UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of Earliest Event Reported):
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November 20, 2014
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Castle Brands Inc.
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(Exact name of registrant as specified in its charter)
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Florida
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001-32849
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41-2103550
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(State or other jurisdiction
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(Commission
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(I.R.S. Employer
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of incorporation)
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File Number)
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Identification No.)
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122 East 42nd Street, Suite 4700, New York, New York
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10168
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(Address of principal executive offices)
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(Zip Code)
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Registrants telephone number, including area code:
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(646) 356-0200
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Not Applicable
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Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On November 20, 2014, Castle Brands Inc., a Florida corporation (the "Company"), entered into an Equity Distribution Agreement (the "Distribution Agreement") with Barrington Research Associates, Inc. ("Barrington"), as sales agent, under which the Company may issue and sell over time and from time to time, to or through Barrington, shares (the "Shares") of its common stock, $0.01 par value per share ("Common Stock"), having a gross sales price of up to $10.0 million.
Sales of the Shares pursuant to the Distribution Agreement, if any, may be effected by any method permitted by law deemed to be an "at-the-market" offering as defined in Rule 415 of the Securities Act of 1933, as amended, including without limitation directly on the NYSE MKT LLC or any other existing trading market for the Common Stock or through a market maker, up to the amount specified, and otherwise to or through Barrington in accordance with the placement notices delivered by the Company to Barrington. Also, with the prior consent of the Company, some or all of the Common Stock issued pursuant to the Distribution Agreement may be sold in privately negotiated transactions. Under the Distribution Agreement, Barrington will be entitled to compensation of 2.0% of the gross proceeds from the sale of all of the Shares sold through Barrington, as sales agent, pursuant to the Distribution Agreement. Also, the Company will reimburse Barrington for certain expenses incurred in connection with the matters contemplated by the Distribution Agreement, up to an aggregate of $50,000, plus up to an additional $7,500 per calendar quarter related to ongoing maintenance; provided, however, that the total compensation payable to Barrington (including any reimbursement of out-of-pocket expenses) shall not exceed 8% of the aggregate gross proceeds received by the Company under the Distribution Agreement.
The Shares sold pursuant to the Distribution Agreement will be issued pursuant to a prospectus dated September 12, 2014, as supplemented by a prospectus supplement dated November 20, 2014, in each case filed with the Securities and Exchange Commission (the "Commission") pursuant to the Company’s effective Registration Statement on Form S-3 (File No. 333-198414) (the "Registration Statement") which was initially filed with the Commission on August 27, 2014 and declared effective on September 12, 2014. Interested investors should read the Registration Statement and all documents incorporated therein by reference. The Distribution Agreement is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the material terms of the Distribution Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to such exhibit.
The Distribution Agreement has been included to provide investors and security holders with information regarding its terms and conditions. The representations, warranties and covenants contained in the Distribution Agreement were made only for purposes of that agreement and as of specific dates, and were solely for the benefit of the parties to the Distribution Agreement. Investors should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Distribution Agreement, which subsequent information may or may not be fully reflected in public disclosures by the Company.
This Current Report on Form 8-K does not constitute an offer to sell or a solicitation of an offer to buy any securities. The Registration Statement relating to these securities has been filed with the Commission and is effective. Copies of the prospectus supplement and accompanying prospectus relating to the offering of the Shares may be obtained when available by contacting Barrington Research Associates, Inc., 169 North Clark St., Suite 2950, Chicago, Illinois 60601, Telephone: (312) 634-6000 or by visiting EDGAR on the Commission’s website at www.sec.gov.
Item 9.01 Financial Statements and Exhibits.
On November 20, 2014, Greenberg Traurig, P.A. delivered to the Company an opinion with respect to the validity of the Common Stock (the "Opinion"). The Opinion and consent of Greenberg Traurig, P.A. are being filed herewith as Exhibit 5.1 and Exhibit 23.1, respectively, to this Current Report on Form 8-K, and are thereby automatically incorporated by reference into the Company’s Registration Statement on Form S-3 (No. 333-198414), in accordance with the requirements of Item 601(b) of Regulation S-K.
(d) Exhibits.
Exhibit No. Exhibit Description
1.1 Equity Distribution Agreement, dated November 20, 2014, between Castle Brands Inc. and Barrington Research Associates, Inc., as sales agent.
5.1 Opinion of Greenberg Traurig, P.A., regarding validity of the common stock to be issued.
23.1 Consent of Greenberg Traurig, P.A. (included in Exhibit 5.1).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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Castle Brands Inc.
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November 20, 2014
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By:
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/s/ Alfred J. Small
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Name: Alfred J. Small
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Title: SVP, CFO, Treas. & Secretary
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Exhibit Index
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Exhibit No.
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Description
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1.1
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Equity Distribution Agreement, dated November 20, 2014, between Castle Brands Inc. and Barrington Research Associates, Inc., as sales agent.
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5.1
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Opinion of Greenberg Traurig, P.A., regarding validity of the common stock to be issued.
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Exhibit 1.1
CASTLE BRANDS INC.
EQUITY DISTRIBUTION AGREEMENT
November 20, 2014
Barrington Research Associates, Inc.
169 North Clark St.
Suite 2950
Chicago, Illinois 60601
Ladies and Gentlemen:
Castle Brands Inc., a corporation organized under the laws of the State of Florida (the
Company), proposes, subject to the terms and conditions stated in this equity
distribution agreement (this Agreement), to issue and sell through or to Barrington
Research Associates, Inc., as the sales agent (the Sales Agent), shares of its authorized
but unissued common stock, par value $0.01 per share (the Common Stock), having an
aggregate gross sales price of up to $10.0 million (the Securities).
SECTION 1. DESCRIPTION OF SECURITIES.
The Company agrees that, from time to time during the term of this Agreement, on the basis of
the representations and warranties contained herein and on the terms and subject to the conditions
set forth herein, it may issue and sell through or to the Sales Agent, acting as agent or
principal, the Securities. Notwithstanding anything to the contrary contained herein, except as
set forth in a Placement Notice (as defined below) the parties hereto agree that compliance with
the limitations set forth in this Section 1 on the number of the Securities issued and sold under
this Agreement shall be the sole responsibility of the Company, and the Sales Agent shall have no
obligation in connection with such compliance. The issuance and sale of the Securities through or
to the Sales Agent will be effected pursuant to the Registration Statement (as defined below) filed
by the Company and declared effective by the Securities and Exchange Commission (the
Commission), although nothing in this Agreement shall be construed as requiring the
Company to use the Registration Statement to offer, sell or issue the Securities.
The Company has filed with the Commission, in accordance with the provisions of the Securities
Act of 1933, as amended (the 1933 Act), and the rules and regulations thereunder (the
1933 Act Regulations), a registration statement on Form S-3 (File No. 333-198414)
relating to the Securities and other equity securities of the Company (collectively, the Shelf
Securities) to be issued from time to time by the Company that incorporates by reference
documents that the Company has filed or will file (the Incorporated Documents) in
accordance with the provisions of the Securities Exchange Act of 1934, as amended (the 1934
Act), and the rules and regulations thereunder (the 1934 Act Regulations). Except
where the context otherwise requires, Registration Statement means the Registration
Statement on Form S-3 (File No. 333-198414) as of its most recent effective date, including any
information contained in a Prospectus (as defined below) subsequently filed with the Commission
pursuant to Rule 424(b) under the 1933 Act as part of the Registration Statement or deemed to be
part of the Registration Statement at the time of effectiveness pursuant to Rule 430A or 430B under
the 1933 Act. As used herein, Effective Date means any date of such Registration
Statements effectiveness for purposes of Section 11 of the 1933 Act, as such section applies to
the Company for the Securities pursuant to Rule 430B(f)(2) under the 1933 Act. Unless the context
otherwise requires, the Base Prospectus means the base prospectus covering the Shelf
Securities filed with the Commission on August 27, 2014, together with any amendments or
supplements thereto as of the most recent Effective Date of the Registration Statement and
Prospectus Supplement means the prospectus supplement relating to the Securities, in the
form filed with the Commission pursuant to Rule 424(b) under the 1933 Act on or before the second
Business Day (as defined below) after the date hereof, in the form furnished by the Company to the
Sales Agent in connection with the offering of the Securities. Except where the context otherwise
requires, Prospectus means the Base Prospectus, as supplemented by the Prospectus Supplement. As
used herein, free writing prospectus has the meaning set forth in Rule 405 under the 1933
Act. The Company will furnish, upon request, to the Sales Agent, for use by the Sales Agent,
copies of the Prospectus relating to the Securities. Any reference herein to the Registration
Statement, the Base Prospectus, the Prospectus Supplement, the Prospectus or any Permitted Free
Writing Prospectus (as defined below) shall be deemed to refer to and include all Incorporated
Documents, or any amendment or supplement thereto shall be deemed to refer to and include the
Incorporated Documents, and any reference herein to the terms amend, amendment or supplement
with respect to the Registration Statement, the Base Prospectus, the Prospectus Supplement or the
Prospectus shall be deemed to refer to and include the filing after the execution hereof of any
Incorporated Documents. Any reference herein to financial statements and schedules and other
information that is contained, included or stated in the Registration Statement, the Base
Prospectus, the Prospectus Supplement or the Prospectus (and all other references of like import)
shall be deemed to mean and include all such financial statements and schedules and other
information that is incorporated by reference in the Registration Statement, the Base Prospectus,
the Prospectus Supplement or the Prospectus, as the case may be.
SECTION 2. PLACEMENTS.
Each time that the Company wishes to issue and sell the Securities hereunder (each, a
Placement), it will notify the Sales Agent by email notice (or other method mutually
agreed to in writing by the parties) containing the parameters in accordance with which it desires
the Securities to be sold, which shall at a minimum include the number of Securities to be issued
(the Placement Securities) or the gross proceeds to be raised, the time period during
which sales are requested to be made, any limitation on the number of Securities that may be sold
in any one Trading Day (as defined below) and any minimum price below which sales may not be made
(a Placement Notice), a form of which is attached hereto as Exhibit A. The
Placement Notice shall originate from any of the individuals from the Company set forth on
Exhibit B, and shall be addressed to each of the individuals from the Sales Agent set forth
on Exhibit B; as such Exhibit B may be amended from time to time. If the Sales
Agent wishes to accept such proposed terms included in the Placement Notice (which it may decline
to do so for any reason in its sole discretion), or, following discussions with the Company wishes
to accept amended terms, the Sales Agent shall confirm such Placement Notice by email notice (or
other method mutually agreed to in writing by the parties) addressed to the person from whom such
Placement Notice was received. The amount of any discount, commission or other compensation to be
paid by the Company to the Sales Agent in connection with the sale of the Placement Securities
shall be calculated in accordance with the terms set forth in Exhibit C. If the Company
wishes to issue and sell the Placement Securities to the Sales Agent as principal, it will notify
the Sales Agent of the proposed terms of such Placement in the Placement Notice. In the event of a
conflict between the terms of this Agreement and the terms of a Placement Notice, the terms of the
Placement Notice will control.
The term Business Day means each Monday, Tuesday, Wednesday, Thursday or Friday that
is not a day on which banking institutions in New York are generally authorized or obligated by law
or executive order to close.
SECTION 3. SALE OF PLACEMENT SECURITIES BY THE SALES AGENT.
Subject to the provisions of Section 6(a), the Sales Agent, for the period specified in the
Placement Notice, will use its commercially reasonable efforts, consistent with its normal trading
and sales practices and applicable state and federal laws, rules and regulations and the rules of
the NYSE MKT or such other national securities exchange on which the Common Stock may be listed or
quoted after the date of this Agreement (the Exchange), to sell the Placement Securities
up to the amount specified, and otherwise in accordance with the terms of such Placement Notice.
The Sales Agent will provide written confirmation to the Company no later than the opening of the
Trading Day immediately following the Trading Day on which it has made sales of Placement
Securities hereunder setting forth the number of Placement Securities sold on such day, the
compensation payable by the Company to the Sales Agent pursuant to Section 2 with respect to such
sales, and the Net Proceeds (as defined below) payable to the Company, with an itemization of the
deductions made by the Sales Agent (as set forth in Section 6(b)) from the gross proceeds that it
receives from such sales. Subject to the terms of the Placement Notice (as amended, if
applicable), the Sales Agent may sell Placement Securities by any method permitted by law deemed to
be an at the market offering as defined in Rule 415 of the 1933 Act, including without limitation
sales made directly on the Exchange, on any other existing trading market for the Common Stock or
to or through a market maker. If specified in a Placement Notice (as amended, if applicable), the
Sales Agent may also sell Placement Securities by any other method permitted by law, including but
not limited to in privately negotiated transactions. For the purposes hereof, the term
Trading Day means any day on which shares of Common Stock are purchased and sold on the
Exchange.
SECTION 4. SUSPENSION OF SALES.
The Company or the Sales Agent may, upon notice to the other party in writing (including by
email correspondence to each of the individuals of the other party set forth on Exhibit B,
if receipt of such correspondence is actually acknowledged by any of the individuals to whom the
notice is sent, other than via auto-reply) or by telephone (confirmed immediately by verifiable
facsimile transmission or email correspondence to each of the individuals of the other party set
forth on Exhibit B), suspend any sale of Placement Securities; provided, however, that such
suspension shall not affect or impair either partys obligations with respect to any Placement
Securities sold hereunder prior to the receipt of such notice. Each of the parties agrees that no
such notice under this Section 4 shall be effective against the other unless it is made to one of
the individuals named on Exhibit B hereto (confirmed as soon as reasonably practicable by
verifiable facsimile transmission or email correspondence to each of the individuals of the other
party set forth on Exhibit B), as such exhibit may be amended from time to time. The
Company may, upon notice to the Sales Agent in writing, suspend sales of Securities for the time
specified in such notice.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Sales Agent as of the date hereof and as of each
Representation Date (as defined herein), as of the time of each sale of any Securities pursuant to
this Agreement (the Time of Sale) and on each Settlement Date (as defined below), and
agrees with the Sales Agent, as follows:
(a) The Company meets the requirements for the use of, and has prepared and filed with the
Commission the Registration Statement, including a prospectus relating to the Shelf Securities,
including the Securities, to be issued from time to time by the Company.
(b) The Registration Statement and each amendment thereto has become effective under the 1933
Act; no stop order suspending the effectiveness of the Registration Statement is in effect; and no
proceedings for such purpose are pending before or threatened by the Commission. The Company was
not an ineligible issuer (as defined in Rule 405 under the 1933 Act) as of the eligibility
determination date for purposes of Rules 164 and 433 under the 1933 Act with respect to any sale of
the Securities contemplated hereby.
(c) (i) At each Effective Date of the Registration Statement and each amendment thereto, as of
each Time of Sale and at all times during which a Prospectus is required to be delivered by the
Sales Agent under the 1933 Act (whether physically or through compliance with Rule 172 under the
1933 Act or any similar rule) in connection with any sale of Securities (the Delivery
Period), the Registration Statement complied and will comply in all material respects with the
applicable provisions of the 1933 Act and the 1933 Act Regulations, (ii) the Prospectus will
comply, as of the date that such document is filed with the Commission, as of each Time of Sale, at
each Settlement Date and at all times during the Delivery Period, in all material respects with the
1933 Act and the 1933 Act Regulations; and (iii) the Incorporated Documents, when they were or will
be filed with the Commission, conformed or will conform in all material respects with the
requirements of the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations,
as the case may be.
(d) (i) As of the date hereof, at each Effective Date of the Registration Statement and each
amendment thereto, the Registration Statement did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; (ii) as of each Time of Sale, the Prospectus (as amended and
supplemented at such Time of Sale), together with any Permitted Free Writing Prospectus (as defined
below) then in use (collectively, the General Disclosure Package), did not and will not
contain any untrue statement of a material fact or omit 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; (iii) as of its date, the Prospectus did not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading; and (iv) at any
Settlement Date, the Prospectus (as amended and supplemented at such Settlement Date) did not and
will not contain an untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in, in the light of the circumstances under which they
were made, not misleading; provided, however, that this representation and warranty shall not apply
to any statement or omission made in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of the Sales Agent expressly for use in the Prospectus or in
the General Disclosure Package. The parties hereto agree that the information provided in writing
by or on behalf of the Sales Agent expressly for use in the Prospectus or in the General Disclosure
Package consists solely of the material referred to in Exhibit G hereto, as updated from
time to time.
(e) Other than the Prospectus Supplement and any document not constituting a prospectus
pursuant to Section 2(a)(10)(a) of the 1933 Act, the Company (including its agents and
representatives, other than the Sales Agent) has not prepared, made, used, authorized, approved or
referred to and will not prepare, make, use, authorize, approve or refer to any written
communication (as defined in Rule 405 under the 1933 Act) that constitutes an offer to sell or a
solicitation of an offer to buy any Securities required to be filed with the Commission without the
Sales Agents consent, other than any Permitted Free Writing Prospectus (each such communication by
the Company or its agents and representatives being referred to herein as an Issuer Free
Writing Prospectus).
(f) The Company has complied and will comply with the requirements of Rule 433 under the 1933
Act with respect to each Issuer Free Writing Prospectus including, without limitation, all
prospectus delivery, filing, record retention and legending requirements applicable to any such
Issuer Free Writing Prospectus. Each Issuer Free Writing Prospectus, as of its issue date and at
all subsequent times through the completion of the offering and sale of the Securities or until any
earlier date that the Company notified or notifies the Sales Agent, did not, does not and will not
include any material information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement, including any Incorporated Document, or any prospectus
supplement relating to this offering deemed to be part thereof that has not been superseded or
modified, the General Disclosure Package or the Prospectus; provided, however, that this
representation and warranty shall not apply to any statement or omission in any Issuer Free Writing
Prospectus made in reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of the Sales Agent expressly for use in such Issuer Free Writing
Prospectus. The parties hereto agree that the information provided in writing by the Sales Agent
expressly for use in the Issuer Free Writing Prospectus consists solely of the material referred to
in Exhibit G hereto, as updated from time to time.
(g) This Agreement has been duly authorized, executed and delivered by the Company. The
Company has full right, power and authority to execute and deliver this Agreement and to perform
its obligations hereunder; and all action required to be taken for the due and proper
authorization, execution and delivery by it of this Agreement and the consummation by it of the
transactions contemplated hereby has been duly and validly taken.
(h) The outstanding shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable; the Securities to be issued and sold by the
Company have been duly authorized and, when issued and delivered to and paid for pursuant to this
Agreement, will be validly issued, fully paid and nonassessable. The issuance of the Securities
will not be subject to any preemptive, rights of refusal or other similar rights of any
securityholder of the Company. The Securities conform to all statements relating thereto contained
in the Registration Statement, the General Disclosure Package and the Prospectus, and such
description conforms to the rights set forth in the instruments defining the same. No holder of
the Securities will be subject to personal liability by reason of being such a holder.
(i) Except as otherwise stated therein, since the respective dates as of which information is
given in the Registration Statement, the General Disclosure Package or the Prospectus, (i) there
has been no material adverse change in the condition, financial or otherwise, or in the earnings,
business affairs, properties or business prospects of the Company and its subsidiaries listed on
Exhibit 21.1 to the Companys Annual Report on Form 10-K for its most recently completed fiscal
year, including the amendment thereto on the Companys Form 10-K/A (the 10-K and, such
subsidiaries, its Subsidiaries), considered as one enterprise, whether or not arising in
the ordinary course of business (a Material Adverse Effect), (ii) there have been no
transactions entered into by the Company or any of its Subsidiaries, other than those in the
ordinary course of business, which are material with respect to the Company and its Subsidiaries
considered as one enterprise, and (iii) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(j) The Company and its Subsidiaries do not own any real property. All of the leases and
subleases material to the business of the Company and its Subsidiaries, considered as one
enterprise, and under which the Company or any of its Subsidiaries hold interests in properties
described in the Registration Statement, the General Disclosure Package or the Prospectus, are in
full force and effect, and neither the Company nor any such Subsidiary has any notice of any
material claim of any sort that has been asserted by anyone adverse to the rights of the Company or
any such Subsidiary under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or any such Subsidiary to the continued possession of the
leased or subleased premises under any such lease or sublease.
(k) The Company and its Subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights, know how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks, trade names or other intellectual property necessary to
carry on the business now operated by them (collectively, Intellectual Property), and
neither the Company nor any of its Subsidiaries has received any notice or is otherwise aware of
any infringement of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its Subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect.
(l) [Reserved.]
(m) There is no franchise, contract or other document of a character required to be described
in the Registration Statement, the General Disclosure Package or Prospectus, or to be filed as an
exhibit to the Registration Statement, which is not described or filed as required; and the
statements in the Prospectus under the heading Description of Capital Stock and in the 10-K under
the headings Business-Production and supply, Business-Distribution network, Business-Strategic
brand-partner relationships, Business-Intellectual property, Business-Government regulation,
Managements Discussion and Analysis of Financial Condition and Results of Operations-Recent
Events and Managements Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and capital resources-Existing Financing, insofar as such statements
summarize legal matters, agreements, documents, proceedings or regulations discussed therein, are
accurate and fair summaries of such legal matters, agreements, documents, proceedings or
regulations in all material respects.
(n) Each of the Company and its Subsidiaries has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction in which it is
chartered or organized with full corporate power and authority to own or lease, as the case may be,
and to operate its properties and conduct its business as described in the General Disclosure
Package and the Prospectus, and is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction which requires such qualification.
(o) All the outstanding shares of capital stock of each Subsidiary have been duly and validly
authorized and issued and are fully paid and nonassessable, and, except as otherwise set forth in
the General Disclosure Package and the Prospectus, all outstanding shares of capital stock of the
Subsidiaries are owned by the Company either directly or through wholly-owned Subsidiaries free and
clear of any perfected security interest or any other security interests, claims, liens or
encumbrances.
(p) The Company is not and, after giving effect to the offering and sale of the Securities and
the application of the proceeds thereof as described in the General Disclosure Package and the
Prospectus, will not be an investment company as defined in the Investment Company Act of 1940,
as amended (the 1940 Act).
(q) No consent, approval, authorization, filing with or order of any court or governmental
agency or body is required in connection with the transactions contemplated herein and in the
General Disclosure Package and the Prospectus, except such as have been obtained under the 1933
Act, the 1933 Act Regulations, the rules of the Exchange and such as may be required under blue sky
laws of any jurisdiction.
(r) Neither the issuance and sale of the Securities nor the consummation of any other of the
transactions herein contemplated nor the fulfillment of the terms hereof will conflict with, result
in a breach or violation of, or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its Subsidiaries pursuant to, (x) the charter or by-laws of the
Company or any of its Subsidiaries, (y) the terms of any indenture, contract, lease, mortgage, deed
of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or
instrument to which the Company or any of its Subsidiaries is a party or bound or to which its or
their property is subject, or (z) any statute, law, rule, regulation, judgment, order or decree
applicable to the Company or any of its Subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having jurisdiction over the Company or
any of its Subsidiaries or any of its or their properties.
(s) There are no persons with registration rights or other similar rights to have any
securities registered for sale pursuant to the Registration Statement or otherwise registered for
sale or sold by the Company under the 1933 Act pursuant to this Agreement that have not been
complied with.
(t) The consolidated historical financial statements and schedules of the Company and its
consolidated subsidiaries included in the Registration Statement, the General Disclosure Package
and the Prospectus present fairly in all material respects the financial condition, results of
operations and cash flows of the Company as of the dates and for the periods indicated, comply as
to form with the applicable accounting requirements of the 1933 Act and have been prepared in
conformity with generally accepted accounting principles applied on a consistent basis throughout
the periods involved (except as otherwise noted therein). The selected financial data and the
summary financial information included in the Registration Statement, the General Disclosure
Package and the Prospectus present fairly in all material respects the information shown therein
and have been compiled on a basis consistent with that of the audited financial statements included
therein.
(u) No action, suit or proceeding by or before any court or governmental agency, authority or
body or any arbitrator involving the Company or any of its Subsidiaries or its or their property is
pending or, to the knowledge of the Company, threatened that could reasonably be expected to result
in a Material Adverse Effect, or which might materially and adversely affect their respective
properties or assets or the consummation of the transactions contemplated in this Agreement or the
performance by the Company of its obligations hereunder, except as set forth in or contemplated in
the General Disclosure Package or the Prospectus (exclusive of any supplement thereto); and the
aggregate of all pending legal or governmental proceedings to which the Company or any of its
Subsidiaries is a party or of which any of their respective properties or assets is the subject
which are not described in the Registration Statement, the General Disclosure Package and the
Prospectus, including ordinary routine litigation incidental to the business, could not reasonably
be expected to result in a Material Adverse Effect.
(v) Neither the Company nor any Subsidiary is in violation or default of (i) any provision of
its charter or by-laws, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to
which it is a party or bound or to which its property is subject, or (iii) any statute, law, rule,
regulation, judgment, order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the Company or such
Subsidiary or any of its properties, as applicable, except for such violation or default that could
not, individually or in the aggregate, reasonably be expected to result in a Material Adverse
Effect.
(w) EisnerAmper LLP, who have certified certain financial statements of the Company and its
consolidated subsidiaries and delivered their report with respect to the audited consolidated
financial statements and schedules included in the Registration Statement, the General Disclosure
Package and the Prospectus, are independent public accountants with respect to the Company within
the meaning of the 1933 Act and the 1933 Act Regulations.
(x) There are no transfer taxes or other similar fees or charges under Federal law or the laws
of any state, or any political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance by the Company or sale by the Company of
the Securities.
(y) The Company has filed all tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file could not reasonably be
expected to result in a Material Adverse Effect, except as set forth in or contemplated in the
General Disclosure Package and the Prospectus (exclusive of any supplement thereto)) and has paid
all taxes required to be paid by it and any other assessment, fine or penalty levied against it, to
the extent that any of the foregoing is due and payable, except for any such assessment, fine or
penalty that is currently being contested in good faith or as could not reasonably be expected to
result in a Material Adverse Effect, except as set forth in or contemplated in the General
Disclosure Package and the Prospectus (exclusive of any supplement thereto).
(z) No labor problem or dispute with the employees of the Company or any of its Subsidiaries
exists or is threatened or 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, contractors or
customers, that could reasonably be expected to result in a Material Adverse Effect, except as set
forth in or contemplated in the General Disclosure Package and the Prospectus (exclusive of any
supplement thereto).
(aa) The Company and each of its Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are reasonably prudent and
customary in the businesses in which they are engaged; all policies of insurance and fidelity bonds
insuring the Company or any of its Subsidiaries or their respective businesses, assets, employees,
officers and directors are in full force and effect; the Company and its subsidiaries are in
compliance with the terms of such policies and instruments in all material respects; and there are
no claims by the Company or any of its Subsidiaries under any such policy or instruments as to
which any insurance company is denying liability or defending under a reservation of rights clause
except as could not reasonably be expected to result in a Material Adverse Effect; neither the
Company nor any such Subsidiary has been refused any insurance coverage sought or applied for; and
neither the Company nor any such Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a cost that could
not be reasonably expected to result in a Material Adverse Effect, except as set forth in or
contemplated in the General Disclosure Package and the Prospectus (exclusive of any supplement
thereto).
(bb) No Subsidiary is currently prohibited, directly or indirectly, from paying any dividends
to the Company, from making any other distribution on such Subsidiarys capital stock, from
repaying to the Company any loans or advances to such Subsidiary from the Company or from
transferring any of such Subsidiarys property or assets to the Company or any other Subsidiary,
except as described in or contemplated by the General Disclosure Package and the Prospectus
(exclusive of any supplement thereto).
(cc) The Company, its Subsidiaries and each officer or director of the Company or such
Subsidiaries possess all registrations, licenses, certificates, permits and other authorizations
issued by all applicable authorities necessary to conduct their respective businesses, and are in
compliance with all applicable laws, rules and regulations requiring any such registrations,
licenses, certificates, permits and other authorizations, including those rules and regulations
listed under the headings Business-Distribution network and Business-Government regulation in
the 10-K, except where non-possession or non-compliance could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect; and neither the Company
nor any such Subsidiaries or, to the knowledge of the Company, any officer or director of the
Company or such Subsidiaries, has received any notice of proceedings relating to the revocation or
modification of any such registrations, licenses, certificates, permits or authorizations, which,
individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding,
could reasonably be expected to result in a Material Adverse Effect.
(dd) The Company and each of its Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with managements general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to assets is permitted
only in accordance with managements 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 reference in the Registration
Statement, the General Disclosure Package and the Prospectus fairly presents the information called
for in all material respects and is prepared in accordance with the Commissions rules, regulations
and guidelines applicable thereto.
(ee) The Company and its Subsidiaries internal controls over financial reporting are
effective and the Company and its Subsidiaries are not aware of any material weakness in their
internal controls over financial reporting. The Company and each of its Subsidiaries maintain
disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act
Regulations); such disclosure controls and procedures are effective.
(ff) The Company has not taken, directly or indirectly, any action designed to or that would
constitute or that might reasonably be expected to cause or result in, under the Exchange Act or
otherwise, stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(gg) The Company and its Subsidiaries are (i) in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants
(Environmental Laws), (ii) have received and are in compliance with all permits, licenses
or other approvals required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) have not received notice of any actual or potential liability under any
environmental law, except where such non-compliance with Environmental Laws, failure to receive
required permits, licenses or other approvals, or liability could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect, except as set forth in or
contemplated in the General Disclosure Package and the Prospectus (exclusive of any supplement
thereto). Except as set forth in the General Disclosure Package and the Prospectus, neither the
Company nor any of the Subsidiaries has been named as a potentially responsible party under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.
(hh) None of the following events has occurred or exists: (i) a failure to fulfill the
obligations, if any, under the minimum funding standards of Section 302 of the United States
Employee Retirement Income Security Act of 1974, as amended (ERISA), and the regulations
and published interpretations thereunder with respect to a Plan, determined without regard to any
waiver of such obligations or extension of any amortization period; (ii) an audit or investigation
by the Internal Revenue Service, the U.S. Department of Labor, the Pension Benefit Guaranty
Corporation or any other federal or state governmental agency or any foreign regulatory agency with
respect to the employment or compensation of employees by any of the Company or any of its
subsidiaries that could reasonably be expected to result in a Material Adverse Effect; or (iii) any
breach of any contractual obligation, or any violation of law or applicable qualification
standards, with respect to the employment or compensation of employees by the Company or any of its
subsidiaries that could reasonably be expected to result in a Material Adverse Effect. None of the
following events has occurred or is reasonably likely to occur: (i) a material increase in the
aggregate amount of contributions required to be made to all Plans in the current fiscal year of
the Company and its Subsidiaries compared to the amount of such contributions made in the most
recently completed fiscal year of the Company and its Subsidiaries; (ii) a material increase in the
accumulated post-retirement benefit obligations (within the meaning of Statement of Financial
Accounting Standards 106) of the Company and its Subsidiaries compared to the amount of such
obligations in the most recently completed fiscal year of the Company and its Subsidiaries; (iii)
any event or condition giving rise to a liability under Title IV of ERISA that could reasonably be
expected to result in a Material Adverse Effect; or (iv) the filing of a claim by one or more
employees or former employees of the Company or any of its Subsidiaries related to their employment
that could reasonably be expected to result in a Material Adverse Effect. For purposes of this
paragraph, the term Plan means a plan (within the meaning of Section 3(3) of ERISA)
subject to Title IV of ERISA with respect to which the Company or any of its Subsidiaries may have
any liability.
(ii) There is and has been no failure on the part of the Company or any of the Companys
directors or officers, in their capacities as such, to comply with any provision of the Sarbanes
Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, including
Section 402 related to loans and Sections 302 and 906 related to certifications.
(jj) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any
director, officer, agent, employee or affiliate 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, its subsidiaries 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.
(kk) The operations of the Company and its subsidiaries are and have been conducted at all
times in compliance with applicable financial recordkeeping and reporting requirements and the
money laundering statutes and the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any governmental agency
(collectively, the Money Laundering Laws) and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator involving the Company or any
of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of
the Company, threatened.
(ll) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any
director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is
currently subject to any 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, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any sanctions administered by OFAC.
(mm) The interactive data in the eXtensible Business Reporting Language incorporated by
reference in the Registration Statement, the General Disclosure Package and the Prospectus fairly
presents the information called for in all material respects and has been prepared in accordance
with the Commissions rules, regulations and guidelines applicable thereto.
(nn) Except as disclosed in the Registration Statement, the General Disclosure Package and the
Prospectus, the Company (i) does not have any material lending or other relationship with any bank
or lending affiliate of the Sales Agent and (ii) does not intend to use any of the proceeds from
the sale of the Securities to repay any outstanding debt owed to any affiliate of the Sales Agent.
(oo) Any statistical and market-related data included in the Registration Statement, the
General Disclosure Package or the Prospectus are based on or derived from sources that the Company
believes, after reasonable inquiry, to be reliable and accurate and, to the extent required, the
Company has obtained the consent to the use of such data from such sources.
(pp) The Company shall have filed an application for listing of the Securities on the Exchange
prior to the date of this Agreement.
(qq) Except for this Agreement, the Company is not party to any other equity distribution or
sales agency agreements or other similar arrangements with any other agent or any other
representative in respect of at the market offerings of the Securities in accordance with Rule
415(a)(4) of the 1933 Act.
Any certificate signed by or on behalf of the Company and delivered to the Sales Agent or to
counsel for the Sales Agent shall be deemed to be a representation and warranty by the Company to
the Sales Agent as to the matters covered thereby.
SECTION 6. SALE AND DELIVERY TO THE SALES AGENT; SETTLEMENT.
(a) Sale of Placement Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, unless the sale of the
Placement Securities described therein has been declined, suspended, or otherwise terminated in
accordance with the terms of this Agreement, the Sales Agent, for the period specified in the
Placement Notice, will use its commercially reasonable efforts, consistent with its normal trading
and sales practices and applicable state and federal laws, rules and regulations and the rules of
the Exchange, to sell such Placement Securities up to the amount specified, and otherwise in
accordance with the terms of such Placement Notice. The Company acknowledges and agrees that (i)
no assurance can be given that the Sales Agent will be successful in selling Placement Securities,
(ii) the Sales Agent will incur no liability or obligation to the Company or any other person or
entity if it does not sell Placement Securities for any reason other than a failure by the Sales
Agent to use its commercially reasonable efforts, consistent with its normal trading and sales
practices and applicable state and federal laws, rules and regulations and the rules of the
Exchange, to sell such Placement Securities as required under this Section 6, and (iii) the Sales
Agent shall be under no obligation to purchase Securities on a principal basis pursuant to this
Agreement, except as otherwise agreed by the Sales Agent in the Placement Notice, and then only to
the extent permitted by law and the rules and regulations of the Exchange. The Company also
acknowledges and agrees that the Sales Agent shall have no obligation to offer or sell any
Securities in the event such an offer or sale of the Securities as agent on behalf of the Company
may, in the judgment of the Sales Agent, constitute the sale of a block under Rule 10b-18(a)(5)
under the 1934 Act or a distribution within the meaning of Rule 100 of Regulation M.
The Company acknowledges and agrees that the Sales Agent has informed the Company that the
Sales Agent may, to the extent permitted under the 1933 Act and the 1934 Act (including, without
limitation, Regulation M promulgated thereunder), purchase and sell shares of Common Stock for its
own account while this Agreement is in effect, and shall be under no obligation to purchase
Securities on a principal basis pursuant to this Agreement, except as otherwise agreed by the Sales
Agent in the Placement Notice; provided, that no such purchase or sales shall take place while a
Placement Notice is in effect (except (i) as agreed by the Company and the Sales Agent in the
Placement Notice or (ii) to the extent the Sales Agent may engage in sales of Placement Securities
purchased or deemed purchased from the Company as a riskless principal or in a similar capacity);
and, provided, further, that the Sales Agent acknowledges and agrees that, except as expressly set
forth in a Placement Notice, any such transactions are not being, and shall not be deemed to have
been, undertaken at the request or direction of, or for the account of, the Company, and that the
Company has and shall have no control over any decision by the Sales Agent to enter into any such
transactions.
(b) Settlement of Placement Securities. Unless otherwise specified in the applicable
Placement Notice, settlement for sales of Placement Securities will occur on the third (3rd)
Trading Day (or such earlier day as is industry practice for regular-way trading) following the
date on which such sales are made (each, a Settlement Date). The amount of proceeds to
be delivered to the Company on a Settlement Date against receipt of the Placement Securities sold
(the Net Proceeds) will be equal to the aggregate sales price received by the Sales Agent
at which such Placement Securities were sold, after deduction for the Sales Agents commission,
discount or other compensation for such sales payable by the Company pursuant to Section 2 hereof
and any transaction fees imposed by any governmental or self-regulatory organization in respect of
such sales.
(c) Delivery of Placement Securities. On or before each Settlement Date, concurrently
with the receipt by the Company of the Net Proceeds due to the Company in respect of such
Settlement Date, the Company will, or will cause its transfer agent to, electronically transfer the
Placement Securities being sold by crediting the Sales Agents or its designees account (provided
the Sales Agent shall have given the Company written notice of such designee prior to the
Settlement Date) at The Depository Trust Company through its Deposit and Withdrawal at Custodian
System or by such other means of delivery as may be mutually agreed upon by the parties hereto,
which in all cases shall be freely tradable, transferable, registered shares in good deliverable
form. On each Settlement Date, the Sales Agent will deliver the related Net Proceeds in same day
funds to an account designated by the Company on, or prior to, the Settlement Date. The Company
agrees that if the Company defaults in its obligation to deliver Placement Securities on a
Settlement Date, in addition to and in no way limiting the rights and obligations set forth in
Section 10(a), the Company will (i) hold the Sales Agent harmless against any loss, claim, damage
or expense (including reasonable documented legal fees and expenses), as incurred, arising out of
or in connection with such default by the Company and (ii) pay to the Sales Agent any commission,
discount or other compensation to which the Sales Agent would otherwise have been entitled absent
such default.
(d) Denominations; Registration. If requested by the Sales Agent at least two (2)
Business Days prior to the Settlement Date, then in lieu of electronic transfer, certificates for
the Securities shall be in such denominations and registered in such names as the Sales Agent shall
have specified in such request. The certificates for the Securities will be made available for
examination and packaging by the Sales Agent in The City of New York not later than noon (New York
time) on the Business Day prior to the Settlement Date.
(e) Limitations on Offering Size. The Company shall not cause or request the offer or
sale of any Securities if, after giving effect to the sale of such Securities, the aggregate
Securities sold pursuant to this Agreement would exceed the lesser of (i) the amount available for
offer and sale under the currently effective Registration Statement and (ii) the amount authorized
from time to time to be issued and sold under this Agreement by the Companys board of directors
and notified to the Sales Agent in writing (such lesser amount, the Maximum Amount). The
Company shall not cause or request the offer or sale of any Securities at a price lower than the
minimum price authorized from time to time by the Companys board of directors and notified to the
Sales Agent in writing, by a Placement Notice or otherwise. Further, under no circumstances shall
the aggregate offering amount of Securities sold pursuant to this Agreement exceed the Maximum
Amount.
SECTION 7. COVENANTS OF THE COMPANY.
The Company covenants with the Sales Agent as follows:
(a) Registration Statement Amendment. After the date of this Agreement and during the
Delivery Period, (i) the Company will notify the Sales Agent promptly of the time when any
subsequent amendment to the Registration Statement, other than documents incorporated by reference,
has been filed with the Commission and/or has become effective or any subsequent supplement to the
Prospectus has been filed and of any comment letter from the Commission or any request by the
Commission for any amendment or supplement to the Registration Statement or Prospectus or for
additional information; (ii) the Company will prepare and file with the Commission, promptly upon
the Sales Agents request, any amendments or supplements to the Registration Statement or
Prospectus that, in the Sales Agents reasonable opinion, may be necessary or advisable in
connection with the distribution of the Securities by the Sales Agent (provided, however, that the
failure of the Sales Agent to make such request shall not relieve the Company of any obligation or
liability hereunder, or affect the Sales Agents right to rely on the representations and
warranties made by the Company in this Agreement; (iii) the Company will not file any amendment or
supplement to the Registration Statement or Prospectus, other than documents incorporated by
reference, relating to the Securities unless a copy thereof has been submitted to the Sales Agent
and counsel for the Sales Agent within a reasonable period of time before the filing and the Sales
Agent has not reasonably objected thereto (provided, however, that (A) the failure of the Sales
Agent to make such objection shall not relieve the Company of any obligation or liability
hereunder, or affect the Sales Agents right to rely on the representations and warranties made by
the Company in this Agreement and (B) the Company shall have no obligation to provide the Sales
Agent any advance copy of such filing or to provide the Sales Agent an opportunity to object to
such filing if the filing does not name the Sales Agent or does not relate to the transaction
contemplated by this Agreement) and the Company will furnish to the Sales Agent at the time of
filing thereof a copy of any document that upon filing is deemed to be incorporated by reference
into the Registration Statement or Prospectus, except for those documents available via the
Commissions Electronic Data Gathering Analysis and Retrieval system (EDGAR); and (iv)
the Company will cause each amendment or supplement to the Prospectus, other than documents
incorporated by reference, to be filed with the Commission as required pursuant to the applicable
paragraph of Rule 424(b) of the 1933 Act (without reliance on Rule 424(b)(8) of the 1933 Act).
(b) Notice of Commission Stop Orders. The Company will advise the Sales Agent,
promptly after it receives notice, or obtains knowledge thereof, of the issuance or threatened
issuance by the Commission of any stop order suspending the effectiveness of the Registration
Statement or of any other order preventing or suspending the use of the Prospectus or any Issuer
Free Writing Prospectus, or of the suspension of the qualification of the Securities for offering
or sale in any jurisdiction or of the loss or suspension of any exemption from any such
qualification, or of the initiation or threatening of any proceedings for any of such purposes, or
of any examination pursuant to Section 8(e) of the 1933 Act concerning the Registration Statement
or if the Company becomes the subject of a proceeding under Section 8A of the 1933 Act in
connection with the offering of the Securities. The Company will use its commercially reasonable
efforts to prevent the issuance of any stop order, the suspension of any qualification of the
Securities for offering or sale and any loss or suspension of any exemption from any such
qualification, and if any such stop order is issued or any such suspension or loss occurs, to
obtain the lifting thereof at the earliest possible moment.
(c) Delivery of Registration Statement and Prospectus. The Company will furnish to
the Sales Agent and counsel to the Sales Agent (at the expense of the Company) copies of the
Registration Statement, the Prospectus (including all documents incorporated by reference therein)
and all amendments and supplements to the Registration Statement or Prospectus, and any Issuer Free
Writing Prospectuses, that are filed with the Commission during the term of this Agreement and the
Delivery Period (including all documents filed with the Commission during such period that are
deemed to be incorporated by reference therein), in each case as soon as reasonably practicable and
in such quantities and at such locations as the Sales Agent may from time to time reasonably
request. Such delivery shall be satisfied to the extent such documents have been publicly filed
with the Commission and available via EDGAR.
(d) Continued Compliance with Securities Laws. If at any time during the Delivery
Period, any event shall occur or condition shall exist as a result of which it is necessary to
amend the Registration Statement together with the Prospectus in order that the Prospectus and the
General Disclosure Package will not include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it shall be necessary at any such
time to amend the Registration Statement together with the Prospectus in order to comply with the
requirements of the 1933 Act, the Company will (i) subject to Section 7(a), promptly prepare and
file with the Commission such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement, the Prospectus and the General Disclosure
Package comply with such requirements and (ii) promptly (and in any event within 24 hours) notify
the Sales Agent to suspend the offering of Placement Securities until such amendment or supplement
is filed with the Commission. The Company shall furnish to the Sales Agent such number of copies
of such amendment or supplement as the Sales Agent may reasonably request. If at any time
following the issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or
development as a result of which such Issuer Free Writing Prospectus conflicted, conflicts or would
conflict with the information contained in the Registration Statement, the Prospectus or the
General Disclosure Package or included, includes or would include an untrue statement of a material
fact or together with the Prospectus and the General Disclosure Package omitted, omits or would
omit to state a material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, the Company will (i) subject to
Section 7(a), promptly amend or supplement such Issuer Free Writing Prospectus to eliminate or
correct such conflict, untrue statement or omission and (ii) promptly notify the Sales Agent to
suspend the offering of Placement Securities until such conflict, untrue statement or omission is
eliminated or corrected.
(e) Blue Sky and Other Qualifications. The Company will use its commercially
reasonable efforts, in cooperation with the Sales Agent, to qualify the Securities for offering and
sale, or to obtain an exemption for the Securities to be offered and sold, under the applicable
securities laws of such states and other jurisdictions (domestic or foreign) as the Sales Agent may
designate and to maintain such qualifications and exemptions in effect for so long as required for
the distribution of the Securities (but in no event for less than one year from the date of this
Agreement); provided, however, that the Company shall not be obligated to file any general consent
to service of process or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each jurisdiction in
which the Securities have been so qualified or exempt, the Company will file such statements and
reports as may be required by the laws of such jurisdiction to continue such qualification or
exemption, as the case may be, in effect, for so long as required for the distribution of the
Securities (but in no event for less than one year from the date of this Agreement).
(f) Rule 158. The Company will timely file such reports pursuant to the 1934 Act as
are necessary in order to make generally available to its securityholders as soon as practicable an
earnings statement for the purposes of, and to provide to the Sales Agent the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(g) Use of Proceeds. The Company will use the net proceeds received by it from the
sale of the Securities in the manner specified in the Prospectus under Use of Proceeds.
(h) Listing. The Company will use its commercially reasonable efforts to effect and
maintain the listing of the Common Stock on the Exchange.
(i) Filings with the Exchange. The Company will timely file with the Exchange all
material documents and notices required by the Exchange of companies that have securities traded on
the Exchange.
(j) 1933 Act and 1934 Act. The Company will comply with all requirements imposed upon
it by the 1933 Act and the 1934 Act as from time to time in force, so far as necessary to permit
the continuance of sales of, or dealings in, the Securities as contemplated by the provisions
hereof and the Prospectus. Without limiting the generality of the foregoing, the Company, during
the Delivery Period, will file all documents required to be filed with the Commission pursuant to
the 1934 Act within the time periods required by the 1934 Act.
(k) Notice of Other Sales. During the pendency of any Placement Notice given
hereunder, the Company shall provide the Sales Agent notice as promptly as reasonably possible
before it offers to sell, contracts to sell, sells, grants any option to sell or otherwise disposes
of any shares of Common Stock (other than Placement Securities offered pursuant to the provisions
of this Agreement) or securities convertible into or exchangeable for Common Stock, warrants or any
rights to purchase or acquire Common Stock; provided, that such notice shall not be required in
connection with the (i) issuance, grant or sale of Common Stock, options to purchase Common Stock,
or Common Stock issuable upon the exercise of options or other equity awards pursuant to any stock
option, stock bonus or other stock or compensatory plan or arrangement described in the Prospectus
(ii) issuance of securities in connection with an acquisition, merger or sale or purchase of assets
described in the Prospectus, (iii) issuance or sale of Common Stock upon conversion of securities
or the exercise of warrants, options or other rights in effect or outstanding, and disclosed in
filings by the Company available on EDGAR or otherwise in writing to the Sales Agent, and (iv) the
issuance or sale of Common Stock pursuant to any dividend reinvestment and stock purchase plan that
the Company has in effect or may adopt from time to time, provided that the implementation of such
new plan is disclosed to the Sales Agent in advance. If the Company notifies the Sales Agent under
this Section 7(k) of a proposed sale of shares of Common Stock or Common Stock equivalents, the
Sales Agent may suspend any offers and sales of Securities under this Agreement for a period of
time deemed appropriate by the Sales Agent.
(l) Change of Circumstances. The Company will advise the Sales Agent promptly after
it shall have received notice or obtained knowledge thereof, of any information or fact that would
alter or affect in any material respect any opinion, certificate, letter or other document provided
to the Sales Agent pursuant to this Agreement.
(m) Due Diligence Cooperation. During the term of this Agreement, the Company will
cooperate with any reasonable due diligence review conducted by the Sales Agent or its agents in
connection with the transactions contemplated hereby, including, without limitation, providing
information and making available documents and senior officers, during regular business hours and
at the Companys principal offices, as the Sales Agent may reasonably request.
(n) Representation Dates; Officers Certificate. On the date of execution of this
Agreement and (i) upon recommencement of the offering of the Securities under this Agreement
following the temporary suspension of sales hereunder; (ii) each time the Company files a
Prospectus relating to the Securities or amends or supplements the Registration Statement or the
Prospectus relating to the Securities by means of a post-effective amendment, sticker, or
supplement, other than (A) by means of incorporation of documents by reference into the
Registration Statement or the Prospectus relating to the Securities, which shall be subject to the
provisions of clauses (iii) through (v) below, or (B) a prospectus supplement filed pursuant to
Rule 424(b) under the 1933 Act relating solely to an offering of securities (including, without
limitation, Common Stock) other than the Securities pursuant to this Agreement; (iii) each time the
Company files an Annual Report on Form 10-K under the 1934 Act; (iv) each time the Company files
its Quarterly Reports on Form 10-Q under the 1934 Act; (v) each time the Company files a Current
Report on Form 8-K containing amended financial information (other than information furnished
pursuant to Items 2.02 or 7.01 of Form 8-K) under the 1934 Act; or (vi) the Securities are
delivered to the Sales Agent as principal at the Time of Sale pursuant to the applicable Placement
Notice (such recommencement date and each filing or other date referred to in clauses (i) through
(vi) shall be a Representation Date); the Company shall furnish the Sales Agent with a
certificate, substantially in the form attached hereto as Exhibit F; within three (3)
Trading Days of any Representation Date provided, however, that if the Company has previously
furnished to the Sales Agent such certificate substantially in the form previously agreed between
the parties, the Company may, in respect of any future Representation Date, furnish the Sales Agent
with bring-down certificate (a Bring-Down Certificate) in lieu of such certificate to the
effect that the Sales Agent may rely on the prior certificate delivered pursuant to this Section
7(n) to the same extent as if it were dated the date of such Bring-Down Certificate. The
requirement to provide deliverables under Sections 7(n) through 7(q) shall be automatically waived
for any Representation Date occurring at a time at which no Placement Notice is pending, which
waiver shall continue until the date the Company delivers a Placement Notice hereunder (which shall
be considered a Representation Date). Any existing Placement Notice shall be deemed to be
suspended and no new Placement Notice shall be delivered until the deliverables in Sections 7(n)
through 7(q), as may be required with respect to a Representation Date, shall have been delivered
and such deliverables shall all be delivered and dated the same day and the Sales Agent shall have
no obligation to effect any offers or sales hereunder prior to the receipt of such deliverables.
(o) Secretarys Certificate. On the date of execution of this Agreement and within
three (3) Trading Days after each Representation Date, the Company shall deliver to the Sales Agent
a certificate executed by the Secretary of the Company, signing in such capacity, dated as of such
date (i) certifying that attached thereto are true and complete copies of the resolutions duly
adopted by the Board of Directors or a duly authorized committee thereof of the Company authorizing
the execution and delivery of this Agreement and the consummation of the transactions contemplated
hereby (including, without limitation, the issuance of the Securities pursuant to this Agreement),
which authorization shall be in full force and effect on and as of the date of such certificate and
(ii) certifying and attesting to the office, incumbency, due authority and specimen signatures of
each person who executed this Agreement for or on behalf of the Company; provided, however, that,
subject to the waiver provisions set forth in Section 7(n), if the Company has previously furnished
to the Sales Agent such secretarys certificate substantially in the form previously agreed between
the parties, the Company may, in respect of any future Representation Date, furnish the Sales Agent
with bring-down secretarys certificate (a Bring-Down Secretarys Certificate) (which may
be incorporated into the Bring-Down Certificate) in lieu of such secretarys certificate to the
effect that the Sales Agent may rely on the prior secretarys certificate delivered pursuant to
this Section 7(o) to the same extent as if it were dated the date of such Bring-Down Secretarys
Certificate.
(p) Legal Opinion. On the date of execution of this Agreement and within three (3)
Trading Days after each Representation Date, the Company shall cause to be furnished to the Sales
Agent the written opinion and negative assurance letter of Greenberg Traurig, P.A., counsel to the
Company (Company Counsel), substantially in the form attached hereto as Exhibit
E), modified, as necessary, to relate to the Registration Statement and the Prospectus as then
amended or supplemented; provided, however, that, subject to the waiver provisions
set forth in Section 7(n), if Company Counsel has previously furnished to the Sales Agent such
written opinions and negative assurance substantially in the form previously agreed between the
parties, Company Counsel may, in respect of any future Representation Date, furnish the Sales Agent
with a letter (a Reliance Letter) in lieu of such opinions and negative assurance to the
effect that the Sales Agent may rely on the prior opinions and negative assurance of Company
Counsel delivered pursuant to this Section 7(p) to the same extent as if it were dated the date of
such Reliance Letter (except that statements in such prior opinion shall be deemed to relate to the
Registration Statement and the Prospectus as amended or supplemented to the date of such Reliance
Letter).
(q) Comfort Letter. On the date of execution of this Agreement and within three (3)
Trading Days after each Representation Date for which no waiver is applicable pursuant to Section
7(n), the Company shall cause EisnerAmper LLP (and/or any other independent accountants whose
report is included in the Registration Statement or the Prospectus) to furnish the Sales Agent
letters (each, a Comfort Letter), dated the date the Comfort Letter is delivered, in form
and substance satisfactory to the Sales Agent, (i) confirming that they are an independent
registered public accounting firm within the meaning of the 1933 Act, the 1934 Act and the PCAOB
and (ii) stating, as of such date, the conclusions and findings of such firm with respect to the
financial information and other matters ordinarily covered by accountants comfort letters to
underwriters in connection with registered public offerings.
(r) Market Activities. The Company will not, directly or indirectly, (i) take any
action designed to cause or result in, or that constitutes or might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or (ii) sell, bid for, or purchase the Securities
to be issued and sold pursuant to this Agreement, or pay anyone any compensation for soliciting
purchases of the Securities to be issued and sold pursuant to this Agreement other than the Sales
Agent; provided, however, that with the consent of the Sales Agent, the Company may bid for and
purchase Company securities in accordance with Rule 10b-18 under the 1934 Act.
(s) Investment Company Act. The Company will conduct its affairs in such a manner so
as to reasonably ensure that it will not be or become, at any time prior to the termination of this
Agreement, an investment company, as such term is defined in the 1940 Act, assuming no change in
the Commissions current interpretation as to entities that are not considered an investment
company.
(t) Sarbanes-Oxley Act. The Company will comply with all effective applicable
provisions of the Sarbanes-Oxley Act of 2002.
(u) Disclosure of Sales. The Company will, if applicable, disclose in its Quarterly
Reports on Form 10-Q and in its Annual Report on Form 10-K the number of Placement Securities sold
through the Sales Agent during the most recent fiscal quarter and the Net Proceeds to the Company
with respect to such Placement Securities.
SECTION 8. PAYMENT OF EXPENSES.
(a) Expense Reimbursement. Upon the execution and delivery of this Agreement, the
Company shall, subject to presentation of customary invoices or other written documentation,
reimburse the Sales Agent for its reasonable documented out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Sales Agent, incurred by the Sales Agent in
connection with the transactions and other matters contemplated hereunder in an amount not to
exceed $50,000 in the aggregate. Additionally, after the execution and delivery of this Agreement,
in any quarter in which counsel for the Sales Agent is engaged in connection with the transactions
and other matters contemplated hereunder, the Company will reimburse the Sales Agent on demand for
its reasonable documented out-of-pocket expenses, including the reasonable fees and disbursements
of counsel for the Sales Agent, related to ongoing maintenance and other reasonable documented
out-of-pocket expenses associated herewith up to $7,500 per quarter. In no event shall the total
compensation payable to the Sales Agent hereunder (including any reimbursement of reasonable
out-of-pocket expenses) exceed 8.0% of the aggregate gross proceeds expected to be received by the
Company from the sale of the Securities hereunder.
(b) Expenses. The Company will pay all of the expenses it incurs that are incident to
the performance of its obligations under this Agreement, including (i) the preparation, printing
and filing of the Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment and supplement thereto, (ii) the printing and delivery to
the Sales Agent of such documents as may be required in connection with the offering, purchase,
sale, issuance or delivery of the Placement Securities, (iii) the preparation, issuance and
delivery of the certificates for the Placement Securities to the Sales Agent, including any stock
or other transfer taxes and any capital duties, stamp duties or other duties or taxes payable upon
the sale, issuance or delivery of the Placement Securities to the Sales Agent, (iv) the fees and
disbursements of the counsel, accountants and other advisors to the Company, (v) the qualification
or exemption of the Placement Securities under securities laws in accordance with the provisions of
Section 7(e) hereof (including filing fees and the reasonable fees and expenses of counsel to the
Sales Agent relating to such filings), (vi) the printing and delivery to the Sales Agent of copies
of any permitted Free Writing Prospectus and the Prospectus and any amendments or supplements
thereto and any reasonable costs associated with electronic delivery of any of the foregoing by the
Sales Agent to investors, (vii) the fees and expenses of the transfer agent and registrar for the
Securities, (viii) any filing fees incident to the review by FINRA of the terms of the sale of the
Securities, (ix) the fees and expenses incurred in connection with the listing of the Placement
Securities on the Exchange, (x) the reasonable documented out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Sales Agent, incurred by the Sales Agent, as
set forth in Section 8(a) hereof, and (xi) all other costs and expenses incident to the performance
of the Companys obligations hereunder which are not otherwise specifically provided for in this
Section 8. The Sales Agent will pay all of the expenses they incur that are incident to the
performance of their obligations under this Agreement, other than those set forth in this Section
8.
(c) Termination of Agreement. If this Agreement is terminated by the Sales Agent in
accordance with the provisions of Sections 9(l) or 12(a)(i), or by the Company pursuant to Section
12(b) hereof, the Company shall reimburse the Sales Agent for all of its out-of-pocket expenses,
including reasonable fees and disbursements of counsel to the Sales Agent incurred by them in
connection with the offering contemplated by this Agreement. Following a termination of this
Agreement for any other reason, each of the Company and the Sales Agent shall be responsible for
their own respective out-of-pocket expenses, including fees and disbursements of their respective
counsels.
SECTION 9. CONDITIONS OF THE SALES AGENTS OBLIGATIONS.
The obligations of the Sales Agent hereunder with respect to a Placement will be subject to
the continuing accuracy and completeness of the representations and warranties of the Company
contained in this Agreement or in certificates of any officer of the Company delivered pursuant to
the provisions hereof, to the performance by the Company of its covenants and other obligations
hereunder, and to the following further conditions:
(a) Opinion of Counsel to the Company. The Sales Agent shall have received the
opinion of counsel to the Company and negative assurance letter required to be delivered pursuant
to Section 7(p) on or before the date on which such delivery of such opinion and letter is
required.
(b) Effectiveness of Registration Statement. The Registration Statement shall have
become effective and shall be available for (i) all sales of Placement Securities issued pursuant
to all prior Placement Notices and (ii) the sale of all Placement Securities contemplated to be
issued by any Placement Notice.
(c) No Material Notices. None of the following events shall have occurred and be
continuing: (i) receipt by the Company of any request for additional information from the
Commission or any other federal or state governmental authority during the period of effectiveness
of the Registration Statement, the response to which would require any post-effective amendments or
supplements to the Registration Statement or the Prospectus; (ii) the issuance by the Commission or
any other federal or state governmental authority of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt by
the Company of any notification with respect to the suspension of the qualification or exemption
from qualification of any of the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the occurrence of any event that makes any
material statement made in the Registration Statement or the Prospectus, or any Issuer Free Writing
Prospectus, or any material document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes in the Registration
Statement, the Prospectus or any Issuer Free Writing Prospectus, or such documents so that, in the
case of the Registration Statement, it will not contain any materially untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and, that in the case of the Prospectus and any Issuer Free
Writing Prospectus, it will not contain any materially untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading.
(d) No Misstatement or Material Omission. The Sales Agent shall not have advised the
Company that the Registration Statement or Prospectus, or any Issuer Free Writing Prospectus, or
any amendment or supplement thereto, contains an untrue statement of fact that in the Sales Agents
reasonable opinion is material, or omits to state a fact that in the Sales Agents opinion is
material and is required to be stated therein or is necessary to make the statements therein not
misleading.
(e) Material Changes. Except as contemplated in the Prospectus, or disclosed in the
Companys reports filed with the Commission under the 1934 Act, there shall not have been any
Material Adverse Effect.
(f) Certificates. The Sales Agent shall have received the certificates required to be
delivered pursuant to Sections 7(n) and 7(o) on or before the date on which delivery of such
certificates is required.
(g) Accountants Comfort Letter. The Sales Agent shall have received the Comfort
Letter required to be delivered pursuant to Section 7(q) on or before the date on which such
delivery of such letter is required.
(h) Approval for Listing. The Placement Securities shall either have been
(i) approved for listing on the Exchange, subject only to notice of issuance, or (ii) the Company
shall have filed an application for listing of the Placement Securities on the Exchange at, or
prior to, the issuance of any Placement Notice.
(i) No Suspension. Trading in the Securities shall not have been suspended on the
Exchange.
(j) Additional Documents. On the date of execution of this Agreement and on each
Representation Date, counsel to the Sales Agent shall have been furnished with such documents as
they may require for the purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions, contained in this
Agreement.
(k) 1933 Act Filings Made. All filings with the Commission required by Rule 424 under
the 1933 Act to have been filed prior to the issuance of any Placement Notice hereunder shall have
been made within the applicable time period prescribed for such filing by Rule 424 under the 1933
Act.
SECTION 10. INDEMNITY AND CONTRIBUTION BY THE COMPANY AND THE SALES AGENT.
(a) The Company agrees to indemnify and hold harmless the Sales Agent, the directors,
officers, employees and agents of the Sales Agent and each person who controls the Sales Agent
within the meaning of either the 1933 Act or the 1934 Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may become subject under the
1933 Act, the 1934 Act or other Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement as originally filed or in any amendment thereof, 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, or in the Base
Prospectus, the Prospectus or any other Prospectus Supplement relating to the Securities or any
Issuer Free Writing Prospectus, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Sales Agent specifically for
inclusion therein. The Company acknowledges that the information provided in writing by or on
behalf of the Sales Agent expressly for use in the Prospectus, the General Disclosure Package or
the Issuer Free Writing Prospectus consists solely of the material referred to in Exhibit G
hereto, as updated from time to time. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
(b) The Sales Agent agrees to indemnify and hold harmless the Company, each of its directors,
each of its officers who signs the Registration Statement, and each person who controls the Company
within the meaning of either the 1933 Act or the 1934 Act, to the same extent as the foregoing
indemnity from the Company to the Sales Agent, but only with reference to written information
relating to the Sales Agent furnished to the Company by or on behalf of the Sales Agent
specifically for inclusion in the documents referred to in the foregoing indemnity. The Company
acknowledges that the information provided in writing by or on behalf of the Sales Agent expressly
for use in the Prospectus, the General Disclosure Package or the Issuer Free Writing Prospectus
consists solely of the material referred to in Exhibit G hereto, as updated from time to
time. This indemnity agreement will be in addition to any liability which the Sales Agent may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 10 of notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 10, notify the indemnifying party in writing
of the commencement thereof; but the failure to so notify the indemnifying party (i) will not
relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the indemnifying party
of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying partys choice at the indemnifying partys expense to represent the indemnified party
in any action for which indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel retained by the
indemnified party or parties except as set forth below); provided, however, that such counsel shall
be satisfactory to the indemnified party. Notwithstanding the indemnifying partys election to
appoint counsel to represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would present such counsel with
a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action
include both the indemnified party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the indemnifying party, (iii)
the indemnifying party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of the institution of such
action or (iv) the indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or consent to the entry of
any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect
of which indemnification or contribution may be sought hereunder (whether or not the indemnified
parties are actual or potential parties to such claim or action) unless such settlement, compromise
or consent includes an unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a), (b) or (c) of this Section 10
is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company
and the Sales Agent agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with investigating or
defending the same) (collectively Losses) to which the Company and the Sales Agent may be
subject in such proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and by the Sales Agent on the other from the offering of the Securities;
provided, however, that in no case shall the Sales Agent be responsible for any amount in excess of
the discount, commission or other compensation actually received by it in connection with the
Securities distributed pursuant to this Agreement. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the Sales Agent shall contribute
in such proportion as is appropriate to reflect not only such relative benefits but also the
relative fault of the Company on the one hand and of the Sales Agent on the other in connection
with the statements or omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company shall be deemed to be equal to the
total net proceeds from the offering (before deducting expenses) received by it, and benefits
received by the Sales Agent shall be deemed to be equal to the total discount, commission or other
compensation received by the Sales Agent, in each case as determined by this Agreement or any
applicable Placement Notice. Relative fault shall be determined by reference to, among other
things, whether any untrue or any alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information provided by the Company on the one
hand or the Sales Agent on the other, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such untrue statement or omission. The
Company and the Sales Agent agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions of this paragraph
(d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 10, each person who controls the Sales Agent
within the meaning of either the 1933 Act or the 1934 Act and each director, officer, employee and
agent of the Sales Agent shall have the same rights to contribution as the Sales Agent, and each
person who controls the Company within the meaning of either the 1933 Act or the 1934 Act, each
officer of the Company who shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
SECTION 11. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement or in certificates
of officers of the Company submitted pursuant hereto, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of the Sales Agent or the Company or
any of the officers, directors, employees, agents or controlling persons referred to in Section 10
hereof, and shall survive delivery of and payment for the Securities.
SECTION 12. TERMINATION OF AGREEMENT.
(a) Termination; General. The Sales Agent may terminate this Agreement, by notice to
the Company, as hereinafter specified at any time (i) if there has been, since the time of
execution of this Agreement or since the date as of which information is given in the Prospectus,
any Material Adverse Effect, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the judgment of the Sales
Agent, impracticable or inadvisable to market the Securities or to enforce contracts for the sale
of the Securities, or (iii) if trading in the Securities has been suspended or limited by the
Commission or the Exchange, or if trading generally on the New York Stock Exchange, the NYSE MKT or
the Nasdaq Global Market has been suspended or limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by
order of the Commission, the FINRA or any other governmental authority, or a material disruption
has occurred in commercial banking or securities settlement or clearance services in the United
States or in Europe, or (iv) if a banking moratorium has been declared by either Federal or New
York authorities.
(b) Termination by the Company. The Company shall have the right, by giving one (1)
day notice as hereinafter specified to terminate this Agreement in its sole discretion at any time
after the date of this Agreement. Upon termination of this Agreement pursuant to this Section
12(b), any outstanding Placement Notices shall also be terminated.
(c) Termination by the Sales Agent. The Sales Agent shall have the right, by giving
one (1) day notice as hereinafter specified to terminate this Agreement in its sole discretion at
any time after the date of this Agreement. Upon termination of this Agreement pursuant to this
Section 12(c), any outstanding Placement Notices shall also be terminated.
(d) Automatic Termination. Unless earlier terminated pursuant to this Section 12,
this Agreement shall automatically terminate upon the issuance and sale of all of the Securities
through or to the Sales Agent on the terms and subject to the conditions set forth herein.
(e) Continued Force and Effect. This Agreement shall remain in full force and effect
unless terminated pursuant to Sections 9(l) or 12(a), (b), (c), or (d) above or otherwise by mutual
agreement of the parties.
(f) Effectiveness of Termination. Any termination of this Agreement shall be
effective on the date specified in such notice of termination; provided, however, that such
termination shall not be effective until the close of business on the date of receipt of such
notice by the Sales Agent or the Company, as the case may be. If such termination shall occur
prior to the Settlement Date for any sale of Placement Securities, such Placement Securities shall
settle in accordance with the provisions of this Agreement.
(g) Liabilities. If this Agreement is terminated pursuant to this Section 12, such
termination shall be without liability of any party to any other party except as provided in
Section 8, and except that, in the case of any termination of this Agreement, Sections 5, 8 10, 11
and 19 hereof shall survive such termination and remain in full force and effect.
SECTION 13. NOTICES.
Except as otherwise provided in this Agreement, all notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any
standard form of telecommunication. Notices to the Sales Agent shall be directed to it at the
offices of the Sales Agent at Barrington Research Associates, Inc., 169 North Clark St., Suite
2950, Chicago, Illinois 60601, fax no. (312) 634-6350, Attention: Greg Paris, Michael Hutchison and
Alice Somodji with a copy (which shall not constitute notice) to the counsel to the Sales Agent at
Lowenstein Sandler LLP, 1251 Avenue of the Americas, 17th Floor, New York, New York 10020,
Attention: John D. Hogoboom. Notices to the Company shall be directed to it at the offices of the
Company at Castle Brands Inc., 122 East 42nd Street, Suite 4700, New York, New York 10168,
Attention: Alfred J. Small, with a copy (which shall not constitute notice) to the counsel to the
Company at Greenberg Traurig P.A., 333 Southeast 2nd Avenue, Suite 4400, Miami, Florida 33131,
Attention: Robert L. Grossman, Esq.
SECTION 14. PARTIES.
This Agreement shall inure to the benefit of and be binding upon the Sales Agent, the Company
and their respective successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the Sales Agent, the Company
and their respective successors and the controlling persons and officers and directors referred to
in Section 10 and their heirs and legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the
Sales Agent, the Company and their respective successors, and said controlling persons and officers
and directors and their heirs and legal representatives, and for the benefit of no other person,
firm or corporation. No purchaser of Securities from the Sales Agent shall be deemed to be a
successor by reason merely of such purchase.
SECTION 15. ADJUSTMENTS FOR STOCK SPLITS.
The parties acknowledge and agree that all stock-related numbers contained in this Agreement
shall be adjusted to take into account any stock split, stock dividend or similar event effected
with respect to the Securities.
SECTION 16. GOVERNING LAW AND JURISDICTION; WAIVER OF JURY TRIAL; TIME.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. EACH OF THE COMPANY AND THE SALE AGENT IRREVOCABLY (A) SUBMITS TO THE JURISDICTION OF
ANY COURT OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
THE STATE 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 AND THE 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. EACH OF THE COMPANY (ON ITS BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ON BEHALF OF ITS STOCKHOLDERS AND AFFILIATES) AND THE SALES AGENT HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AND ANY ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 17. EFFECT OF HEADINGS.
The Section and Exhibit headings herein are for convenience only and shall not affect the
construction hereof.
SECTION 18. PERMITTED FREE WRITING PROSPECTUSES.
The Company represents, warrants and agrees that, unless it obtains the prior consent of the
Sales Agent, and the Sales Agent represents, warrants and agrees that, unless it obtains the prior
consent of the Company, they have not made and will not make any offer relating to the Securities
that would constitute an Issuer Free Writing Prospectus, or that would otherwise constitute a free
writing prospectus, as defined in Rule 405 under the 1933 Act, required to be filed with the
Commission. Any such free writing prospectus consented to by the Sales Agent or by the Company, as
the case may be, is hereinafter referred to as a Permitted Free Writing Prospectus. The
Company represents and warrants that it has treated and agrees that it will treat each Permitted
Free Writing Prospectus as an issuer free writing prospectus, as defined in Rule 433 under the
1933 Act, and has complied and will comply with the requirements of Rule 433 under the 1933 Act
applicable to any Permitted Free Writing Prospectus, including timely filing with the Commission
where required, legending and record keeping. For the purposes of clarity, the parties hereto
agree that all free writing prospectuses, if any, listed in Exhibit D hereto are Permitted
Free Writing Prospectuses.
SECTION 19. ABSENCE OF FIDUCIARY RELATIONSHIP.
The Company acknowledges and agrees that:
(a) the Sales Agent is acting solely as agent and/or principal in connection with the public
offering of the Securities and in connection with each transaction contemplated by this Agreement
and the process leading to such transactions, and no fiduciary or advisory relationship between the
Company or any of their respective affiliates, stockholders (or other equityholders), creditors or
employees or any other party, on the one hand, and the Sales Agent, on the other hand, has been or
will be created in respect of any of the transactions contemplated by this Agreement, irrespective
of whether or not the Sales Agent has advised or is advising the Company on other matters, and the
Sales Agent has no obligation to the Company with respect to the transactions contemplated by this
Agreement except the obligations expressly set forth in this Agreement;
(b) the public offering price of the Securities was not established by the Sales Agent;
(c) the Company is capable of evaluating and understanding, and understands and accepts, the
terms, risks and conditions of the transactions contemplated by this Agreement;
(d) the Sales Agent has not provided any legal, accounting, regulatory or tax advice with
respect to the transactions contemplated by this Agreement and the Company has consulted its own
legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate;
(e) the Company is aware that the Sales Agent and its respective affiliates are engaged in a
broad range of transactions which may involve interests that differ from those of the Company, and
the Sales Agent has no obligation to disclose such interests and transactions to the Company by
virtue of any fiduciary, advisory or agency relationship or otherwise; and
(f) the Company waives, to the fullest extent permitted by law, any claims it may have against
the Sales Agent for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that
the Sales Agent shall not have any liability (whether direct or indirect, in contract, tort or
otherwise) to the Company in respect of such a fiduciary duty claim or to any person asserting a
fiduciary duty claim on the Companys behalf or in right of such person or the Company, employees
or creditors of the Company.
[Signature Page Follows]
If the foregoing is in accordance with your understanding of our agreement, please sign
and return to the Company a counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement by and between the Sales Agent and the Company in
accordance with its terms.
Very truly yours,
CASTLE BRANDS INC.
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By: /s/ Alfred J. Small |
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Name: Alfred J. Small
Title: Senior Vice President, Chief
Financial Officer, Secretary
and Treasurer |
CONFIRMED AND ACCEPTED, as of the date first above written:
BARRINGTON RESEARCH ASSOCIATES, INC.
By: /s/ Gregory Paris
Name: Gregory Paris
Title: Executive Vice President
EXHIBIT A
FORM OF PLACEMENT NOTICE
From:
To:
Cc:
Subject: Castle Brands Inc.
Equity DistributionProposed Placement Notice
Ladies and Gentlemen:
Pursuant to the terms and subject to the conditions contained in the Equity Distribution
Agreement between Castle Brands Inc. (the Company) and Barrington Research Associates,
Inc. (Barrington) dated November 20, 2014 (the Agreement), I hereby request on
behalf of the Company that Barrington sell shares of the Companys common stock, par value $0.01
per share, on the terms specified below:
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Maximum aggregate number of Placement Securities to be sold or gross
proceeds to be raised: |
Minimum price at which Placement Securities may be sold: |
Date(s) on which Placement Securities may be sold: |
Compensation to the Sales Agent (if different from the Agreement): |
[ADDITIONAL SALES PARAMETERS MAY BE ADDED, SUCH AS THE MAXIMUM AGGREGATE OFFERING PRICE,
THE TIME PERIOD IN WHICH SALES ARE REQUESTED TO BE MADE, SPECIFIC DATES ON WHICH THE SHARES MAY NOT
BE SOLD ON, THE MANNER IN WHICH SALES ARE TO BE MADE BY BARRINGTON, AND/OR THE CAPACITY IN WHICH
BARRINGTON MAY ACT IN SELLING SHARES (AS PRINCIPAL, AGENT, OR BOTH)]
Capitalized terms used herein without definition shall have the meanings given to such terms
in the Equity Distribution Agreement.
Castle Brands Inc.
By:
Name:
Title:
EXHIBIT B
AUTHORIZED INDIVIDUALS FOR PLACEMENT NOTICES AND ACCEPTANCES
Barrington Research Associates, Inc.
Castle Brands Inc.
EXHIBIT C
COMPENSATION
The Sales Agent shall be paid compensation equal to 2.0% of the gross proceeds from the sale
of Securities pursuant to the terms of this Agreement and shall be reimbursed for certain expenses
in accordance with Section 8(a) of this Agreement.
The foregoing rate of compensation shall not apply when the Sales Agent acts as principal, in
which case the Company may sell the Securities to the Sales Agent as principal at a price agreed
upon at the relevant Time of Sale pursuant to the applicable Placement Notice.
EXHIBIT D
ISSUER FREE WRITING PROSPECTUSES
None
EXHIBIT E
FORM OF OPINION OF COUNSEL TO THE COMPANY
1
EXHIBIT F
CASTLE BRANDS INC.
OFFICERS CERTIFICATE
__________, 20__
The undersigned is the duly elected or duly appointed [Chief Executive Officer] [Chief
Financial Officer] of Castle Brands Inc., a Florida corporation (the Company). The
undersigned hereby executes this Officers Certificate as of the date hereof [in connection with
the Representation Date] pursuant to the terms of that certain Equity Distribution Agreement, dated
November 20, 2014 (the Equity Distribution Agreement), by and between the Company and
Barrington Research Associates, Inc. Capitalized terms used herein without definition shall have
the meanings given to such terms in the Equity Distribution Agreement.
The undersigned hereby further certifies, in his capacity as an officer of the Company and not
in any individual capacity, that:
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The representations and warranties of the Company in the Equity Distribution
Agreement are true and correct with the same force and effect as though expressly made
as of the date hereof; |
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The Company has complied with all of its obligations and satisfied all of the
conditions on its part to be performed or satisfied under the Equity Distribution
Agreement at or prior to the date hereof; |
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No stop order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto has been issued and no proceedings for that purpose
have been instituted or are pending or threatened under the 1933 Act; and |
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Subsequent to the respective dates as of which information is given in the
Registration Statement or the Prospectus, there has not been (A) any Material Adverse
Effect, (B) any transaction that is material to the Company, (C) any obligation, direct
or contingent, that is material to the Company incurred by the Company, or (D) any
change in the capital stock or outstanding indebtedness of the Company that is material
to the Company. |
Greenberg Traurig, P.A., counsel to the Company, is entitled to rely upon this Officers
Certificate in connection with the opinion given by such firm pursuant to the Equity Distribution
Agreement.
[Signature Page Follows]
2
IN WITNESS WHEREOF, the undersigned has signed his name as of the date first written above.
By:
Name:
Title: [Chief Executive Officer][Chief Financial
Officer]
EXHIBIT G
INFORMATION PROVIDED BY SALES AGENT
The parties acknowledge and agree that, for purposes of Sections 5(d), 5(f) and 10 hereof,
there is no information provided by the Sales Agent.
The information in this Exhibit shall be updated from time to time in connection with the
filing of a new Prospectus or otherwise as necessary.
3
Exhibit 5.1
[Letterhead of Greenberg Traurig, P.A.]
November 20, 2014
Castle Brands Inc.
122 East 42nd Street, Suite 4700
New York, New York 10168
Re: Castle Brands Inc. Prospectus Supplement to Shelf Registration Statement on Form S-3
Ladies and Gentlemen,
We have acted as counsel for Castle Brands Inc., a Florida corporation (the
Company), in connection with the issuance and sale by the Company of its common shares,
par value $0.01 per share (the Shares), having an aggregate gross sales price of up to
$10.0 million, pursuant to (1) the shelf registration statement on Form S-3 (File No. 333-198414)
(the Registration Statement) filed by the Company with the Securities and Exchange
Commission (the Commission) under the Securities Act of 1933, as amended (the
Securities Act), on August 27, 2014 and declared effective by the Commission on September
12, 2014 and (2) the Companys prospectus supplement relating to the Shares, as transmitted by the
Company to the Commission on November 20, 2014 pursuant to Rule 424(b)(5) under the Securities Act
(the Prospectus). All of the Shares are to be issued and sold by the Company as
described in the Registration and the Prospectus.
In connection with our representation of the Company, and as a basis for the opinion
hereinafter set forth, we have examined originals, or copies certified or otherwise identified to
our satisfaction, of the following:
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the Registration Statement and the Prospectus; |
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the Companys Articles of Incorporation, as amended to the date hereof; |
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the Companys Bylaws, as amended to the date hereof; |
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the Equity Distribution Agreement, dated as of November 20, 2014, by and
between the Company and Barrington Research Associates, Inc. (the Distribution
Agreement); |
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records of corporate proceedings of the Company authorizing the issuance and
sale of the Shares; |
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a certificate of an officer of the Company as to matters of fact material to
this opinion; and |
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such other documents and records and other certificates and instruments and
matters of law as we have deemed necessary or appropriate to express the opinion set
forth below, subject to the assumptions, limitations and qualifications stated herein. |
In rendering the opinions set forth below, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to us as duplicates or
certified or conformed copies and the authenticity of the originals of such latter documents. In
making our examination of documents executed by parties other than the Company, we have assumed
that each such party has the power and authority to execute and deliver, and to perform and observe
the provisions of, each such document to which it is a party and has duly authorized, executed and
delivered each such document to which it is a party, and that each such document constitutes a
legal, valid and binding obligation of each such party other than the Company party thereto.
As to matters of fact material to this opinion, we have relied to the extent we deemed
reasonably appropriate upon representations or certificates of officers of the Company, without
independently verifying the accuracy of such documents, records and instruments.
We have further assumed that all of the Shares will be issued and sold in compliance with the
applicable provisions of the Securities Act, the securities or blue sky laws of various states and
the terms and conditions of the Distribution Agreement and in the manner stated in the Registration
Statement and the Prospectus.
Based upon and subject to the foregoing, and subject to the assumptions, limitations and
qualifications stated herein, we are of the opinion that the Shares have been duly authorized for
issuance by the Company and, when issued in accordance with the Registration Statement and the
Prospectus, and upon payment of the purchase price therefor in accordance with the Distribution
Agreement, will be validly issued, fully paid and nonassessable.
The opinions expressed herein are specifically limited to the laws of the State of Florida and
the federal laws of the United States of America and are as of the date hereof. We assume no
obligation to update or supplement such opinions to reflect any facts or circumstances that may
hereafter come to our attention or any changes in law that may hereafter occur.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement
and as an exhibit to any application under the securities or other laws of any state of the United
States which relate to the offer and sale of the Shares and to the use of the name of our firm
therein. In giving this consent, we do not admit that we are within the category of persons whose
consent is required by Section 7 of the Securities Act.
Sincerely,
GREENBERG TRAURIG, P.A.
By: /s/ Robert L. Grossman, Esq.
Castle Brands (AMEX:ROX)
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