the intention to make any offer, sale, pledge or
disposition, or to enter into any transaction, swap, hedge or other
arrangement relating to any Lock-Up Securities. Notwithstanding the
foregoing, and subject to the conditions below, the undersigned may
transfer Lock-Up Securities without the prior written consent of
the Representative in connection with (a) transactions relating to
Lock-Up Securities acquired in open market transactions after the
completion of the Public Offering; provided that no filing under
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”), shall be required or shall be voluntarily made
in connection with subsequent sales of Lock-Up Securities acquired
in such open market transactions; (b) transfers of Lock-Up
Securities as a bona fide
gift, by will or intestacy or to a family member or trust for the
benefit of a family member (for purposes of this lock-up agreement,
“family member” means any relationship by blood,
marriage or adoption, not more remote than first cousin); (c)
transfers of Lock-Up Securities to a charity or educational
institution; or (d) if the undersigned, directly or indirectly,
controls a corporation, partnership, limited liability company or
other business entity, any transfers of Lock-Up Securities to any
shareholder, partner or member of, or owner of similar equity
interests in, the undersigned, as the case may be; provided that in the case of
any transfer pursuant to the foregoing clauses (b), (c) or
(d), (i) any such transfer shall not involve a disposition for
value, (ii) each transferee shall sign and deliver to the
Representative a lock-up agreement substantially in the form of
this lock-up agreement and (iii) no filing under Section 16(a)
of the Exchange Act shall be required or shall be voluntarily made.
The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company’s transfer agent and
registrar against the transfer of the undersigned’s Lock-Up
Securities except in compliance with this lock-up
agreement.
Ex.
A-1
If the
undersigned is an officer or director of the Company, (i) the
undersigned agrees that the foregoing restrictions shall be equally
applicable to any issuer-directed or “friends and
family” Shares that the undersigned may purchase in the
Public Offering; (ii) the Representative agrees that, at least
three (3) business days before the effective date of any release or
waiver of the foregoing restrictions in connection with a transfer
of Lock-Up Securities, the Representative will notify the Company
of the impending release or waiver; and (iii) the Company has
agreed in the Underwriting Agreement to announce the impending
release or waiver by press release through a major news service at
least two (2) business days before the effective date of the
release or waiver. Any release or waiver granted by the
Representative hereunder to any such officer or director shall only
be effective two (2) business days after the publication date of
such press release. The provisions of this paragraph will not apply
if (a) the release or waiver is effected solely to permit a
transfer of Lock-Up Securities not for consideration and (b) the
transferee has agreed in writing to be bound by the same terms
described in this lock-up agreement to the extent and for the
duration that such terms remain in effect at the time of such
transfer.
No
provision in this agreement shall be deemed to restrict or prohibit
the exercise, exchange or conversion by the undersigned of any
securities exercisable or exchangeable for or convertible into
Shares, as applicable; provided that the undersigned
does not transfer the Shares acquired on such exercise, exchange or
conversion during the Lock-Up Period, unless otherwise permitted
pursuant to the terms of this lock-up agreement. In addition, no
provision herein shall be deemed to restrict or prohibit the entry
into or modification of a so-called “10b5-1” plan at
any time (other than the entry into or modification of such a plan
in such a manner as to cause the sale of any Lock-Up Securities
within the Lock-Up Period).
The
undersigned understands that the Company and the Representative are
relying upon this lock-up agreement in proceeding toward
consummation of the Public Offering. The undersigned further
understands that this lock-up agreement is irrevocable and shall be
binding upon the undersigned’s heirs, legal representatives,
successors and assigns.
The
undersigned understands that, if the Underwriting Agreement is not
executed by May 31, 2018, or if the Underwriting Agreement (other
than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the
Shares to be sold thereunder, then this lock-up agreement shall be
void and of no further force or effect.
Whether
or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only
be made pursuant to an Underwriting Agreement, the terms of which
are subject to negotiation between the Company and the
Representative.
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Very
truly yours,
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(Name -
Please Print)
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(Name
of Signatory, in the case of entities - Please Print)
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(Title
of Signatory, in the case of entities - Please Print)
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Address:
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Ex.
A-2
EXHIBIT B
Form of Press Release
New Age Beverages Corporation
[Date]
New Age
Beverages Corporation (the “Company”) announced today
that Euro Pacific Capital, Inc., doing business as A.G.P./Alliance
Global Partners, acting as representative for the underwriters in
the Company’s recent public offering of shares of the
Company’s Common Stock, is [waiving] [releasing] a lock-up
restriction with respect to shares of the Company’s common
stock held by [certain officers or directors] [an officer or
director] of the Company. The [waiver] [release] will take effect
on , 20 , and the shares may be sold on or after such
date.
This press release is not an offer or sale of the securities in the
United States or in any other jurisdiction where such offer or sale
is prohibited, and such securities may not be offered or sold in
the United States absent registration or an exemption from
registration under the Securities Act of 1933, as
amended.
Ex.
B-1