NEW AGE BEVERAGES CORPORATION UNDERWRITING AGREEMENT 8,200,000 Shares of Common Stock
Exhibit
1.1
NEW
AGE BEVERAGES CORPORATION
8,200,000
Shares of Common Stock
August 22,
2018
▇▇▇▇ Capital
Partners, LLC
As the Representative of the
Several Underwriters Named on Schedule I hereto
▇/▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Ladies and
Gentlemen:
New Age Beverages
Corporation, a Washington corporation (the “Company”), proposes,
subject to the terms and conditions stated herein, to issue and
sell to the underwriters named in Schedule I hereto (the
“Underwriters,” or each,
an “Underwriter”), for whom
▇▇▇▇ Capital Partners, LLC is acting as the representative (the
“Representative”), an
aggregate of 8,200,000 authorized but unissued shares (the
“Firm
Shares”) of common stock, par value $0.001 per share
(the “Common
Stock”), of the Company. The Company also
proposes to sell to the Underwriters, upon the terms and conditions
set forth in Section 4 hereof, up to an additional 1,000,000 shares
of Common Stock (the “Option
Shares”). The Firm Shares and the Option
Shares are hereinafter collectively referred to as the
“Shares.”
The
Company and the several
Underwriters hereby confirm their agreement as
follows:
1. Registration
Statement and Prospectus.
The Company has
prepared and filed with the Securities and Exchange Commission (the
“Commission”) a
registration statement on Form S-3 (File No. 333-219341) under the
Securities Act of 1933, as amended (the “Securities Act”), and the
rules and regulations (the “Rules and Regulations”)
of the Commission thereunder relating to the Shares and such
amendments to such registration statement (including post effective
amendments) as may have been required to the date of this
Agreement. Such registration statement, as amended
(including any post effective amendments), has been declared
effective by the Commission. The registration statement,
together with the amendments prior to the date of this Agreement,
including the information (if any) deemed to be a part of, or
incorporated by reference into, the registration statement at the
time of effectiveness pursuant to Rule 430B under the Securities
Act, or at such time as the case may be, is hereinafter referred to
as the “Registration
Statement” and the related prospectus, dated July 18,
2017, included in the Registration Statement at the time the
Registration Statement first became effective is hereinafter called
the “Base
Prospectus”. If the Company has filed or
files an abbreviated registration statement pursuant to Rule 462(b)
under the Securities Act (the “Rule 462 Registration
Statement”), then any reference herein to the term
Registration Statement shall include such Rule 462 Registration
Statement.
The Company is
filing with the Commission pursuant to Rule 424 under the
Securities Act a final prospectus supplement to the Base Prospectus
relating to the Shares. The final prospectus supplement
as filed, along with the Base Prospectus, is hereinafter called the
“Final
Prospectus.” The term “Preliminary Prospectus”
means the Base Prospectus, together with any preliminary prospectus
supplement used or filed with the Commission pursuant to
Rule 424 of the Rules and Regulations, in the form provided to
the Underwriters by the Company for use in connection with the
offering of the Shares. Such Final Prospectus and any
Preliminary Prospectus in the form in which they shall be filed
with the Commission pursuant to Rule 424(b) under the Securities
Act (including the Base Prospectus as so supplemented) is
hereinafter called a “Prospectus.” Reference
made herein to the Base Prospectus, any Preliminary Prospectus or
to the Prospectus shall be deemed to refer to and include any
documents incorporated by reference therein and any reference to
any amendment or supplement to the Base Prospectus, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and
include any document filed under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and the
rules and regulations of the Commissions thereunder, incorporated
by reference in such Preliminary Prospectus or the Prospectus, as
the case may be. The term “Effective Date” shall
mean each date that the Registration Statement and any
post-effective amendment or amendments thereto became or become
effective.
The Commission has
not notified the Company of any objection to the use of form of
Registration Statement or any post-effective amendment
thereto.
2. Representations
and Warranties of the Company Regarding the Offering.
(a) The
Company represents and warrants to, and agrees with, the several
Underwriters, as of the date hereof , as of the Closing Date (as
defined in Section 4(d) below) and as of each Option Closing Date
(as defined in Section 4(b) below), as follows:
(i) No
Material Misstatements or Omissions. At each time of
effectiveness, at the date hereof, at the Closing Date, and at each
Option Closing Date, if any, the Registration Statement and any
post-effective amendment thereto complied or will comply in all
material respects with the requirements of the Securities Act and
the Rules and Regulations and did not, does not, and will not, as
the case may be, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not
misleading. The Time of Sale Disclosure Package (as
defined in Section 2(a)(iv)(A)(1) below) as of 8:15 AM (Eastern
time) (the “Applicable Time”) on the
date hereof, at the Closing Date and on each Option Closing Date,
if any, and the Final Prospectus, as amended or supplemented, as of
its date, at the time of filing pursuant to Rule 424(b) under the
Securities Act, at the Closing Date and at each Option Closing
Date, if any, when considered together with the Time of Sale
Disclosure Package, did not, does not and will not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. The representations and
warranties set forth in the two immediately preceding sentences
shall not apply to statements in or omissions from the Registration
Statement, the Time of Sale Disclosure Package or any Prospectus in
reliance upon, and in conformity with, written information
furnished to the Company by any Underwriter specifically for use in
the preparation thereof, which written information is described in
Section 7(f). The Registration Statement contains all
exhibits and schedules required to be filed by the Securities Act
or the Rules and Regulations. No order preventing or
suspending the effectiveness or use of the Registration Statement
or any Prospectus is in effect and no proceedings for such purpose
have been instituted or are pending, or, to the knowledge of the
Company, are contemplated or threatened by the
Commission.
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Marketing Materials. The Company has not
distributed any prospectus or other offering material in connection
with the offering and sale of the Shares other than the Time of
Sale Disclosure Package and the roadshow or investor presentations
delivered to and approved by the Representative for use in
connection with the marketing of the offering of the Shares (the
“Marketing
Materials”).
(ii) Emerging
Growth Company. The
Company is an “emerging growth company,” as defined in
Section 2(a) of the Securities Act (an “Emerging
Growth Company”).
(iii) Accurate
Disclosure. (A) The Company has provided a copy to the
Underwriters of each Issuer Free Writing Prospectus (as defined
below) used in the sale of Shares. The Company has filed
all Issuer Free Writing Prospectuses required to be so filed with
the Commission, and no order preventing or suspending the
effectiveness or use of any Issuer Free Writing Prospectus is in
effect and no proceedings for such purpose have been instituted or
are pending, or, to the knowledge of the Company, are contemplated
or threatened by the Commission. When taken together with the
rest of the Time of Sale Disclosure Package or the Final
Prospectus, no Issuer Free Writing Prospectus, as of
its issue date and at all subsequent times through the
completion of the public offer and sale of Shares, has, does or
will include (1) any untrue statement of a material fact or
omission 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, or (2) information
that conflicted, conflicts or will conflict with the
information contained in the Registration Statement or the Final
Prospectus. The representations and warranties set forth
in the immediately preceding sentence shall not apply to statements
in or omissions from the Time of Sale Disclosure Package, the Final
Prospectus or any Issuer Free Writing Prospectus in reliance upon,
and in conformity with, written information furnished to the
Company by any Underwriter specifically for use in the preparation
thereof, which written information is described in Section
7(f). As used in this paragraph and elsewhere in this
Agreement:
(1) “Time
of Sale Disclosure Package” means the Base Prospectus,
the Prospectus most recently filed with the Commission before
the time of this Agreement, including any preliminary prospectus
supplement deemed to be a part thereof, each Issuer Free Writing
Prospectus, and the description of the transaction provided by the
Underwriters included on Schedule
II.
(2) “Issuer
Free Writing Prospectus” means any “issuer free
writing prospectus,” as defined in Rule 433 under the
Securities Act, relating to the Shares that (A) is required to be
filed with the Commission by the Company, or (B) is exempt from
filing pursuant to Rule 433(d)(5)(i) or (d)(8) under the Securities
Act, 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)
under the Securities Act.
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(B) At
the time of filing of the Registration Statement and at the date
hereof, the Company was and is an “ineligible issuer,”
as defined in Rule 405 under the Securities Act or an
“excluded issuer” as defined in Rule 164 under the
Securities Act.
(C) Each
Issuer Free Writing Prospectus listed on Schedule III satisfied, as of its issue
date and at all subsequent times through the Prospectus Delivery
Period (as defined below), all other conditions as may be
applicable to its use as set forth in Rules 164 and 433 under the
Securities Act, including any legend, record-keeping or other
requirements.
(v) Financial
Statements. The financial statements of the Company,
together with the related notes and schedules, incorporated by
reference in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus comply in all material
respects with the applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations of the Commission
thereunder, and fairly
present the financial condition of the Company as of the dates
indicated and the results of operations and changes in cash flows
for the periods therein specified in conformity with U.S. generally
accepted accounting principles (“GAAP”) consistently
applied throughout the periods involved. No other
financial statements or schedules are required under the Securities
Act, the Exchange Act, or the Rules and Regulations to be included
or incorporated by reference in the Registration Statement, the
Time of Sale Disclosure Package or the Final
Prospectus.
(iv) Pro
Forma Financial Information. The pro forma financial
statements included or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus include assumptions that provide a reasonable
basis for presenting the significant effects directly attributable
to the transactions and events described therein, the related pro
forma adjustments give appropriate effect to those assumptions, and
the pro forma adjustments reflect the proper application of those
adjustments to the historical financial statements amounts in the
pro forma financial statements included or incorporated by
reference in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus. The pro
forma financial statements included or incorporated by reference in
the Registration Statement, the Time of Sale Disclosure Package and
the Final Prospectus comply as to form in all material respects
with the application requirements of Regulation S-X under the
Exchange Act. No other pro forma financial information or schedules
are required under the Securities Act, the Exchange Act, or the
rules and regulations thereunder to be included in the Registration
Statement, the Time of Sale Disclosure Package or the Final
Prospectus.
(vi) Independent
Accountants. To the Company’s knowledge, Accell Audit
& Compliance, PA, which has expressed its opinion with respect
to the financial statements and schedules incorporated by reference
as a part of the Registration Statement and incorporated by
reference in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus, is an independent
registered public accounting firm with respect to the Company
within the meaning of the Securities Act and the Rules and
Regulations.
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(viii)
Accounting and Disclosure Controls. The Company and
its subsidiaries maintain systems of “internal control over
financial reporting” (as defined under Rules 13a-15 and
15d-15 under the Exchange Act) 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; (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; and
(v) the interactive data in eXtensible Business Reporting Language
included or incorporated by references in the Registration
Statement, the Time of Sale Disclosure Package and the Final
Prospectus fairly present the information called for in all
material respects and are prepared in accordance with the
Commission’s rules and guidelines applicable thereto. Since
the date of the latest audited financial statements included in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus, there has been no change in the Company’s
internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the
Company’s internal control over financial
reporting.
The Company
maintains disclosure controls and procedures that have been
designed to ensure that material information relating to the
Company and any subsidiaries is made known to the Company’s
principal executive officer and principal financial officer by
others within those entities; and such disclosure controls and
procedures are effective.
(ix) Forward-Looking
Statements. The Company had a reasonable basis for, and made
in good faith, each “forward-looking statement” (within
the meaning of Section 27A of the Securities Act or Section 21E of
the Exchange Act) contained or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package, the
Final Prospectus or the Marketing Materials.
(x) Statistical
and Marketing-Related Data. All statistical or
market-related data included or incorporated by reference in the
Registration Statement, the Time of Sale Disclosure Package or the
Final Prospectus, or included in the Marketing Materials, are based
on or derived from sources that the Company reasonably believes to
be reliable and accurate, and the Company has obtained the written
consent to the use of such data from such sources, to the extent
required.
(xi) Trading
Market. The Common Stock is registered pursuant to Section
12(b) of the Exchange Act and is approved for listing on the Nasdaq
Capital Market (“Nasdaq”). There is no
action pending by the Company or, to the Company’s knowledge,
the Nasdaq to delist the Common Stock from the Nasdaq, nor has the
Company received any notification that the Nasdaq is contemplating
terminating such listing. When issued, the Shares will
be listed on the Nasdaq.
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(xii)
Absence of Manipulation. The Company has not taken, directly
or indirectly, any action that is designed to or that has
constituted or that would reasonably be expected to cause or result
in the stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the
Shares.
(xiii) Investment
Company Act. The Company is not and, after giving effect to
the offering and sale of the Shares and the application of the net
proceeds thereof, will not be an “investment company,”
as such term is defined in the Investment Company Act of 1940, as
amended.
3. Representations
and Warranties Regarding the Company.
(a) The
Company represents and warrants to, and agrees with, the several
Underwriters, as of the date hereof, as of the Closing Date and as
of each Option Closing Date, as follows:
(i) Good
Standing. Each of the Company and its subsidiaries has been
duly organized and is validly existing as a corporation or other
entity in good standing under the laws of its jurisdiction of
incorporation. Each of the Company and its subsidiaries has the
power and authority (corporate or otherwise) to own its properties
and conduct its business as currently being carried on and as
described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, and is duly qualified to do
business as a foreign corporation or other entity in good standing
in each jurisdiction in which it owns or leases real property or in
which the conduct of its business makes such qualification
necessary, except where the failure to so qualify would
not have or be reasonably likely to result in a material
adverse effect upon the business, prospects, properties,
operations, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries, taken as a whole,
or in its ability to perform its obligations under this Agreement
(“Material Adverse
Effect”).
(ii) Authorization.
The Company has the power and authority to enter into this
Agreement and
to authorize, issue and sell the Shares as contemplated by this
Agreement. This Agreement has been duly authorized by the
Company, and when executed and delivered by the Company, and will
constitute the valid, legal and binding obligation of the Company,
enforceable against the Company in accordance with
its terms, except as rights to indemnity hereunder may
be limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.
(iii) Contracts.
The execution, delivery and performance of this
Agreement and
the consummation of the transactions herein contemplated will not
(A) result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any law, order, rule
or regulation to which the Company or any subsidiary is subject, or
by which any property or asset of the Company or any subsidiary is
bound or affected, (B) conflict with, result in any violation or
breach of, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to
others any right of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or
both) (a “Default Acceleration
Event”) of, any agreement, lease, credit facility,
debt, note, bond, mortgage, indenture or other instrument (the
“Contracts”) or obligation
or other understanding to which the Company or any subsidiary is a
party or by which any property or asset of the Company or any
subsidiary is bound or affected, except to the extent that such
conflict, default, or Default Acceleration Event not reasonably
likely to result in a Material Adverse Effect, or (C) result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, the Company’s Articles of
Incorporation or bylaws.
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(iv)
No Violations of Governing Documents. Neither the Company
nor any of its subsidiaries is in violation, breach or default
under its articles of incorporation, bylaws or other equivalent
organizational or governing documents.
(v) Consents.
No consents, approvals, orders, authorizations or filings are
required on the part of the Company in connection with the
execution, delivery or performance of this Agreement and the issue
and sale of the Shares, except (A) the registration under the
Securities Act of the Shares, which has been effected, (B) the
necessary filings and approvals from the Nasdaq to list the Shares,
(C) such consents, approvals, authorizations, registrations or
qualifications as may be required under state or foreign securities
or Blue Sky laws and the rules of the Financial Industry Regulatory
Authority, Inc. (“FINRA”) in connection
with the purchase and distribution of the Shares by the several
Underwriters, (D) such consents and approvals as have been obtained
and are in full force and effect, and (E) such consents, approvals,
orders, authorizations and filings the failure of which to make or
obtain is not reasonably likely to result in a Material Adverse
Effect.
(vi) Capitalization.
The Company has an authorized capitalization as set forth in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus. All of the issued and outstanding shares of
capital stock of the Company are duly authorized and validly
issued, fully paid and nonassessable, and have been issued in
compliance with all applicable securities laws, and conform to the
description thereof in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus. All of the issued
shares of capital stock of each subsidiary of the Company have been
duly and validly authorized and issued, are fully paid and
non-assessable and, except as set forth in the Registration
Statement, the Time of Sale Disclosure Package and the Final
Prospectus, are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims. Except
for the issuances of options or restricted stock in the ordinary
course of business, since the respective dates as of which
information is provided in the Registration Statement, the Time of
Sale Disclosure Package or the Final Prospectus, the Company has
not entered into or granted any convertible or exchangeable
securities, options, warrants, agreements, contracts or other
rights in existence to purchase or acquire from the Company any
shares of the capital stock of the Company. The Shares,
when issued and paid for as provided herein, will be duly
authorized and validly issued, fully paid and nonassessable, will
be issued in compliance with all applicable securities laws, and
will be free of preemptive, registration or similar
rights and
will conform to the description of the capital stock of the Company
contained in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus.
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(vii)
Taxes. Each of the Company
and its subsidiaries has (a) filed all foreign, federal, state and
local tax 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 and (b) paid all
taxes (as hereinafter defined) shown as due and payable on such
returns that were filed and has paid all taxes imposed on or
assessed against the Company or such respective
subsidiary. The provisions for taxes payable, if any,
shown on the financial statements included or incorporated by
reference in the Registration Statement, the Time of Sale Disclosure Package and
the Final Prospectus 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. To the knowledge of the Company, no issues
have been raised (and are currently pending) by any taxing
authority in connection with any of the returns or taxes asserted
as due from the Company or its subsidiaries, and no waivers of
statutes of limitation with respect to the returns or collection of
taxes have been given by or requested from the Company or its
subsidiaries. The term “taxes” means all federal,
state, local, foreign, and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits,
license, lease, service, service use, withholding, payroll,
employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs, duties or other taxes, fees,
assessments, or charges of any kind whatever, together with any
interest and any penalties, additions to tax, or additional amounts
with respect thereto. The term “returns” means all
returns, declarations, reports, statements, and other documents
required to be filed in respect to taxes.
(viii) Material
Change. Since the respective dates as of which information
is given (including information incorporated by reference) in the
Registration Statement, the Time of Sale Disclosure Package or the
Final Prospectus, (a) neither the Company nor any of its
subsidiaries has 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 any of its
subsidiaries (other than a change in the number of outstanding
shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants, upon the conversion of
outstanding shares of preferred stock or other convertible
securities or the issuance of restricted stock awards or
restricted stock units under the Company’s existingstock
awards plan, or any new grants thereof in the ordinary course of
business), (d) there has not been any material change in the
Company’s long-term or short-term debt, and (e) there has not
been the occurrence of any Material Adverse Effect.
(ix) Absence
of Proceedings. There is not pending or, to the knowledge of
the Company, threatened, any action, suit or proceeding to which
the Company or any of its subsidiaries is a party or of which any
property or assets of the Company or any of its subsidiaries is the
subject before or by any court or governmental agency, authority or
body, or any arbitrator or mediator, which is reasonably likely to
result in a Material Adverse Effect
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(x)
Permits. The Company and each of its subsidiaries
holds, and is in compliance with, all franchises, grants,
authorizations, licenses, permits, easements, consents,
certificates and orders (“Permits”) of any
governmental or self-regulatory agency, authority or body required
for the conduct of its business, and all such Permits are in full
force and effect, in each case except where the failure to hold, or
comply with, any of them is not reasonably likely to result in a
Material Adverse Effect or adversely affect the consummation of the
transactions contemplated by this Agreement. The Company
and its operations are not subject to the regulations of the Food
and Drug Administration of the U.S. Department of Health and Human
Services or any similar foreign, federal, state or local regulatory
agency.
(xi) Good
Title. The Company and each of its subsidiaries have good
and marketable title to all property (whether real or personal)
described in the Registration Statement, the Time of Sale
Disclosure Package and the Final Prospectus as being owned by them
that are material to the business of the Company, in each case free
and clear of all liens, claims, security interests, other
encumbrances or defects, except those that are disclosed in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus and those that are not reasonably likely to result
in a Material Adverse Effect. The property held under
lease by the Company and its subsidiaries is held by them under
valid, subsisting and enforceable leases with only such exceptions
with respect to any particular lease as do not interfere in any
material respect with the conduct of the business of the Company
and its subsidiaries.
(xii) Intellectual
Property. The Company and each of its subsidiaries owns or
possesses or has valid right 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”)
necessary for the conduct of the business of the Company and its
subsidiaries as currently carried on and as described in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus. To the knowledge of the Company, no
action or use by the Company or any of its subsidiaries involves or
gives rise to any infringement of, or license or similar fees for,
any Intellectual Property of others, except where such action, use,
license or fee is not reasonably likely to result in a Material
Adverse Effect. Neither the Company nor any of its
subsidiaries has received any notice alleging any such infringement
or fee. To the Company’s knowledge, none of the technology
employed by the Company or any subsidiary has been obtained or is
being used by the Company or such subsidiary in violation of any
contractual obligation binding on the Company or such subsidiary
or, to the Company’s knowledge, any of the officers,
directors or employees of the Company or any subsidiary, or, to the
Company’s knowledge, otherwise in violation of the rights of
any persons.
(xiii) Employment
Matters. There is (A) no unfair labor practice
complaint pending against the Company, or any of its subsidiaries,
nor to the Company’s knowledge, threatened against it or any
of its subsidiaries, before the National Labor Relations Board, any
state or local labor relation board or any foreign labor relations
board, and no grievance or arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against the
Company or any of its subsidiaries, or, to the Company’s
knowledge, threatened against it and (B) no labor disturbance by
the employees of the Company or any of its subsidiaries exists or,
to the Company’s knowledge, is imminent, and the Company is
not aware of any existing or imminent labor disturbance by the
employees of any of its or its subsidiaries, principal suppliers,
manufacturers, customers or contractors, that could reasonably be
expected, singularly or in the aggregate, to have a Material
Adverse Effect. The Company is not aware that any key
employee or significant group of employees of the Company or any
subsidiary plans to terminate employment with the Company or any
such subsidiary.
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(xiv)
ERISA Compliance. No “prohibited
transaction” (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder
(“ERISA”), or Section 4975
of the Internal Revenue Code of 1986, as amended from time to time
(the “Code”)) or
“accumulated funding deficiency” (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of
ERISA (other than events with respect to which the thirty (30)-day
notice requirement under Section 4043 of ERISA has been waived) has
occurred or could reasonably be expected to occur with respect to
any employee benefit plan of the Company or any of its subsidiaries
which would reasonably be expected to, singularly or in the
aggregate, have a Material Adverse Effect. Each employee
benefit plan of the Company or any of its subsidiaries is in
compliance in all material respects with applicable law, including
ERISA and the Code. The Company and its subsidiaries have not
incurred and could not reasonably be expected to incur liability
under Title IV of ERISA with respect to the termination of, or
withdrawal from, any pension plan (as defined in
ERISA). Each pension plan for which the Company or any
of its subsidiaries would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified, and to
the Company’s knowledge nothing has occurred, whether by
action or by failure to act, which could, singularly or in the
aggregate, cause the loss of such qualification.
(xv) Environmental
Matters. The Company and its subsidiaries are in
compliance with all foreign, federal, state and local rules, laws
and regulations relating to the use, treatment, storage and
disposal of hazardous or toxic substances or waste and protection
of health and safety or the environment which are applicable to
their businesses (“Environmental Laws”),
except where the failure to comply has not had and would not
reasonably be expected to have, singularly or in the aggregate, a
Material Adverse Effect. There has been no storage,
generation, transportation, handling, treatment, disposal,
discharge, emission, or other release of any kind of toxic or other
wastes or other hazardous substances by, due to, or caused by the
Company or any of its subsidiaries (or, to the Company’s
knowledge, any other entity for whose acts or omissions the Company
or any of its subsidiaries is or may otherwise be liable) upon any
of the property now or previously owned or leased by the Company or
any of its subsidiaries, or upon any other property, in violation
of any law, statute, ordinance, rule, regulation, order, judgment,
decree or permit or which would, under any law, statute, ordinance,
rule (including rule of common law), regulation, order, judgment,
decree or permit, give rise to any liability, except for any
violation or liability which has not had and would not reasonably
be expected to have, singularly or in the aggregate, a Material
Adverse Effect; and there has been no disposal, discharge, emission
or other release of any kind onto such property or into the
environment surrounding such property of any toxic or other wastes
or other hazardous substances with respect to which the Company or
any of its subsidiaries has knowledge.
(xvi) SOX
Compliance. The Company is in compliance in all material
respects with all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
of 2002 and all rules and regulations promulgated thereunder or
implementing the provisions thereof.
(xvii)
Reserved.
-10-
(xviii) Money
Laundering Laws. The operations of the Company
and its subsidiaries are and have been conducted at all
times in compliance in all material respects 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 or any of its subsidiaries with
respect to the Money Laundering Laws is pending or, to the
knowledge of the Company, threatened. “Governmental Entity”
shall be defined as any arbitrator, court, governmental body,
regulatory body, administrative agency or other authority, body or
agency (whether foreign or domestic) having jurisdiction over the
Company or any of its subsidiaries or any of their respective
properties, assets or operations.
(xix) Foreign
Corrupt Practices Act. Neither the Company nor ,any of its
subsidiaries, nor any director or officer of the Company or any
subsidiary, nor, to the knowledge of the Company, any employee,
representative, agent, affiliate of the Company or any of its
subsidiaries or any other person acting on behalf of the Company or
any of its subsidiaries, is aware of or has taken any action,
directly or indirectly, that would result in a violation by such
persons of the Foreign Corrupt Practices Act of 1977, as amended,
and the rules and regulations thereunder (the “FCPA”), including,
without limitation, making use of the mails or any means or
instrumentality of interstate commerce corruptly in furtherance of
an offer, payment, promise to pay or authorization of the payment
of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any
candidate for foreign political office, in contravention of the
FCPA and the Company and, to the knowledge of the Company, its
affiliates have conducted their businesses in compliance
with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to
continue to ensure, continued compliance therewith.
(xx) OFAC.
Neither the Company nor any of its subsidiaries nor any director or
officer of the Company or any subsidiary, nor, to the knowledge of
the Company, any employee, representative, agent or
affiliate of the Company or any of its subsidiaries or any other
person acting on behalf of the Company or any of its subsidiaries
is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”); and the Company
will not directly or indirectly use the proceeds of the offering of
the Shares contemplated hereby, or lend, contribute or otherwise
make available such proceeds to any person or entity, for the
purpose of financing the activities of any person currently subject
to any U.S. sanctions administered by OFAC.
(xxi) Insurance.
The Company and each of its subsidiaries carries, or is covered by,
insurance in such amounts and covering such risks as is adequate
for the conduct of its business and the value of its properties and
as is customary for companies engaged in similar businesses in
similar industries.
-11-
(xxii)
Books and Records. The minute books of the
Company and each of its subsidiaries have been made available to
the Underwriters and counsel for the Underwriters, and such books
(i) contain a complete summary of all meetings and actions of the
board of directors (including each board committee) and
stockholders of the Company (or analogous governing bodies and
interest holders, as applicable), and each of its subsidiaries
since the time of its respective incorporation or organization
through the date of the latest meeting and action, and (ii)
accurately in all material respects reflect all transactions
referred to in such minutes.
(xxiii) No
Undisclosed Contracts. There is no Contract or
document required by the Securities Act or by the Rules and
Regulations to be described in the Registration Statement, the Time
of Sale Disclosure Package or in the Final Prospectus or to be
filed as an exhibit to the Registration Statements which is not so
described or filed therein as required; and all descriptions of any
such Contracts or documents contained in the Registration
Statement, the Time of Sale Disclosure Package and in the Final
Prospectus are accurate and complete descriptions of such documents
in all material respects. Other than as described in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus, no such Contract has been suspended or terminated
for convenience or default by the Company or any subsidiary party
thereto or any of the other parties thereto, and neither the
Company nor any of its subsidiaries has received notice, and the
Company has no knowledge, of any such pending or threatened
suspension or termination, except for such pending or threatened
suspensions or terminations that have not had, and would not
reasonably be expected to have, a Material Adverse Effect,
individually or in the aggregate.
(xxiv) No
Undisclosed Relationships. No relationship,
direct or indirect, exists between or among the Company or any of
its subsidiaries on the one hand, and the directors, officers,
stockholders (or analogous interest holders), customers or
suppliers of the Company or any of its subsidiaries on the other
hand, which is required to be described in the Registration
Statement, the Time of Sale Disclosure Package or the Final
Prospectus and which is not so described.
(xxv) Insider
Transactions. All transactions by the Company
with office holders or control persons of the Company have been
duly approved by the board of directors of the Company, or duly
appointed committees or officers thereof, if and to the extent
required under applicable law.
(xxvi) No
Registration Rights. Except pursuant to that certain
Registration Rights Agreement by and among the Company, Marley
Beverage Company, LLC and the Initial Holders, signatory thereto,
dated as of June 13, 2017, no person or entity has the right to
require registration of shares of Common Stock or other securities
of the Company or any of its subsidiaries within 90 days of the
date hereof because of the filing or effectiveness of the
Registration Statement or otherwise, except for persons and
entities who have expressly waived such right in writing or who
have been given timely and proper written notice and have failed to
exercise such right within the time or times required under the
terms and conditions of such right. Except as described in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus, there are no persons with registration rights or
similar rights to have any securities registered by the Company or
any of its subsidiaries under the Securities Act.
-12-
(xxvii)
Continued Business. No supplier, customer, distributor
or sales agent of the Company or any subsidiary has notified
the Company or any subsidiary that it intends to discontinue
or decrease the rate of business done with the
Company or any subsidiary, except where such discontinuation or
decrease has not resulted in and could not reasonably be expected
to result in a Material Adverse Effect.
(xxviii) No
Finder’s Fee. There are no claims, payments,
issuances, arrangements or understandings for services in the
nature of a finder’s, consulting or origination fee with
respect to the introduction of the Company to any Underwriter or
the sale of the Shares hereunder or any other arrangements,
agreements, understandings, payments or issuances with respect to
the Company that may affect the Underwriters’ compensation,
as determined by FINRA.
(xxix) No
Fees. Except as disclosed to the Representative in writing,
the Company has not made any direct or indirect payments (in cash,
securities or otherwise) to (i) any person, as a finder’s
fee, investing fee or otherwise, in consideration of such person
raising capital for the Company or introducing to the Company
persons who 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
12-month period prior to the date on which the initial Preliminary
Prospectus was filed with the Commission (“Filing Date”) or
thereafter.
(xxx)
Proceeds. None of the
net proceeds of the offering will be paid by the Company to any
participating FINRA member or any affiliate or associate of any
participating FINRA member, except as specifically authorized
herein.
(xxxi)
No FINRA Affiliations. To
the Company’s knowledge and except as disclosed to the
Representative in writing, no (i) officer or director of the
Company or its subsidiaries, (ii) owner of 5% or more of any class
of the Company’s securities or (iii) owner of any amount of
the Company’s unregistered securities acquired within the
180-day period prior to the Filing Date, has any direct or indirect
affiliation or association with any FINRA member. The
Company will advise the Representative and counsel to the
Underwriters if it becomes aware that any officer, director of the
Company or its subsidiaries or any owner of 5% or more of any class
of the Company’s securities is or becomes an
affiliate or associated person of a FINRA member participating in
the offering.
(xxxii) No
Financial Advisor. Other than the Underwriters, no person
has the right to act as an underwriter or as a financial advisor to
the Company in connection with the transactions contemplated
hereby.
(xxxiii)
Certain
Statements. The statements set forth in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus under the captions “Description of Common
Stock” and “Description of Preferred Stock,”
insofar as they purport to constitute a summary of (i) the terms of
the Company’s outstanding securities, (ii) the terms of the
Shares, and (iii) the terms of the documents referred to therein,
are accurate, complete and fair in all material
respects.
-13-
(xxxiv) Prior
Sales of Securities. Except as set forth in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus, the Company has not sold or issued any shares of
Common Stock during the six-month period preceding the date hereof,
including any sales pursuant to Rule 144A under, or Regulations D
or S of, the Securities Act, other than shares issued pursuant to
employee benefit plans, stock option plans or other employee
compensation plans or pursuant to outstanding preferred stock,
options, rights or warrants or other outstanding convertible
securities.
(b) Any
certificate signed by any officer of the Company and delivered to
the Representative on behalf of the Underwriters or to counsel for
the Underwriters shall be deemed a representation and warranty by
the Company to the Underwriters as to the matters covered
thereby.
4. Purchase,
Sale and Delivery of Shares.
(a) On
the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell the Firm Shares to the
several Underwriters, and the several Underwriters agree, severally
and not jointly, to purchase the Firm Shares set forth opposite the
names of the Underwriters in Schedule I hereto. The
purchase price to be paid
by the Underwriters to the Company for each Firm Share shall be
$1.1904 per share.
(b) The
Company hereby grants
to the Underwriters the option to purchase some or all of the
Option Shares and, upon the basis
of the warranties and representations and
subject to the terms and conditions herein set forth, the
Underwriters shall have the right, severally and not jointly, to
purchase at the purchase price set forth in Section 4(a) all or any
portion of the Option Shares as may be necessary to cover
over-allotments made in connection with the transactions
contemplated hereby. This option may be exercised by the
Underwriters at any time and from time to time on or before the
thirtieth (30th) day following
the date hereof, by written notice to the Company (the “Option
Notice”). The Option Notice shall set forth
the aggregate number of Option Shares as to which the option is
being exercised, and the date and time when the Option
Shares are to be delivered (such date and time being
herein referred to as the “Option Closing Date”);
provided, however, that the Option Closing Date
shall not be earlier than the Closing Date (as defined below) nor
earlier than the first business day after the date on which the
option shall have been exercised nor later than the fifth business
day after the date on which the option shall have been exercised
unless the Company and the Representative otherwise
agree. If the Underwriters elect to purchase less than
all of the Option Shares, the Company agrees to sell to each
Underwriter the number of Option Shares obtained by multiplying the
number of Option Shares specified in such notice by a
fraction, the numerator of which is the number of Option Shares, as
applicable, set forth opposite the name of the Underwriter in
Schedule I hereto under the
caption “Number of Option Shares to be Sold” and the
denominator of which is the total number of Option
Shares.
(c) Payment
of the purchase price for and delivery of the Option Shares shall
be made on an Option Closing Date in the same manner and at the
same office as the payment for the Firm Shares as set forth in subparagraph (d)
below.
-14-
(d)
The Firm Shares will be delivered by the Company
to the Representative,
for the respective accounts of the several
Underwriters, against payment of the purchase price
therefor by wire transfer of same day funds payable to the order of
the Company at the offices of ▇▇▇▇ Capital Partners,
LLC, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or
such other location as may be mutually acceptable, at 6:00 a.m.
Pacific Time, on the date specified for regular way settlement in
Rule 15c6-1(a) under the Exchange Act (or if the Firm Shares are
priced after 4:30 p.m. Eastern time, the date specified therein),
or at such other time and date as the Representative and the
Company determine pursuant to Rule 15c6-1(a) under the Exchange
Act, or, in the case of the Option Shares, at such date and time
set forth in the Option Notice. The time and date of
delivery of the Firm Shares is referred to herein as the
“Closing
Date.” On the Closing Date, the Company
shall deliver the Firm Shares, which shall be registered in the
name or names and shall be in such denominations as the
Representative may request on behalf of the Underwriters at least
one (1) business day before the Closing Date, to the respective
accounts of the several Underwriters, which delivery shall be made
through the facilities of the Depository Trust Company’s DWAC
system.
(e) It
is understood that the Representative has been authorized, for its
own account and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price
for, the Firm Shares and any Option Shares the Underwriters have
agreed to purchase. The Representative, individually and not as the
Representative of the Underwriters, may (but shall not be obligated
to) make payment for any Shares to be purchased by any Underwriter
whose funds shall not have been received by the Representative by
the Closing Date or any Option Closing Date, as the case may be,
for the account of such Underwriter, but any such payment shall not
relieve such Underwriter from any of its obligations under this
Agreement.
5. Covenants.
(a) The
Company covenants and agrees with the Underwriters as
follows:
(i) The
Company shall prepare the Final Prospectus in a form approved by
the Representative and file such Final Prospectus pursuant to Rule
424(b) under the Securities Act not later than the Commission's
close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such
earlier time as may be required by the Rules and
Regulations.
(ii) During
the period beginning on the date hereof and ending on the later of
the Closing Date or such date as determined by the Representative
the Final Prospectus is no longer required by law to be delivered
in connection with sales by an underwriter or dealer (the
“Prospectus Delivery
Period”), prior to amending or supplementing the
Registration Statement, including any Rule 462 Registration
Statement, the Time of Sale Disclosure Package or the Final
Prospectus, the Company shall furnish to the Representative for
review and comment a copy of each such proposed amendment or
supplement, and the Company shall not file any such proposed
amendment or supplement to which the Representative reasonably
objects.
-15-
(iii) From
the date of this Agreement until the end of the Prospectus Delivery
Period, the Company shall promptly advise the Representative in
writing (A) of the receipt of any comments of, or requests for
additional or supplemental information from, the Commission, (B) of
the time and date of any filing of any post-effective amendment to
the Registration Statement or any amendment or supplement to the
Time of Sale Disclosure Package, the Final Prospectus or any Issuer
Free Writing Prospectus, (C) of the time and date that any
post-effective amendment to the Registration Statement becomes
effective and (D) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or
of any order preventing or suspending its use or the use of the
Time of Sale Disclosure Package, the Final Prospectus or any Issuer
Free Writing Prospectus, or of any proceedings to remove, suspend
or terminate from listing or quotation the Common Stock from any
securities exchange upon which it is listed for trading or included
or designated for quotation, or of the threatening or initiation of
any proceedings for any of such purposes. If the
Commission shall enter any such stop order at any time during the
Prospectus Delivery Period, the Company will use its reasonable
efforts to obtain the lifting of such order at the earliest
possible moment. Additionally, the Company agrees that
it shall comply with the provisions of Rules 424(b), 430B or 430C as applicable,
under the Securities Act and will use its reasonable efforts to
confirm that any filings made by the Company under Rule 424(b) or
Rule 433 were received in a timely manner by the Commission
(without reliance on Rule 424(b)(8) or 164(b) of the Securities
Act).
(iv) (A)
During the Prospectus Delivery Period, the Company will comply with
all requirements imposed upon it by the Securities Act, as now and
hereafter amended, and by the Rules and Regulations, as from time
to time in force, and by the Exchange Act, as now and hereafter
amended, so far as necessary to permit the continuance of sales of
or dealings in the Shares as contemplated by the provisions hereof,
the Time of Sale Disclosure Package, the Registration Statement and
the Final Prospectus. If during the Prospectus Delivery
Period any event occurs the result of which would cause the Final
Prospectus (or if the Final Prospectus is not yet available to
prospective purchasers, the Time of Sale Disclosure Package ) to
include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the
light of the circumstances then existing, not misleading, or if
during such period it is necessary or appropriate in the opinion of
the Company or its counsel or the Representative or counsel to the
Underwriters to amend the Registration Statement or supplement the
Final Prospectus (or if the Final Prospectus is not yet available
to prospective purchasers, the Time of Sale Disclosure Package ) to
comply with the Securities Act , or to file under the Exchange Act
any document that would be deemed to be incorporated by reference
in the Final Prospectus in order to comply with the Securities Act
or the Exchange Act, the Company will promptly notify the
Representative, allow the Representative the opportunity to provide
reasonable comments on such amendment, prospectus supplement or
document, and will amend the Registration Statement or supplement
the Final Prospectus (or if the Final Prospectus is not yet
available to prospective purchasers, the Time of Sale Disclosure
Package) or file such document (at the expense of the Company) so
as to correct such statement or omission or effect such
compliance.
-16-
(v)
(B) If at any time during the Prospectus Delivery Period
there occurred or occurs an event or development the result of
which such Issuer Free Writing Prospectus conflicted or would
conflict with the information contained in the Registration
Statement or any Prospectus or included or would include, when
taken together with the Time of Sale Disclosure Package, 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 prevailing at that subsequent time,
not misleading, the Company will promptly notify the Representative
and will promptly amend or will promptly amend or supplement, at
its own expense, such Issuer Free Writing Prospectus to eliminate
or correct such conflict, untrue statement or
omission.
(vi) The
Company shall take or cause to be taken all necessary action to
qualify the Shares for sale under the securities laws of such
jurisdictions as the Representative reasonably designates and to
continue such qualifications in effect so long as required for the
distribution of the Shares, except that the Company shall not be
required in connection therewith to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified, to execute a general consent to
service of process in any state or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not
otherwise subject.
(vii) The
Company will furnish to the Underwriters and counsel to the
Underwriters copies of the Registration Statement, each Prospectus,
any Issuer Free Writing Prospectus, and all amendments and
supplements to such documents, in each case as soon as available
and in such quantities as the Underwriters may from time to time
reasonably request.
(viii) The
Company will make generally available to its security holders as
soon as practicable, but in any event not later than 15 months
after the end of the Company’s current fiscal quarter, an
earnings statement (which need not be audited) covering a 12-month
period that shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 of the Rules and
Regulations.
-17-
(ix)
The Company, whether or not the transactions contemplated hereunder
are consummated or this Agreement is terminated, will pay or cause
to be paid (A) all expenses (including transfer taxes
allocated to the respective transferees) incurred in connection
with the delivery to the Underwriters of the Shares (including all
fees and expenses of the registrar and transfer agent of the
Shares, and the cost of preparing and printing stock certificates),
(B) all expenses and fees (including, without limitation, fees and
expenses of the Company’s counsel) in connection with the
preparation, printing, filing, delivery, and shipping of the
Registration Statement (including the financial statements therein
and all amendments, schedules, and exhibits thereto), the Shares,
the Time of Sale Disclosure Package, any Prospectus, the Final
Prospectus, any Issuer Free Writing Prospectus and any amendment
thereof or supplement thereto, (C) all reasonable filing fees and
reasonable fees and disbursements of the Underwriters’
counsel incurred in connection with the qualification of the Shares
for offering and sale by the Underwriters or by dealers under the
securities or blue sky laws of the states and other jurisdictions
that the Representative shall designate, (D) the reasonable filing
fees and reasonable fees and disbursements of counsel to the
Underwriters incident to any required review and approval by FINRA,
of the terms of the sale of the Shares, (F) listing fees, if any,
and (G) all other costs and expenses incident to the performance of
its obligations hereunder that are not otherwise specifically
provided for herein. The Company will reimburse the Representative
for the Underwriters’ reasonable out-of-pocket expenses,
including legal fees and disbursements, in connection with the
purchase and sale of the Shares contemplated hereby (including
amounts payable pursuant to clauses (C) and (D) above) up to an
aggregate of $150,000. If this Agreement is terminated
by the Representative in accordance with the provisions of Section
6, Section 7 or Section 9, the Company will reimburse the
Underwriters for all out-of-pocket disbursements (including, but
not limited to, reasonable fees and disbursements of counsel,
travel expenses, postage, facsimile and telephone charges) incurred
by the Underwriters in connection with their investigation,
preparing to market and marketing the Shares or in contemplation of
performing their obligations hereunder.
(x) The
Company intends to apply the net proceeds from the sale of the
Shares to be sold by it hereunder for the purposes set forth in the
Registration Statement, the Time of Sale Disclosure Package and the
Final Prospectus under the heading “Use of
Proceeds.”
(xi) The
Company has not taken and will not take, directly or indirectly,
during the Prospectus Delivery Period, any action designed to or
which might reasonably be expected to cause or result in, or that
has constituted, the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the
Shares.
(xii) The
Company represents and agrees that, unless it obtains the prior
written consent of the Representative, and each Underwriter,
severally, and not jointly, represents and agrees that, unless it
obtains the prior written consent of the Company, it has not made
and will not make any offer relating to the Shares that would
constitute an Issuer Free Writing Prospectus; provided that the
prior written consent of the parties hereto shall be deemed to have
been given in respect of the free writing prospectuses included in
Schedule III. Any
such free writing prospectus consented to by the Company and the
Representative is hereinafter referred to as a “Permitted Free Writing
Prospectus.” The Company represents that it
has treated or agrees that it will treat each Permitted Free
Writing Prospectus as an “issuer free writing
prospectus,” as defined in Rule 433, and has complied or will
comply with the requirements of Rule 433 applicable to any
Permitted Free Writing Prospectus, including timely Commission
filing where required, legending and record-keeping.
-18-
(xiii)
The Company hereby agrees that, without the prior written consent
of the Representative, it will not, during the period ending ninety
(90) days after the date hereof (“Lock-Up Period”), (i)
offer, pledge, issue, sell, contract to sell, purchase, contract to
purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock;
or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise; or
(iii) file any registration statement with the Commission relating
to the offering of any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common
Stock. The restrictions contained in the preceding
sentence shall not apply to (1) the Shares to be sold hereunder,
(2) the issuance of Common Stock upon the exercise of options or
warrants or the conversion of outstanding preferred stock or other
outstanding convertible securities disclosed as outstanding in the
Registration Statement (excluding exhibits thereto), the Time of
Sale Disclosure Package, and the Final Prospectus, or (3) the
issuance of employee stock options not exercisable during the
Lock-Up Period and the grant of restricted stock awards or
restricted stock units or shares of Common Stock pursuant to equity
incentive plans described in the Registration Statement (excluding
exhibits thereto), the Time of Sale Disclosure Package, and the
Final Prospectus.
(xiv) The
Company hereby agrees, during a period of three years from the
effective date of the Registration Statement, to furnish to the
Representative copies of all reports or other communications
(financial or other) furnished to shareholders, and to deliver to
the Representative as soon as reasonably practicable upon
availability, copies of any reports and financial statements
furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company
is listed; provided, that any information or documents available on
the Commission’s Electronic Data Gathering, Analysis and
Retrieval System shall be considered furnished for purposes of this
Section 5(a)(xiii).
(xv) The
Company hereby agrees to engage and maintain, at its expense, a
registrar and transfer agent for the Common Stock.
(xvi) The
Company hereby agrees to use its reasonable best efforts to obtain
approval to list the Shares on the Nasdaq.
(xvii) The
Company hereby agrees not to take, directly or indirectly, any
action designed to cause or result in, or that has constituted or
might reasonably be expected to constitute, under the Exchange Act
or otherwise, the stabilization or manipulation of the price of any
securities of the Company to facilitate the sale or resale of the
Shares.
-19-
(xviii)
The Company will promptly notify the Representative if the Company
ceases to be an Emerging Growth Company at any time prior to the
later of (a) the end of the Prospectus Delivery Period and
(b) the expiration of the lock-up period described in
Section 5(xii) above.
6. Conditions
of the Underwriter’s Obligations. The
respective obligations of the several Underwriters hereunder to
purchase the Shares are subject to the accuracy, as of the date
hereof and at all times through the Closing Date, and on each
Option Closing Date (as if made on the Closing Date or such Option
Closing Date, as applicable), of and compliance with all
representations, warranties and agreements of the
Company contained
herein, the performance by the Company of its obligations hereunder
and the following additional conditions:
(a) If
filing of the Final Prospectus, or any amendment or supplement
thereto, or any Issuer Free Writing Prospectus, is required under
the Securities Act or the Rules and Regulations, the Company shall
have filed the Final Prospectus (or such amendment or supplement)
or such Issuer Free Writing Prospectus with the Commission in the
manner and within the time period so required (without reliance on
Rule 424(b)(8) or 164(b) under the Securities Act); the
Registration Statement shall remain effective; no stop order
suspending the effectiveness of the Registration Statement or any
part thereof, any Rule 462 Registration Statement, or any amendment
thereof, nor suspending or preventing the use of the Time of Sale
Disclosure Package, any Prospectus, the Final Prospectus or any
Issuer Free Writing Prospectus shall have been issued; no
proceedings for the issuance of such an order shall have been
initiated or threatened by the Commission; any request of the
Commission or the Representative for additional
information (to be included in the Registration Statement, the Time
of Sale Disclosure Package, any Prospectus, the Final Prospectus,
any Issuer Free Writing Prospectus or otherwise) shall have been
complied with to the satisfaction of the
Representative.
(b) The
Shares shall be approved for listing on the Nasdaq, subject to
official notice of issuance.
(c) FINRA
shall have raised no objection to the fairness and reasonableness
of the underwriting terms and arrangements.
(d)
The Representative shall not have reasonably determined,
and advised the Company, that the Registration Statement, the
Time of Sale Disclosure Package, any Prospectus, the Final
Prospectus, or any amendment thereof or supplement thereto, or any
Issuer Free Writing Prospectus, contains an untrue statement of
fact which, in the reasonable opinion of the Representative, is
material, or omits to state a fact which, in the reasonable opinion
of the Representative, is material and is required to be stated
therein or necessary to make the statements therein not
misleading.
(e)
On the Closing Date and on each Option Closing Date, there shall
have been furnished to the Representative, for the benefit of the
Underwriters, the opinions and negative assurance letters of
Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP, counsel to the Company, and
Davies ▇▇▇▇▇▇▇, P.C., Washington state counsel to the Company, each
dated the Closing Date or the Option Closing Date, as applicable,
and addressed to the Underwriters, in form and substance reasonably
satisfactory to the Representative.
-20-
(f)
On the Closing Date and on each Option Closing Date, there shall
have been furnished to the Representative, for the benefit of the
Underwriters, the negative assurance letter of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LLP, counsel to the Underwriters, dated the Closing Date or the
Option Closing Date, as applicable, and addressed to the
Underwriters, in form and substance reasonably satisfactory to the
Representative.
(g) The
Representative, for the benefit of the Underwriters, shall have
received a letter of Accell Audit & Compliance, PA, on the date
hereof and on the Closing Date and on each Option Closing Date,
addressed to the Representative on behalf of the Underwriters,
confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualifications of
accountants under Rule 2-01 of Regulation S-X of the Commission,
and confirming, as of the date of each such letter (or, with
respect to matters involving changes or developments since the
respective dates as of which specified financial information is
given in the Registration Statement, the Time of Sale Disclosure
Package and the Final Prospectus, as of a date not prior to the
date hereof or more than five days prior to the date of such
letter), the conclusions and findings of said firm with respect to
the financial information and other matters required by the
Underwriters.
(h) On
the Closing Date and on each Option Closing Date, there shall have
been furnished to the Representative, for the benefit of the
Underwriters, a certificate, dated the Closing Date and on each
Option Closing Date and addressed to the Underwriters, signed by
the chief executive officer and the chief financial officer of the
Company, in their capacity as officers of the Company, to the
effect that:
(i)
The representations and warranties of the
Company in this Agreement that are qualified by materiality or by
reference to any Material Adverse Effect are true and correct in
all respects, and all other representations and warranties of the
Company in this Agreement are true and correct, in all material
respects, as if made at and as of the Closing Date and on the
Option Closing Date, and the Company has complied in all material
respects with all the agreements and satisfied all the conditions
on its part required to be performed or satisfied at or prior to
the Closing Date or on the Option Closing Date, as
applicable;
(ii)
No stop order or other order (A) suspending the
effectiveness of the Registration Statement or any part thereof or
any amendment thereof, (B) suspending the qualification of the
Shares for offering or
sale, or (C) suspending or preventing the use of the Time of Sale
Disclosure Package, any Prospectus, the Final Prospectus or any
Issuer Free Writing Prospectus, has been issued, and no proceeding
for that purpose has been instituted or, to their knowledge, is
contemplated by the Commission or any state or regulatory body;
and
(iii) There
has been no occurrence of any event resulting or reasonably likely
to result in a Material Adverse Effect during the period from and
after the date of this Agreement and prior to the Closing Date or
on the Option Closing Date, as applicable.
-21-
(i)
On or before the date hereof, the Representative
shall have received duly executed lock-up agreement (each a
“Lock-Up
Agreement”) in the form set forth on Exhibit A hereto, by and between the
Representative and each of the parties specified in Schedule IV.
(j)
The Company shall have
furnished to the Underwriters and their counsel such additional
documents, certificates and evidence as the Representative or
counsel to the Underwriters may have reasonably
requested.
If
any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may
be terminated by the Representative by notice to the
Company at any time at
or prior to the Closing Date or on the Option Closing Date, as
applicable, and such termination shall be without liability of any
party to any other party, except that Section 5(a)(viii), Section 7
and Section 9 shall survive any such termination and remain in full
force and effect.
7. Indemnification
and Contribution.
(a) The
Company agrees to indemnify, defend and hold harmless each
Underwriter, its affiliates, directors and officers and employees,
and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any losses, claims, damages or
liabilities to which such party may become subject, under the
Securities Act or otherwise (including in settlement of any
litigation if such settlement is effected with the written consent
of the Company), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon (i) an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including
the information deemed to be a part of the Registration Statement
at the time of effectiveness and at any subsequent time pursuant to
Rule 430B of the Rules and Regulations, or arise out of or are
based upon the omission from the Registration Statement, or alleged
omission to state therein, a material fact required to be stated
therein or necessary to make the statements therein not misleading
(ii) an untrue statement or alleged untrue statement of a material
fact contained in the Time of Sale Disclosure Package, any
Prospectus, the Final Prospectus, or any amendment or supplement
thereto, any Issuer Free Writing Prospectus, or the Marketing
Materials or in any other materials used in connection with the
offering of the Shares, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading, (iii) in whole or in part, any inaccuracy in the
representations and warranties of the Company contained herein, or
(iv) in whole or in part, any failure of the Company to perform its
obligations hereunder or under law, and will reimburse such party
for any legal or other expenses reasonably incurred by such party
in connection with evaluating, investigating or defending against
such loss, claim, damage, liability or action; provided, however, that such indemnity
shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) in any such case to the extent that
any such loss, claim, damage, liability or action arises out of or
is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the Registration Statement,
the Time of Sale Disclosure Package, any Prospectus, the Final
Prospectus, or any amendment or supplement thereto or any Issuer
Free Writing Prospectus, in reliance upon and in conformity with
written information furnished to the Company by the related
Underwriter specifically for use in the preparation thereof, which
written information is described in Section 7(f).
-22-
(b) Each
Underwriter, severally and not jointly, will indemnify, defend and
hold harmless the Company, its directors and each officer of the
Company who signs the Registration Statement and each person, if
any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, from and
against any losses, claims, damages or liabilities to which such
party may become subject, under the Securities Act or otherwise
(including in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter), insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, the Time of Sale Disclosure Package, any
Prospectus, the Final Prospectus, or any amendment or supplement
thereto or any Issuer Free Writing Prospectus, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the
Registration Statement, the Time of Sale Disclosure Package, any
Prospectus, the Final Prospectus, or any amendment or supplement
thereto or any Issuer Free Writing Prospectus in reliance upon and
in conformity with written information furnished to the Company by
such Underwriter specifically for use in the preparation thereof,
which written information is described in Section 7(f), and will
reimburse such party for any legal or other expenses reasonably
incurred by such party in connection with evaluating,
investigating, and defending against any such loss, claim, damage,
liability or action. The obligation of each Underwriter
to indemnify the Company (including any controlling person,
director or officer thereof) shall be limited to the amount of the
underwriting discount applicable to the Shares to be purchased by
such Underwriter hereunder actually received by such
Underwriter.
(c) Promptly
after receipt by an indemnified party under subsection (a) or (b)
above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the
failure to notify the indemnifying party shall not relieve the
indemnifying party from any liability that it may have to any
indemnified party except to the extent such indemnifying party has
been materially prejudiced by such failure. In case any
such action shall be brought against any indemnified party, and it
shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to
the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of the
indemnifying party’s election so to assume the defense
thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof; provided, however, that if (i) the indemnified
party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified
parties that are different from or in addition to those available
to the indemnifying party, (ii) a conflict or potential conflict
exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which
case the indemnifying party will not have the right to direct the
defense of such action on behalf of the indemnified party), or
(iii) the indemnifying party has not in fact employed counsel
reasonably satisfactory to the indemnified party to assume the
defense of such action within a reasonable time after receiving
notice of the commencement of the action, the indemnified party
shall have the right to employ a single counsel to represent it in
any claim in respect of which indemnity may be sought under
subsection (a) or (b) of this Section 7, in which event the
reasonable fees and expenses of such separate counsel shall be
borne by the indemnifying party or parties and reimbursed to the
indemnified party as incurred.
-23-
The indemnifying
party under this Section 7 shall not be liable for any settlement
of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or
expense by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement, compromise or consent to
the entry of judgment in any pending or threatened action, suit or
proceeding in respect of which any indemnified party is a party or
could be named and indemnity was or would be sought hereunder by
such indemnified party, unless such settlement, compromise or
consent (a) includes an unconditional release of such indemnified
party from all liability for claims that are the subject matter of
such action, suit or proceeding and (b) does not include a
statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If
the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party
as a result of the losses, claims, damages or liabilities referred
to in subsection (a) or (b) above, (i) in such proportion as is
appropriate to reflect the relative benefits received by the
Company on the one hand
and the Underwriters on the other from the offering and sale of the
Shares 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 in connection with the statements or
omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the
Company on the one hand
and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discount received by the Underwriters, in each case as set forth in
the table on the cover page of the Final Prospectus. The
relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by the
Company or the
Underwriters and the parties’ relevant intent, knowledge,
access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this
subsection (d) were to be determined by pro rata allocation or by
any other method of allocation that does not take account of the
equitable considerations referred to in the first sentence of this
subsection (d). The amount paid by an indemnified party
as a result of the losses, claims, damages or liabilities referred
to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending
against any action or claim that is the subject of this subsection
(d). Notwithstanding the provisions of this subsection
(d), no Underwriter shall
be required to contribute any amount in excess of the amount of the
of the underwriting discount applicable to the Shares to be
purchased by such Underwriter hereunder actually received by such
Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The
Underwriters’ respective obligations to contribute as
provided in this Section 7 are several in proportion to their
respective underwriting commitments and not joint.
-24-
(e)
The obligations of the Company under this Section 7 shall be in
addition to any liability that the Company may otherwise have and the
benefits of such obligations shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act; and the obligations of each Underwriter
under this Section 7 shall be in addition to any liability that
each Underwriter may otherwise have and the benefits of such
obligations shall extend, upon the same terms and conditions, to
the Company’s directors, the officers of the Company signing
the Registration Statement, and each person who controls the
Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act.
(f) For
purposes of this Agreement, each Underwriter severally confirms,
and the Company acknowledges, that there is no
information concerning such Underwriter furnished in writing to the
Company by such Underwriter specifically for preparation of or
inclusion in the Registration Statement, the Time of Sale
Disclosure Package, any Prospectus, the Final Prospectus or any
Issuer Free Writing Prospectus, other than the statement set forth
in the last paragraph on the cover page of the Prospectus, the
marketing and legal names of each Underwriter, and the statements
set forth in the “Underwriting” section of the
Registration Statement, the Time of Sale Disclosure Package, and
the Final Prospectus only insofar as such statements relate to the
amount of selling concession and re-allowance, if any, or to
over-allotment, stabilization and related activities that may be
undertaken by such Underwriter.
8. Representations
and Agreements to Survive Delivery. All
representations, warranties, and agreements of the
Company contained herein or in certificates
delivered pursuant hereto, including, but not limited to, the
agreements of the several Underwriters and the Company contained in
Section 5(a)(viii) and Section 7 hereof, shall remain operative and
in full force and effect regardless of any investigation made by or
on behalf of the several Underwriters or any controlling person
thereof, or the Company, its directors,
the officers of the Company signing the Registration Statement, or
any of its controlling
persons, and shall survive delivery of, and payment for, the Shares
to and by the Underwriters hereunder.
-25-
9.
Termination of this Agreement.
(a) The
Representative shall
have the right to terminate this Agreement by giving notice to the
Company as hereinafter specified at any time at or prior to the
Closing Date or any Option Closing Date (as to the Option Shares to
be purchased on such Option Closing Date only), if in the
discretion of the Representative, (i) there has occurred any
material adverse change in the securities markets or any event, act
or occurrence that has materially disrupted, or in the opinion of
the Representative, will in the future materially disrupt, the
securities markets or there shall be such a material adverse change
in general financial, political or economic conditions or the
effect of international conditions on the financial markets in the
United States is such as to make it, in the judgment of the
Representative, inadvisable or impracticable to market the Shares
or enforce contracts
for the sale of the Shares (ii) trading in the
Company’s Common Stock shall have been suspended by the
Commission or the Nasdaq or trading in securities generally on the
Nasdaq Stock Market, the NYSE or the NYSE American shall have been
suspended, (iii) minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have
been required, on the Nasdaq Stock Market, the NYSE or NYSE
American, by such exchange or by order of the Commission or any
other governmental authority having jurisdiction, (iv) a banking
moratorium shall have been declared by federal or
state authorities, (v) there shall have occurred any
attack on, outbreak or escalation of hostilities or act of
terrorism involving the United States, any declaration by the
United States of a national emergency or war, any substantial
change or development involving a prospective substantial change in
United States or international political, financial or economic
conditions or any other calamity or crisis, or (vi) the Company
suffers any loss by strike, fire, flood, earthquake, accident or
other calamity, whether or not covered by insurance, or (vii) in
the judgment of the Representative, there has been, since the time
of execution of this Agreement or since the respective dates as of
which information is given in the Registration Statement, the Time
of Sale Disclosure Package or the Final Prospectus, any material
adverse change in the assets, properties, condition, financial or
otherwise, or in the results of operations, business affairs or
business prospects of the Company and its subsidiaries considered
as a whole, whether or not arising in the ordinary course of
business. Any such termination shall be without
liability of any party to any other party except that the
provisions of Section 5(a)(viii) and Section 7 hereof shall at all
times be effective and shall survive such termination.
(b) If
the Representative elects to terminate this Agreement as provided
in this Section, the Company and the other Underwriters shall be
notified promptly by the Representative by telephone, confirmed by
letter.
10. Substitution
of Underwriters. If any Underwriter or
Underwriters shall default in its or their obligations to purchase
Shares hereunder on the Closing Date or any Option Closing Date and
the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed ten
percent (10%) of the total number of Shares] to be purchased by all
Underwriters on such Closing Date or Option Closing Date, the other
Underwriters shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Shares which such
defaulting Underwriter or Underwriters agreed but failed to
purchase on such Closing Date or Option Closing Date. If
any Underwriter or Underwriters shall so default and the aggregate
number of Shares with respect to which such default or defaults
occur is more than ten percent (10%) of the total number of Shares
to be purchased by all Underwriters on such Closing Date or Option
Closing Date and arrangements satisfactory to the remaining
Underwriters and the Company for the purchase of such Shares by
other persons are not made within forty-eight (48) hours after such
default, this Agreement shall terminate.
-26-
If the remaining
Underwriters or substituted Underwriters are required hereby or
agree to take up all or part of the Shares of a defaulting
Underwriter or Underwriters on such Closing Date or Option Closing
Date as provided in this Section 10, (i) the Company shall have the
right to postpone such Closing Date or Option Closing Date for a
period of not more than five (5) full business days in order to
permit the Company to effect whatever changes in the Registration
Statement, the Final Prospectus, or in any other documents or
arrangements, which may thereby be made necessary, and the Company
agrees to promptly file any amendments to the Registration
Statement or the Final Prospectus which may thereby be made
necessary, and (ii) the respective numbers of Shares to be
purchased by the remaining Underwriters or substituted Underwriters
shall be taken as the basis of their underwriting obligation for
all purposes of this Agreement. Nothing herein contained
shall relieve any defaulting Underwriter of its liability to the
Company or any other Underwriter for damages occasioned by its
default hereunder. Any termination of this Agreement
pursuant to this Section 10 shall be without liability on the part
of any non-defaulting Underwriters or the Company, except that the
representations, warranties, covenants, indemnities, agreements and
other statements set forth in Section 2 and 3, the obligations with
respect to expenses to be paid or reimbursed pursuant to Section
5(a)(viii) and the provisions of Section 7 and Sections 11 through
18, inclusive, shall not terminate and shall remain in full force
and effect.
As used in this
Agreement, the term “Underwriter” shall be deemed to
include any person substituted for a defaulting Underwriter under
this Section 10. Any action taken under this Section 10 shall not
relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
11. Notices. Except
as otherwise provided herein, all communications hereunder shall be
in writing and, if to the Representative, shall be mailed,
delivered or telecopied to ▇▇▇▇ Capital Partners, LLC, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, telecopy
number: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Managing Director;
and if to the Company, shall be mailed, delivered or telecopied to
it at New Age Beverages Corporation, ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇,
CEO; or in each case to such other address as the person
to be notified may have requested in writing. Any party
to this Agreement may change such address for notices by sending to
the parties to this Agreement written notice of a new address for
such purpose.
12. Persons
Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns and the
controlling persons, officers and directors referred to in Section
7. Nothing in this Agreement is intended or shall be
construed to give to any other person, firm or corporation any
legal or equitable remedy or claim under or in respect of this
Agreement or any provision herein contained. The term
“successors and assigns” as herein used shall not
include any purchaser, as such purchaser, of any of the Shares from
any Underwriter.
13. Absence
of Fiduciary Relationship. The Company
acknowledges and agrees that: (a) each Underwriter has been
retained solely to act as underwriter in connection with the sale
of the Shares and that no fiduciary, advisory or agency
relationship between the Company and any Underwriter has been
created in respect of any of the transactions contemplated by this
Agreement, irrespective of whether the Underwriter has advised or
is advising the Company on other matters; (b) the price and other
terms of the Shares set forth in this Agreement were established by
the Company following discussions and arms-length negotiations with
the Underwriters and the Company is capable of evaluating and
understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated by this Agreement; (c)
it has been advised that the Underwriters and their affiliates are
engaged in a broad range of transactions that may involve interests
that differ from those of the Company and that no Underwriter has any
obligation to disclose such interest and transactions to the
Company by virtue of
any fiduciary, advisory or agency relationship; and (d) it has been
advised that each Underwriter is acting, in respect of the
transactions contemplated by this Agreement, solely for the benefit
of such Underwriter, and not on behalf of the Company.
-27-
14.
Amendments and Waivers. No supplement,
modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound
thereby. The failure of a party to exercise any right or
remedy shall not be deemed or constitute a waiver of such right or
remedy in the future. No waiver of any of the provisions
of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (regardless of whether similar), nor
shall any such waiver be deemed or constitute a continuing waiver
unless otherwise expressly provided.
15. Partial
Unenforceability. The invalidity or
unenforceability of any section, paragraph, clause or provision of
this Agreement shall not affect the validity or enforceability of
any other section, paragraph, clause or provision.
16. Governing
Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New
York.
17. Submission
to Jurisdiction. The
Company irrevocably (a) submits to the jurisdiction of
the Supreme Court of the State of New York, Borough of Manhattan or
the United States District Court for the Southern District of New
York for the purpose of any suit, action, or other proceeding
arising out of this Agreement, or any of the agreements or
transactions contemplated by this Agreement, the Registration
Statement, the Time of Sale Disclosure Package, any Prospectus and
the Final Prospectus (each a “Proceeding”), (b) agrees
that all claims in respect of any Proceeding may be heard and
determined in any such court, (c) waives, to the fullest extent
permitted by law, any immunity from jurisdiction of any such court
or from any legal process therein, (d) agrees not to commence any
Proceeding other than in such courts, and (e) waives, to the
fullest extent permitted by law, any claim that such Proceeding is
brought in an inconvenient forum. THE COMPANY (ON BEHALF
OF ITSELF AND, TO THE FULLEST EXTENT PERMITTED BY LAW, ON BEHALF OF
ITS RESPECTIVE EQUITY HOLDERS AND CREDITORS) HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION
STATEMENT, THE TIME OF SALE DISCLOSURE PACKAGE, ANY PROSPECTUS AND
THE FINAL PROSPECTUS.
18. Counterparts. This
Agreement may be executed and delivered (including by facsimile
transmission or electronic mail) in one or more counterparts and,
if executed in more than one counterpart, the executed counterparts
shall each be deemed to be an original and all such counterparts
shall together constitute one and the same instrument.
[Signature Page Follows]
-28-
Please sign and
return to the Company the enclosed duplicates of this letter
whereupon this letter will become a binding agreement between the
Company and the
several Underwriters in accordance with its terms.
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Very truly
yours,
NEW
AGE BEVERAGES CORPORATION
By:
/s/ ▇▇▇▇▇
▇▇▇▇▇▇
Name: ▇▇▇▇▇
▇▇▇▇▇▇
Title: Chief
Executive Officer
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Confirmed as of the
date first above-mentioned
by the
Representative of the several Underwriters.
▇▇▇▇ CAPITAL PARTNERS, LLC
By: /s/
▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇
Title: Head
of Equity Capital Markets
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SCHEDULE
I
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Name
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Number of Firm Shares
to be Purchased
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Number of Option
Shares to be Purchased
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▇▇▇▇ Capital
Partners, LLC
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5,740,000
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700,000
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Northland
Securities, Inc.
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2,460,000
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300,000
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|
|
|
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Total
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8,200,000
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1,000,000
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SCHEDULE
I
SCHEDULE
II
New
Age Beverages Corporation
8,200,000
Shares of Common Stock
Final
Term Sheet
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Issuer:
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NEW AGE BEVERAGES
CORPORATION (the “Company”)
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Symbol:
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NBEV
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Securities:
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8,200,000 shares of
common stock, par value $0.001 per share (the “Common
Stock”), of the Company
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Over-allotment
option:
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Up to an additional
1,000,000 shares of Common Stock
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Public offering
price:
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$1.28 per share of
Common Stock
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Underwriting
discount:
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$0.0896 per share
of Common Stock
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Expected net
proceeds:
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Approximately $9.5
million ($10.7 million if the overallotment option is exercised in
full) (after deducting the underwriting discount and estimated
offering expenses payable by the Company).
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Trade
date:
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August 22,
2018
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Settlement
date:
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August 24,
2018
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Underwriters:
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▇▇▇▇ Capital
Partners, LLC
Northland
Securities, Inc.
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SCHEDULE
II
SCHEDULE
III
Free Writing Prospectus
None.
SCHEDULE
III
SCHEDULE
IV
List of officers and directors executing
lock-up agreements
▇▇▇▇
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▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇
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▇▇▇▇
Fea
▇▇▇▇▇▇
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SCHEDULE
IV
EXHIBIT
A
Form
of Lock-Up Agreement
▇▇▇▇ Capital
Partners, LLC
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Ladies and
Gentlemen:
The undersigned
understands that you, as the representative (the
“Representative”) of the several underwriters named
therein, propose to enter into an Underwriting Agreement (the
“Underwriting Agreement”) with New Age Beverages
Corporation, a Washington corporation (the “Company”),
relating to a proposed offering of securities of the Company (the
“Offering”) including shares of the Common Stock, par
value $0.001 per share (the “Common
Stock”). Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the
Underwriting Agreement.
In consideration of
the foregoing, and in order to induce you to participate the
Offering, and for other good and valuable consideration receipt of
which is hereby acknowledged, the undersigned hereby agrees that,
without the prior written consent of the Representative (which
consent may be withheld in its sole discretion), the undersigned
will not, during the period (the “Lock-Up Period”)
beginning on the date hereof and ending on the date 90 days after
the date of the final prospectus relating to the Offering (the
“Final Prospectus”), (1) offer, pledge, announce the
intention to sell, 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, or otherwise
transfer or dispose of, directly or indirectly, or file (or
participate in the filing of) a registration statement with the
Securities and Exchange Commission in respect of, any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable for shares of Common Stock (including without
limitation, shares of Common Stock which may be deemed to be
beneficially owned by the undersigned in accordance with the rules
and regulations of the Securities and Exchange Commission and
securities which may be issued upon exercise of a stock option or
warrant), (2) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of
ownership of the shares of, whether any such transaction described
in clause (1) or (2) above is to be settled by delivery of shares
of Common Stock or such other securities, in cash or otherwise, (3)
make any demand for or exercise any right with respect to, the
registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for shares of
Common Stock, or (4) publicly announce an intention to effect any
transaction specific in clause (1), (2) or (3) above.
EXHIBIT
A-1
Notwithstanding the
foregoing, the restrictions set forth in clause (1) and (2) above
shall not apply to (a) transfers (i) as a bona fide gift or gifts,
provided that the donee or donees thereof agree to be bound in
writing by the restrictions set forth herein, or (ii) to any trust
for the direct or indirect benefit of the undersigned or the
immediate family of the undersigned, provided that the trustee of
the trust agrees to be bound in writing by the restrictions set
forth herein, and provided further that any such transfer shall not
involve a disposition for value, (b) the acquisition or exercise of
any stock option issued pursuant to the Company’s existing
stock option plan, including any exercise effected by the delivery
of shares of Common Stock of the Company held by the undersigned,
or (c) the purchase or sale of the Company’s securities
pursuant to a plan, contract or instruction that satisfies all of
the requirements of Rule 10b5-1(c)(1)(i)(B) that was in effect
prior to the date hereof. For purposes of this Lock-Up
Agreement, “immediate family” shall mean any
relationship by blood, marriage or adoption, not more remote than
first cousin.
The foregoing
restrictions are expressly agreed to preclude the undersigned from
engaging in any hedging or other transaction which is designed to
or reasonably expected to lead to or result in a sale or
disposition of shares of Common Stock even if such securities would
be disposed of by someone other than the
undersigned. Such prohibited hedging or other
transactions would include without limitation any short sale or any
purchase, sale or grant of any right (including without limitation
any put option or put equivalent position or call option or call
equivalent position) with respect to any of the shares of Common
Stock or with respect to any security that includes, relates to, or
derives any significant part of its value from such
shares.
The undersigned
hereby represents and warrants that the undersigned has full power
and authority to enter into this Lock-Up Agreement. All
authority herein conferred or agreed to be conferred and any
obligations of the undersigned shall be binding upon the
successors, assigns, heirs or personal representatives of the
undersigned.
The undersigned
also agrees and consents to the entry of stop transfer instructions
with the Company’s transfer agent and registrar or depositary
against the transfer of the undersigned’s shares of Common
Stock except in compliance with the foregoing
restrictions.
The undersigned
understands that, if the Underwriting Agreement does not become
effective, on or before August 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 securities to be sold thereunder, the
undersigned shall be released from all obligations under this
Lock-Up Agreement.
This Lock-Up
Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the conflict of
laws principles thereof. The undersigned irrevocably (i) submits to
the jurisdiction of the Supreme Court of the State of New York,
Borough of Manhattan and the United States District Court for the
Southern District of New York, for the purpose of any suit, action,
or other proceeding arising out of this Lock-Up Agreement (each a
“Proceeding”), (ii) agrees that all claims in respect
of any Proceeding may be heard and determined in any such court,
(iii) waives, to the fullest extent permitted by law, any immunity
from jurisdiction of any such court or from any legal process
therein, (iv) agrees not to commence any Proceeding other than in
such courts, and (v) waives, to the fullest extent permitted by
law, any claim that such Proceeding is brought in an inconvenient
forum.
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Very truly
yours,
________________________________
Name:
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EXHIBIT
A-2