Filed with the Securities and
Exchange Commission on November 16, 2015.
Registration Statement No. 333-205916
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 5
to
Form S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
ENER-CORE,
INC.
(Exact name of registrant as specified in its charter)
Delaware |
|
3511 |
|
46-0525350 |
(State or other jurisdiction of
incorporation or organization) |
|
(Primary Standard Industrial
Classification Code Number) |
|
(I.R.S. Employer
Identification Number) |
|
9400 Toledo Way
Irvine, California 92618
(949) 616-3300 |
|
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices) |
|
|
|
|
Alain J. Castro
Chief Executive Officer
9400 Toledo Way
Irvine, California 92618
(949) 616-3300 |
|
(Name, address, including zip code, and telephone number, including area code, of agent for service) |
Copies of all communications to: |
David C. Lee
Shoshannah D. Katz
K&L Gates LLP
1 Park Plaza, Twelfth Floor
Irvine, CA 92614
(949) 253-0900
|
|
Jonathan R. Zimmerman
Joshua L. Colburn
Faegre Baker Daniels LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, Minnesota 55402
(612) 766-7000 |
Approximate date of commencement
of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.
If any of
the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement number of the earlier effective registration statement for
the same offering. o
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o |
Accelerated filer o |
Non-accelerated filer o
(Do not check if a smaller
reporting company) |
Smaller reporting company ☒ |
The registrant hereby amends this registration statement
on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment
which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting
pursuant to said Section 8(a), may determine.
EXPLANATORY NOTE
This Amendment No. 5 to the Registration Statement on
Form S-1 (File No. 333-205916) (the “Registration Statement”) is being filed solely to file Exhibits 1.1, 5.1 and
23.3 and to update the Exhibit List accordingly. No changes have been made to Part I of the Registration Statement, which has
thus been omitted.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance
and Distribution.
The following table
sets forth all costs and expenses, other than the underwriting discount paid or payable by us in connection with the sale of the
common stock being registered. All amounts shown are estimates except for the SEC registration fee, the Financial Industry Regulatory
Authority, or FINRA, filing fee and the NYSE MKT listing fee.
|
|
Amount |
|
Securities and Exchange Commission Registration Fee |
|
$ |
2,673 |
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FINRA Filing Fee |
|
|
3,950 |
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NYSE MKT Listing Fee |
|
|
55,000 |
|
Printing Expenses |
|
|
30,000 |
|
Legal Fees and Expenses |
|
|
480,000 |
|
Accounting Fees and Expenses |
|
|
75,000 |
|
Transfer Agent and Registrar Fees and Expenses |
|
|
35,000 |
|
Miscellaneous Expenses |
|
|
30,000 |
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Total |
|
$ |
711,623 |
|
Item 14. Indemnification of Directors
and Officers.
Section 102 of the
General Corporation Law of the State of Delaware permits a corporation to eliminate the personal liability of directors of a corporation
to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except for breaches of
the director’s duty of loyalty to the corporation or its stockholders, acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of a law, authorizations of the payments of a dividend or approval of a stock repurchase
or redemption in violation of Delaware corporate law or for any transactions from which the director derived an improper personal
benefit. Our certificate of incorporation provides that no director will be liable to us or our stockholders for monetary damages
for breach of fiduciary duties as a director, subject to the same exceptions as described above. Prior to the completion of this
offering, we intend to enter into indemnification agreements with each of our directors which may, in some cases, be broader than
the specific indemnification provisions contained under Delaware law. We also expect to maintain standard insurance policies that
provide coverage (1) to our directors and officers against loss arising from claims made by reason of breach of duty or other wrongful
act and (2) to us with respect to indemnification payments we may make to such officers and directors.
Section 145 of the
General Corporation Law of the State of Delaware provides that a corporation has the power to indemnify a director, officer, employee,
or agent of the corporation and certain other persons serving at the request of the corporation in related capacities against expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlements actually and reasonably incurred by the person
in connection with a threatened, pending, or completed action, suit or proceeding to which he or she is or is threatened to be
made a party by reason of such position, if such person acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation, and, in any criminal action or proceeding, had no reasonable cause
to believe his or her conduct was unlawful, except that, in the case of actions brought by or in the right of the corporation,
indemnification is limited to expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection
with defense or settlement of such action or suit and no indemnification shall be made with respect to any claim, issue, or matter
as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of
Chancery or other adjudicating court determines that, despite the adjudication of liability but in view of all of the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other
court shall deem proper. In addition, to the extent that a present or former director or officer of a corporation has been successful
on the merits or otherwise in defense of any action, suit, or proceeding described above (or claim, issue, or matter therein),
such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person
in connection therewith. Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil,
criminal, administrative, or investigative action, suit, or proceeding may be advanced by the corporation upon receipt of an undertaking
by such person to repay such amount if it is ultimately determined that such person is not entitled to indemnification by the corporation
under Section 145 of the General Corporation Law of the State of Delaware.
Our certificate
of incorporation provides that we will, to the fullest extent permitted by law, indemnify any person made or threatened to be made
a party to an action or proceeding by reason of the fact that he or she (or his or her testators or intestate) is or was our director
or officer or serves or served at any other corporation, partnership, joint venture, trust or other enterprise in a similar capacity
or as an employee or agent at our request, including service with respect to employee benefit plans maintained or sponsored by
us, against expenses (including attorneys’), judgments, fines, penalties and amounts paid in settlement incurred in connection
with the investigation, preparation to defend, or defense of such action, suit, proceeding, or claim. However, we are not required
to indemnify or advance expenses in connection with any action, suit, proceeding, claim, or counterclaim initiated by us or on
behalf of us. Our bylaws provide that we will indemnify and hold harmless each person who was or is a party or threatened to be
made a party to any action, suit, or proceeding by reason of the fact that he or she is or was our director or officer, or is or
was serving at our request in a similar capacity of another corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans (whether the basis of such action, suit, or proceeding is an action in
an official capacity as a director or officer or in any other capacity while serving as a director of officer) to the fullest extent
authorized by the Delaware General Corporation Law against all expense, liability and loss (including attorneys’ fees, judgments,
fines, ERISA excise taxes, or penalties and amounts paid in settlement) reasonably incurred or suffered by such person in connection
with such action, suit or proceeding, and this indemnification continues after such person has ceased to be an officer or director
and inures to the benefit of such person’s heirs, executors and administrators. The indemnification rights also include the
right generally to be advanced expenses, subject to any undertaking required under Delaware General Corporation Law, and the right
generally to recover expenses to enforce an indemnification claim or to defend specified suits with respect to advances of indemnification
expenses.
Item 15. Recent Sales of Unregistered
Securities.
Set forth below
is information regarding securities sold and issued by us since July 1, 2012 that were not registered under the Securities Act,
as well as the consideration received by us for such securities and information relating to the section of the Securities Act,
or rule of the Securities and Exchange Commission, under which exemption from registration was claimed.
All share figures
and exercise prices noted in this Item 15 are adjusted to give effect to the 1-for-50 reverse split of our issued and outstanding
common stock on July 8, 2015, retroactively, unless otherwise noted.
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(a) |
Issuances of Capital Stock and Warrants to Purchase Capital Stock |
In April 2013, we
sold and issued an aggregate of 37,334 shares of our common stock to Sail Capital entities at $37.50 per share in consideration
of approximately $728,000 in cash proceeds and for the conversion of approximately $671,000 of our debt and working capital obligations
that we had incurred in connection with the spin-off transaction between November 2012 and March 2013. We received certain cash
proceeds, and all repayments, in April 2013, and additional cash proceeds in June 2013.
In July 2013, we
sold and issued an aggregate of 92,271 shares of our common stock to 19 accredited investors at $37.50 per share in a private placement
transaction consummated in connection with our April 2013 merger transaction, for which we received proceeds of approximately $3,077,000,
net of approximately $383,000 in broker-dealer commissions. We also issued 2,667 shares to an accredited investor upon conversion
of a $100,000 related party note payable. In connection with this private placement, in July 2013, we issued warrants for the purchase
of up to an aggregate of 9,500 shares of our common stock to certain placement agents. The warrants have an exercise price of $37.50
per share and expire five years from issuance.
In August 2013,
we sold and issued an aggregate of 8,260 shares of our common stock to six accredited investors at $37.50 per share in a private
placement transaction, for which we received proceeds of approximately $285,000, net of approximately $25,000 in broker-dealer
commissions. In connection with this financing, we issued warrants for the purchase of up to an aggregate of 720 shares of our
common stock to certain placement agents. The warrants have an exercise price of $37.50 per share and expire five years from issuance.
In November 2013,
we sold and issued an aggregate of 30,000 shares of our common stock to two accredited investors at $50.00 per share in a private
placement transaction (the “November 2013 Private Placement”), for which we received proceeds of approximately $1,375,000,
net of offering costs of approximately $125,000.
On March 3, 2014,
we issued a warrant for the purchase of up to 48,000 shares of our common stock to a placement agent as consideration for services
rendered in connection with the November 2013 Private Placement. The warrant has an exercise price of $50.00 and expires November
17, 2018.
On April 16, 2014,
we issued $4,600,000 of convertible secured promissory notes (“Secured Notes”) to five institutional investors in a
private placement transaction and detachable warrants for the purchase of up to an aggregate 81,941 shares of our common stock
to the investors. The warrants initially had an exercise price of $39.00 per share and expire five years from issuance. On September
18, 2014, the warrant exercise price was reduced to $25.00 per share. On March 23, 2015, the warrant exercise price was reduced
further to $5.50 per share. The Secured Notes and related detachable warrants are governed by a Securities Purchase Agreement,
dated as of April 15, 2014. We received gross cash proceeds of $4,600,000.
On August 15, 2014,
we issued an aggregate of 271,098 shares of our common stock to the holders of the Secured Notes upon the conversion of $2,711,000
of Secured Notes held by such investors.
On September 22,
2014, we sold and issued an aggregate of 533,334 shares of our common stock to 36 accredited investors at $7.50 per share in a
private placement transaction. We received net cash proceeds of $3,844,000, consisting of $4,000,000 in gross proceeds reduced
by $156,000 in cash offering costs, consisting of cash placement fees of $73,000 and legal fees of $32,000. In addition to the
cash offering costs, we also issued to two placement agents: (1) 20,000 restricted shares of our common stock valued at $150,000,
in lieu of cash offering costs; and (2) warrants for the purchase of up to an aggregate of 26,500 shares of our common stock
at an exercise price of $25.00 per share. The warrants issued for placement agent fees are exercisable for a period of four years
after their issuance dates.
In November 2014,
we issued warrants to two accredited investors for the purchase of up to an aggregate of 6,500 shares of common stock at an exercise
price of $25.00 per share. The warrants were issued for compensation for investor relations services.
In December 2014,
we issued an aggregate of 8,462 shares of common stock and warrants for the purchase of up to an aggregate of 38,462 shares of
our common stock to settle in full a legal claim made by two investors.
On April 16, 2015,
we issued an aggregate of 73,747 shares of our common stock to five accredited investors pursuant to warrant exchange agreements
by which such investors surrendered for cancellation warrants previously received in April 2014 for the purchase of up to an aggregate
of 81,491 shares of our common stock.
On April 23, 2015,
we issued senior secured promissory notes with an aggregate principal amount of $3,100,000 and warrants to purchase up to an aggregate
of 136,267 shares of our common stock to seven accredited investors. We received gross cash proceeds of $3,100,000 and paid $175,000
in placement and legal fees upon closing. The warrants have an exercise price of $12.50 per share and expire five years from issuance.
On May 1, 2015,
we issued an aggregate of 108,000 shares of our common stock to 30 accredited investors at $7.50 per share in a private placement
transaction. We received gross cash proceeds of approximately $810,000 and paid placement fees consisting of: (1) $64,000 in cash
and (2) warrants for the purchase of up to an aggregate of 5,514 shares of our common stock at an exercise price of $12.50 per
share. The warrants issued for placement agent fees are exercisable for a period of five years after their issuance dates.
On May 9, 2015,
we issued senior secured promissory notes with an aggregate principal amount of $1,900,000 and warrants to purchase up to an aggregate
of 83,518 shares of our common stock to four accredited investors. We received gross cash proceeds of $1,900,000. The warrants
have an exercise price of $12.50 per share and expire five years from issuance.
On November 2, 2015,
we issued a warrant to purchase 74,000 shares of our common stock, subject to adjustment for stock splits or other similar changes
to our capital structure. The warrant has an exercise price of $15.00 per share, becomes exercisable on November 2, 2016 and expires
on November 2, 2021.
No underwriters
were involved in the foregoing sales of securities. The securities described in this section (a) of Item 15 were issued to investors
in reliance upon the exemption from the registration requirements of the Securities Act, as set forth in Section 3(a)(9) and/or
Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder relative to transactions by an issuer not involving
any public offering, to the extent an exemption from such registration was required. All purchasers described above represented
to us in connection with their purchase that they were accredited investors and were acquiring the shares for their own account
for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof and that they could
bear the risks of the investment and could hold the securities for an indefinite period of time. The purchasers received written
disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to a
registration statement or an available exemption from such registration. We did not engage in any general solicitation or advertising
in connection with the foregoing issuances.
|
(b) |
Plan-Related Issuances of Stock Options and Restricted Stock |
Since July 1, 2012,
we have granted stock options to certain of our employees, consultants and directors in connection with services provided to us
by such persons to purchase an aggregate of 590,761 shares of common stock with exercise prices ranging from $0.30 per share to
$76.50 per share, and a weighted average exercise price of $23.92 per share. In April 2014, we cancelled options to purchase 172,200
shares at exercise prices between $50.00 and $76.50, originally granted between July 1, 2013 and November 30, 2013, and issued
options to purchase 172,200 shares of common stock with an exercise price of $17.50 per share. Excluding the cancelled options
to purchase 172,200 shares of common stock, since July 1, 2012, we have granted to certain of our employees, consultants and directors,
in connection with services provided by such persons to us, options to purchase an aggregate of 418,561 shares of common stock
with exercise prices ranging from $0.30 per share to $24.00 per share, and a weighted average exercise price of $10.10 per share.
Since July 1, 2012,
we have issued and sold 64,415 shares of common stock upon exercises of options granted under our incentive plans at prices ranging
from $0.30 per share to $0.45 per share, and a weighted average exercise price of $0.44 per share, including 7,202 shares of common
stock that remain subject to our repurchase right as of July 15, 2015.
The stock options
and the common stock issuable upon the exercise of such options as described in this section (b) of Item 15 were issued pursuant
to written compensatory plans or arrangements in reliance on the exemption from the registration requirements of the Securities
Act provided by Rule 701 promulgated under the Securities Act and/or the exemption set forth in Section 4(a)(2) under the Securities
Act and Regulation D promulgated thereunder relative to transactions by an issuer not involving any public offering. All recipients
either received adequate information about us or had access, through employment or other relationships, to such information.
All of the foregoing
securities are deemed restricted securities for purposes of the Securities Act. All certificates representing the issued shares
of capital stock described in this Item 15 included appropriate legends setting forth that the securities had not been registered
and the applicable restrictions on transfer.
Item 16. Exhibits and Financial Statement
Schedules
See Exhibit Index
immediately following the signature page to this registration statement.
|
(b) |
Financial Statement Schedules |
All other schedules
are omitted because they are not required, are not applicable, or the information is included in the consolidated financial statements
or the related notes to consolidated financial statements thereto.
Item 17. Undertakings.
The undersigned
registrant hereby undertakes:
(1) To file, during
any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(a) To
include any prospectus required by Section 10(a)(3) of the Securities Act;
(b) To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
(c) To
include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.
(2) That, for the
purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from
registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination
of the offering.
(4) That each prospectus
filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying
on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with
a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first
use.
(5) That, for the
purpose of determining liability under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or
sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser
and will be considered to offer or sell such securities to such purchaser: (i) any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be filed pursuant to Rule 424; (ii) any free writing prospectus relating
to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; (iii)
the portion of any other free writing prospectus relating to the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned registrant; and (iv) any other communication that is an
offer in the offering made by the undersigned registrant to the purchaser.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes
that:
|
(1) |
For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
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(2) |
For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
SIGNATURES
Pursuant to the
requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Amendment No. 5 to the registration
statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Irvine, State of California,
on this 16th day of November, 2015.
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ENER-CORE, INC. |
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By: |
/s/ Alain J. Castro |
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Alain J. Castro |
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Chief Executive Officer |
Signature |
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Title |
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Date |
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/s/ Alain J. Castro |
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Chief Executive Officer and Director |
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Alain J. Castro |
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(Principal Executive Officer) |
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November 16, 2015 |
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* |
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President, Chief Operating Officer, and |
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Boris A. Maslov |
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Chief Technology Officer |
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November 16, 2015 |
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/s/ Domonic J. Carney |
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Chief Financial Officer |
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Domonic J. Carney |
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(Principal Financial Officer and Principal |
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Accounting Officer) |
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November 16, 2015 |
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* |
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Chairman and Director |
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Michael J. Hammons |
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November 16, 2015 |
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* |
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Director |
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Christopher J. Brown |
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November 16, 2015 |
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* |
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Director |
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Bennet P. Tchaikovsky |
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November 16, 2015 |
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* |
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Director |
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Jeffrey Horn |
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November 16, 2015 |
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* |
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Director |
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Ian C. Copeland |
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November 16, 2015 |
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* |
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Director |
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Eric Helenek |
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November 16, 2015 |
By: |
/s/ Domonic J. Carney |
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Attorney-in-Fact |
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INDEX TO EXHIBITS
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Incorporated by Reference |
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Exhibit |
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File |
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Filing |
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Filed |
Number |
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Description of Exhibit |
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Form |
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No. |
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Date |
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Exhibit |
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Herewith |
1.1 |
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Form of Underwriting Agreement |
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X |
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3.1 |
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Certificate of Incorporation, effective September 3, 2015 |
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8-K |
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000-55400 |
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9/3/15 |
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3.3 |
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3.2 |
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Bylaws, adopted effective September 3, 2015 |
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8-K |
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000-55400 |
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9/3/15 |
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3.4 |
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3.3 |
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Plan of Conversion of the Registrant, effective September 3, 2015 |
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8-K |
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000-55400 |
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9/3/15 |
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2.1 |
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3.4 |
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Articles of Conversion of the Registrant, effective September 3, 2015 |
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8-K |
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000-55400 |
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9/3/15 |
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3.1 |
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3.5 |
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Certificate of Conversion of the Registrant, effective September 3, 2015 |
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8-K |
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000-55400 |
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9/3/15 |
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3.2 |
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4.1 |
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Specimen common stock certificate |
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S-1/A |
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333-205916 |
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11/5/15 |
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4.1 |
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|
4.2 |
|
Registration Rights Agreement, dated September 18, 2014, between the Registrant and certain accredited investors |
|
8-K |
|
333-173040 |
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9/19/14 |
|
10.2 |
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4.3 |
|
Form of Warrant to Purchase Common Stock, dated November 26, 2014, issued by the Registrant to certain consultants |
|
S-1/A |
|
333-205916 |
|
9/18/15 |
|
4.3 |
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4.4 |
|
Warrant to Purchase Common Stock, dated December 1, 2014, issued to Rufus Dufus, LLC |
|
10-K |
|
000-55400 |
|
3/31/15 |
|
4.9 |
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4.5 |
|
Warrant to Purchase Common Stock, dated December 1, 2014, issued to Dylana Dreams, LLC |
|
10-K |
|
000-55400 |
|
3/31/15 |
|
4.10 |
|
|
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4.6 |
|
Warrant to Purchase Common Stock, dated December 16, 2014, issued to Island Pickle, LLC |
|
10-K |
|
000-55400 |
|
3/31/15 |
|
4.11 |
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Incorporated by Reference |
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|
Exhibit |
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File |
|
Filing |
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Filed |
Number |
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Description of Exhibit |
|
Form |
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No. |
|
Date |
|
Exhibit |
|
Herewith |
4.7 |
|
Warrant to Purchase Common Stock, dated December 16, 2014, issued to Pilly Boy, LLC |
|
10-K |
|
000-55400 |
|
3/31/15 |
|
4.12 |
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4.8 |
|
Registration Rights Agreement, dated May 1, 2015, between the Registrant and certain accredited investors |
|
8-K |
|
000-55400 |
|
5/1/15 |
|
10.2 |
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4.9 |
|
Form of Senior Secured Note, dated April 23, 2015, issued by the Registrant to certain accredited investors |
|
8-K |
|
000-55400 |
|
4/23/15 |
|
4.1 |
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4.10 |
|
Form of Warrant to Purchase Common Stock, dated April 23, 2015, issued by the Registrant to certain accredited investors |
|
8-K |
|
000-55400 |
|
4/23/15 |
|
4.2 |
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4.11 |
|
Form of Senior Secured Note, dated May 7, 2015, issued by the Registrant to certain accredited investors |
|
8-K |
|
000-55400 |
|
5/7/15 |
|
4.1 |
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4.12 |
|
Form of Warrant to Purchase Common Stock, dated May 7, 2015, issued by the Registrant to certain accredited investors |
|
8-K |
|
000-55400 |
|
5/7/15 |
|
4.2 |
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4.13 |
|
Form of Warrant issued in support of Backstop Security Support Agreement, dated November 2, 2015 |
|
8-K |
|
000-55400 |
|
11/3/15 |
|
4.1 |
|
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4.14 |
|
Form of Amendment to Senior Secured Notes issued in April 2015, effective November 2, 2015 |
|
8-K |
|
000-55400 |
|
11/3/15 |
|
4.2 |
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4.15 |
|
Form of Amendment to Senior Secured Notes issued in May 2015, effective November 2, 2015 |
|
8-K |
|
000-55400 |
|
11/3/15 |
|
4.3 |
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|
4.16 |
|
Form of Warrant Agreement, dated ___________, 2015, by and between the Registrant and VStock Transfer, LLC as Warrant Agent, including Warrant Certificate |
|
S-1/A |
|
333-205916 |
|
11/5/15 |
|
4.16 |
|
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4.17 |
|
Form of Unit Certificate |
|
S-1/A |
|
333-205916 |
|
11/5/15 |
|
4.17 |
|
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|
5.1 |
|
Opinion of K&L Gates LLP |
|
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|
X |
|
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|
10.1+ |
|
Form of Indemnification Agreement for Directors and Officers |
|
S-1/A |
|
333-205916 |
|
11/5/15 |
|
10.1 |
|
|
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10.2+ |
|
2013 Equity Incentive Plan, as amended on March 25, 2015 |
|
8-K |
|
000-55400 |
|
3/30/15 |
|
10.7(B) |
|
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10.3+ |
|
2015 Omnibus Incentive Plan, as adopted by the Registrant’s board of directors on July 14, 2015 and approved by the Company’s stockholders on August 28, 2015 |
|
DEF 14A |
|
000-55400 |
|
7/15/15 |
|
App. A |
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10.4+ |
|
Executive Employment Agreement, dated April 25, 2013, between FlexPower Generation, Inc. and Alain J. Castro |
|
8-K |
|
333-173040 |
|
7/10/13 |
|
10.4 |
|
|
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|
|
Incorporated by Reference |
|
|
Exhibit |
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|
|
|
File |
|
Filing |
|
|
|
Filed |
Number |
|
Description of Exhibit |
|
Form |
|
No. |
|
Date |
|
Exhibit |
|
Herewith |
10.5+ |
|
Amendment to Executive Employment Agreement, dated May 23, 2014, between Registrant and Alain J. Castro |
|
8-K |
|
333-173040 |
|
5/30/14 |
|
99.2 |
|
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|
10.6+ |
|
Executive Employment Agreement, dated December 31, 2012, between FlexPower Generation, Inc. and Boris Maslov |
|
8-K |
|
333-173040 |
|
7/10/13 |
|
10.5 |
|
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|
|
10.7+ |
|
Amendment to Executive Employment Agreement, dated May 23, 2014, between Registrant and Boris A. Maslov |
|
8-K |
|
333-173040 |
|
5/30/14 |
|
99.3 |
|
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|
|
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|
10.8+ |
|
Offer Letter, dated August 19, 2014, from the Registrant to Domonic J. Carney |
|
8-K |
|
333-173040 |
|
8/20/14 |
|
99.1 |
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
10.9+ |
|
Executive Employment Agreement, dated August 19, 2014, between the Registrant and Domonic J. Carney |
|
8-K |
|
333-173040 |
|
8/20/14 |
|
99.2 |
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
10.10+ |
|
Offer Letter, dated May 19, 2014, from the Registrant to Jeff Horn |
|
8-K |
|
333-173040 |
|
5/30/14 |
|
99.1 |
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
10.11+ |
|
Offer Letter, November 28, 2014, from the Registrant to Ian C. Copeland |
|
8-K |
|
333-173040 |
|
12/4/14 |
|
99.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12+ |
|
Offer Letter, dated May 18, 2015, from the Registrant to Eric Helenek |
|
8-K |
|
000-55400 |
|
5/21/15 |
|
99.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.13+ |
|
Commercial Lease Agreement, dated May 26, 2011, between Meehan Holdings, LLC and FlexEnergy, Inc. |
|
10-Q |
|
333-173040 |
|
8/19/13 |
|
10.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14 |
|
Assignment and Assumption of Lease, dated August 1, 2013, between the Registrant and FlexEnergy, Inc. |
|
8-K |
|
333-173040 |
|
10/2/13 |
|
10.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.15 |
|
Lessor’s Consent to Assignment and Sublease, dated September 4, 2013, among the Registrant, FlexEnergy, Inc. and Meehan Holdings, LLC |
|
8-K |
|
333-173040 |
|
10/2/13 |
|
10.17A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16 |
|
Securities Purchase Agreement, dated September 18, 2014, among the Registrant and certain accredited investors |
|
8-K |
|
333-173040 |
|
9/19/14 |
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17 |
|
Amendment and Waiver Agreement, dated December 1, 2014, between the Registrant and certain accredited investors |
|
10-K |
|
000-55400 |
|
3/31/15 |
|
10.29 |
|
|
|
|
|
|
|
|
Incorporated by Reference |
|
|
Exhibit |
|
|
|
|
|
File |
|
Filing |
|
|
|
Filed |
Number |
|
Description of Exhibit |
|
Form |
|
No. |
|
Date |
|
Exhibit |
|
Herewith |
10.18 |
|
Form of Settlement Agreement and Mutual Release, dated December 16, 2014, among the Registrant and certain accredited investors |
|
10-K |
|
000-55400 |
|
3/31/15 |
|
10.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.19 |
|
Form of Exchange Agreement, dated April 16, 2015, between the Registrant and certain accredited investors |
|
8-K |
|
000-55400 |
|
4/7/15 |
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.20 |
|
Securities Purchase Agreement, dated April 22, 2015, between the Registrant and certain accredited investors |
|
8-K |
|
000-55400 |
|
4/23/15 |
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.21 |
|
Pledge and Security Agreement, dated April 23, 2015, among the Registrant, Ener-Core Power, Inc. and Empery Tax Efficient, LP, as collateral agent |
|
8-K |
|
000-55400 |
|
4/23/15 |
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.22 |
|
Securities Purchase Agreement, dated May 1, 2015, among the Registrant and certain accredited investors |
|
8-K |
|
000-55400 |
|
5/1/15 |
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.23 |
|
Securities Purchase Agreement, dated May 7, 2015, among the Registrant and certain accredited investors |
|
8-K |
|
000-55400 |
|
5/7/15 |
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.24 |
|
First Amendment to Securities Purchase Agreement, dated May 7, 2015, between the Registrant and Empery Tax Efficient, LP, as collateral agent |
|
8-K |
|
000-55400 |
|
5/7/15 |
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.25 |
|
First Amendment to the Pledge and Security Agreement, dated May 7, 2015, among the Registrant, Ener-Core Power, Inc. and Empery Tax Efficient, LP, as collateral agent |
|
8-K |
|
000-55400 |
|
5/7/15 |
|
10.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26 |
|
Sales and Service Agreement between Ener-Core Power, Inc. and the Regents of the University of California University of California, Irvine, dated April 19, 2013 |
|
8-K/A |
|
333-173040 |
|
8/29/13 |
|
10.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27† |
|
Commercial License Agreement, dated November 14, 2014, between Ener-Core Power, Inc. and Dresser-Rand Company |
|
10-K |
|
000-55400 |
|
3/31/15 |
|
10.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.28† |
|
First Amendment to Commercial License Agreement, dated March 17, 2015, between the Registrant and Dresser-Rand Company |
|
10-K |
|
000-55400 |
|
3/31/15 |
|
10.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.29 |
|
First Amendment to Securities Purchase Agreement, dated May 7, 2015, effective as of October 22, 2015, between the Registrant and certain accredited investors |
|
8-K |
|
000-55400 |
|
10/23/15 |
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.30 |
|
Second Amendment to Securities Purchase Agreement, dated April 22, 2015, effective as of October 22, 2015, between the Registrant and certain accredited investors |
|
8-K |
|
000-55400 |
|
10/23/15 |
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.31 |
|
Backstop Security Support Agreement between the Registrant and an investor, dated November 2, 2015 |
|
8-K |
|
000-55400 |
|
11/3/15 |
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.32 |
|
Security Agreement between the Registrant and an investor, dated November 2, 2015 |
|
8-K |
|
000-55400 |
|
11/3/15 |
|
10.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.33 |
|
Subordination and Intercreditor Agreement among an investor, the Registrant and Empery Tax Efficient, LP in its capacity as collateral agent for senior lenders, dated November 2, 2015 |
|
8-K |
|
000-55400 |
|
11/3/15 |
|
10.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14.1 |
|
Code of Ethics, adopted on September 24, 2013 |
|
10-K |
|
333-173040 |
|
4/15/14 |
|
14.1 |
|
|
|
|
|
|
|
|
Incorporated by Reference |
|
|
Exhibit |
|
|
|
|
|
File |
|
Filing |
|
|
|
Filed |
Number |
|
Description of Exhibit |
|
Form |
|
No. |
|
Date |
|
Exhibit |
|
Herewith |
16.1 |
|
Letter from Kelly & Company, dated December 9, 2014 |
|
8-K |
|
333-173040 |
|
12/10/14 |
|
16.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1 |
|
Subsidiaries of the Registrant |
|
S-1 |
|
333-205916 |
|
7/29/15 |
|
21.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1 |
|
Consent of SingerLewak LLP, independent registered public accounting firm |
|
S-1 |
|
333-205916 |
|
10/30/15 |
|
23.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.2 |
|
Consent of Kelly & Company, independent registered public accounting firm |
|
S-1 |
|
333-205916 |
|
10/30/15 |
|
23.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.3 |
|
Consent of K&L Gates LLP (included in Exhibit 5.1) |
|
|
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
24.1 |
|
Power of Attorney |
|
S-1 |
|
333-205916 |
|
7/29/15 |
|
24.1 |
|
|
_____________
† |
Confidential treatment requested as to portions of the exhibit. Confidential materials omitted and filed separately with the SEC. |
|
|
+ |
Indicates a management contract or compensatory plan. |
II-11
Exhibit
1.1
[●]
Units1
Ener-core,
Inc.
PURCHASE
AGREEMENT
[●], 2015
Northland
Securities, Inc.
LAKE
STREET CAPITAL MARKETS, LLC
As
Representatives of the several Underwriters
Named
in Schedule I hereto
c/o
Northland Securities, Inc.
45
South Seventh Street, Suite 2000
Minneapolis,
Minnesota 55402
Ladies
and Gentlemen:
Ener-Core,
Inc., a Delaware corporation (the “Company”), proposes to sell to the several Underwriters named in
Schedule I hereto (the “Underwriters”) an aggregate of [●] units (the “Firm
Units”), with each Firm Unit consisting of (i) one (1) authorized but unissued share (each, a “Firm
Share”) of Common Stock, par value $0.0001 per share (the “Common Stock”), of the Company,
and (ii) one (1) warrant of the Company, in the form set forth in Exhibit A hereto, to purchase [●] of a share of
Common Stock at an exercise price of $[●] per share (each, a “Firm Warrant”). The Company also
has granted to the several Underwriters an option to purchase up to [●] additional units (the “Option
Units” and together with the Firm Units, the “Units”), with each Option Unit consisting
of (i) one (1) authorized but unissued share of Common Stock (each, an “Option Share” and together with
the Firm Shares, the “Shares”), and (ii) one (1) warrant of the Company, in the form set forth in Exhibit
A hereto, to purchase [●] of a share of Common Stock at an exercise price of $[●] per share (each, an “Option
Warrant” and together with the Firm Warrants, the “Warrants”) on the terms and for the
purposes set forth in Section 3 hereof. The Units, the Shares, the Warrants and the shares of Common Stock issuable upon
exercise of the Warrants purchased pursuant to this Purchase Agreement (the “Agreement”) are herein
collectively called the “Securities.” The Underwriters may elect to purchase Option Units, the Option
Shares and/or the Option Warrants in any combination to be determined by the Underwriters, such Securities not to exceed, in the
aggregate, 15% of each of the Firm Shares and the Firm Warrants, whether issued as part of the Units or separately. The Shares
and the Warrants will be immediately separable and transferable upon issuance of the Units.
The
Company hereby confirms its agreement with respect to the sale of the Securities to the several Underwriters, for whom Northland
Securities, Inc. and Lake Street Capital Markets, LLC are acting as representatives (the “Representatives”
or “you”).
1 | Plus
an option to purchase additional securities to cover over-allotments as set forth herein. |
1. Registration
Statement and Prospectus. A registration statement on Form S-1 (File No. 333-205916) with respect to the Securities,
including a preliminary form of prospectus, has been prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the “Act”), and the rules and regulations (“Rules and Regulations”)
of the Securities and Exchange Commission (the “Commission”) thereunder and has been filed with the
Commission. Such registration statement, including the amendments, exhibits and schedules thereto, as of the time it became effective,
including the Rule 430A Information (as defined below), is referred to herein as the “Registration Statement”.
The Company will prepare and file a prospectus pursuant to Rule 424(b) of the Rules and Regulations that discloses the information
previously omitted from the prospectus in the Registration Statement in reliance upon Rule 430A of the Rules and Regulations,
which information will be deemed retroactively to be a part of the Registration Statement in accordance with Rule 430A of the
Rules and Regulations (“Rule 430A Information”). If the Company has elected to rely upon Rule 462(b)
of the Rules and Regulations to increase the size of the offering registered under the Act, the Company will prepare and file
with the Commission a registration statement with respect to such increase pursuant to Rule 462(b) of the Rules and Regulations
(such registration statement, including the contents of the Registration Statement incorporated by reference therein is the “Rule
462(b) Registration Statement”). References herein to the “Registration Statement” will
be deemed to include the Rule 462(b) Registration Statement at and after the time of filing of the Rule 462(b) Registration Statement.
“Preliminary Prospectus” means any prospectus included in the Registration Statement prior to the effective
time of the Registration Statement, any prospectus filed with the Commission pursuant to Rule 424(a) under the Rules and Regulations
and each prospectus that omits Rule 430A Information used after the effective time of the Registration Statement. “Prospectus”
means the prospectus that discloses the public offering price and other final terms of the Securities and the offering
and otherwise satisfies Section 10(a) of the Act. All references in this Agreement to the Registration Statement,
any Preliminary Prospectus, the Prospectus or any amendment or supplement to any of the foregoing, is deemed to include the copy
filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System or any successor system thereto
(“EDGAR”).
All
references herein to the Registration Statement, any Preliminary Prospectus or a Prospectus shall be deemed as of any time to
include the documents and information incorporated therein by reference in accordance with the Rules and Regulations.
|
2. |
Representations
and Warranties of the Company. |
(a) Representations
and Warranties of the Company. The Company represents and warrants to, and agrees with, the several Underwriters as follows:
(i) Registration
Statement and Prospectuses. The Registration Statement and any post-effective amendment thereto has become effective under the
Act. No stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been
issued, and no proceeding for that purpose has been initiated or, to the Company’s knowledge, threatened by the Commission.
No order preventing or suspending the use of any Preliminary Prospectus or the Prospectus (or any supplement thereto) has been
issued by the Commission and no proceeding for that purpose has been initiated or, to the Company’s knowledge, threatened
by the Commission. As of the time the Registration Statement (or any post-effective amendment thereto) became or becomes effective,
such Registration Statement (or any post-effective amendment thereto) conformed or will conform in all material respects to the
requirements of the Act and the Rules and Regulations. Upon the filing or first use within the meaning of the Rules and Regulations,
each Preliminary Prospectus and the Prospectus (or any supplement to either) conformed or will conform in all material respects
to the requirements of the Act and the Rules and Regulations.
(ii) Accurate
Disclosure. Neither the Registration Statement nor any amendment thereto, at the effective time of each part thereof,
at the First Closing Date (as defined below) or at the Second Closing Date (as defined below), contained, contains or will contain
an untrue statement of a material fact or omitted, omits or will omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. As of the Time of Sale (as defined below), neither (A) the Time of Sale
Disclosure Package (as defined below) nor (B) any issuer free writing prospectus (as defined below), when considered together
with the Time of Sale Disclosure Package, included an untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Neither
the Prospectus nor any supplement thereto, as of its issue date, at the time of any filing with the Commission pursuant to Rule
424(b) of the Rules and Regulations, at the First Closing Date or at the Second Closing, included, includes or will include an
untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading. The representations and warranties in this
Section 2(a)(ii) shall not apply to statements in or omissions from the Registration Statement (or any amendment thereto),
the Time of Sale Disclosure Package or the Prospectus (or any supplement thereto) made in reliance upon, and in conformity with,
written information furnished to the Company by you, or by any Underwriter through you, specifically for use in the preparation
of such document, it being understood and agreed that the only such information furnished by any Underwriter consists of the information
described as such in Section 6(e).
“Time
of Sale Disclosure Package” means the Preliminary Prospectus dated [●], 2015 and the information on Schedule
III, all considered together.
Each
reference to a “free writing prospectus” herein means a free writing prospectus as defined in Rule 405
of the Rules and Regulations.
“Time
of Sale” means [●] [a/p]m (Eastern time) on the date of this Agreement.
(iii) No
Other Offering Materials. The Company has not distributed and will not distribute any prospectus or other offering material
in connection with the offering and sale of the Securities other than any Preliminary Prospectus, the Time of Sale Disclosure
Package or the Prospectus or other materials permitted by the Act to be distributed by the Company; provided, further, that the
Company has not made and will not make any offer relating to the Securities that would constitute a free writing prospectus.
(iv) Financial
Statements. The financial statements of the Company, together with the related notes, set forth in the Registration Statement,
the Time of Sale Disclosure Package and Prospectus comply in all material respects with the requirements of the Act and the Rules
and Regulations and fairly present the financial condition of the Company and its consolidated subsidiaries as of the dates indicated
and the results of operations, cash flows and changes in stockholders’ equity for the periods therein specified. The financial
statements of the Company, together with the related notes, set forth in the Registration Statement, the Time of Sale Disclosure
Package and Prospectus have been prepared in accordance with generally accepted accounting principles in the United States consistently
applied throughout the periods involved, except in the case of unaudited interim financial statements, which are subject to normal
year-end adjustments and do not contain certain footnotes as permitted by the applicable rules of the Commission. The supporting
schedules of the Company included in the Registration Statement present fairly the information required to be stated therein.
All non-GAAP financial information included in the Registration Statement, the Time of Sale Disclosure Package and the Prospectus
complies with the requirements of Item 10 of Regulation S-K under the Act. Except as disclosed in the Time of Sale Disclosure
Package and the Prospectus, there are no material off-balance sheet arrangements (as defined in Regulation S-K under the Act,
Item 303(a)(4)(ii)) or anyknown trends or any known demands, commitments, events or uncertainties that are required to be disclosed
by Items 303(a)(1), (2) and (3) of Regulation S-K. No other financial statements or schedules are required to be included in the
Registration Statement, the Time of Sale Disclosure Package or the Prospectus. SingerLewak LLP and Kelly & Company, which
have expressed their opinion with respect to the financial statements of the Company and related schedules filed as a part of
the Registration Statement and included in the Registration Statement, the Time of Sale Disclosure Package and the Prospectus,
are (x) independent registered public accounting firms within the meaning of the Act and the Rules and Regulations, and (y) not
in violation of the auditor independence requirements of the Sarbanes-Oxley Act.
(v) Organization
and Good Standing. Each of the Company and its subsidiaries has been duly organized and is validly existing as
a corporation in good standing under the laws of its jurisdiction of incorporation. Each of the Company and its subsidiaries has
full corporate power and authority to own its properties and conduct its business as currently being carried on and as described
in the Registration Statement, the Time of Sale Disclosure Package and Prospectus, and is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction in which the ownership or lease of real property or the conduct of its business
requires such qualification and in which the failure to so qualify would have a material adverse effect upon the business, prospects,
management, properties, operations, condition (financial or otherwise) or results of operations of the Company and its subsidiaries,
taken as a whole (“Material Adverse Effect”).
(vi) Absence
of Certain Events. Except as contemplated in the Time of Sale Disclosure Package and in the Prospectus, subsequent to
the date of the most recent financial statements of the Company included in the Time of Sale Disclosure Package, neither the Company
nor any of its subsidiaries has incurred any material liabilities or obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any distribution of any kind with respect to its capital stock; and there
has not been any change in the capital stock (other than a change in the number of outstanding shares of Common Stock due to the
issuance of shares upon the exercise of outstanding options or warrants or conversion of convertible securities), or any material
change in the short-term or long-term debt (other than as a result of the conversion of convertible securities), or any issuance
of options, warrants, convertible securities or other rights to purchase the capital stock, of the Company or any of its subsidiaries,
or any material adverse change in the business, prospects, management, properties, operations, condition (financial or otherwise)
or results of operations of the Company and its subsidiaries, taken as a whole (“Material Adverse Change”)
or any development which could reasonably be expected to result in any Material Adverse Change.
(vii) Absence
of Proceedings. Except as set forth in the Time of Sale Disclosure Package and in the Prospectus, there
is not pending or, to the knowledge of the Company, threatened or contemplated, any action, suit or proceeding (a) to which the
Company or any of its subsidiaries is a party or (b) which has as the subject thereof any officer or director of the Company or
any subsidiary, any employee benefit plan sponsored by the Company or any subsidiary or any property or assets owned or leased
by the Company or any subsidiary before or by any court or Governmental Authority (as defined below), or any arbitrator, which,
individually or in the aggregate, could reasonably be expected to result in any Material Adverse Change, or would materially and
adversely affect the ability of the Company to perform its obligations under this Agreement or which are otherwise material in
the context of the sale of the Securities. There are no current or, to the knowledge of the Company, pending, legal, governmental
or regulatory actions, suits or proceedings (x) to which the Company or any of its subsidiaries is subject or (y) which has as
the subject thereof any officer or director of the Company or any subsidiary, any employee plan sponsored by the Company or any
subsidiary or any property or assets owned or leased by the Company or any subsidiary, that are required to be described in the
Registration Statement, Time of Sale Disclosure Package and Prospectus by the Act or by the Rules and Regulations and that have
not been so described.
(viii) Authorization;
No Conflicts; Authority. This Agreement has been duly authorized, executed and delivered by the Company, and constitutes
a valid, legal and binding obligation of the Company, enforceable in accordance with its terms, except as rights to indemnity
hereunder may be limited by federal or state securities laws and except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity. The execution,
delivery and performance of this Agreement and the consummation of the transactions herein contemplated will not (A) conflict
with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries
pursuant to any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, (B) result in any violation of the provisions of the Company’s
charter or by-laws or (C) result in the violation of any law or statute or any judgment, order, rule, regulation or decree of
any court or arbitrator or federal, state, local or foreign governmental agency or regulatory authority having jurisdiction over
the Company or any of its subsidiaries or any of their properties or assets (each, a “Governmental Authority”),
except in the case of clauses (A) and (C) as could not, individually or in the aggregate, reasonably be likely to result in a
Material Adverse Effect. No consent, approval, authorization or order of, or registration or filing with any Governmental Authority
is required for the execution, delivery and performance of this Agreement or for the consummation of the transactions contemplated
hereby, including the issuance or sale of the Securities by the Company, except such as may be required under the Act, the rules
of the Financial Industry Regulatory Authority (“FINRA”) or state securities or blue sky laws;
and the Company has full corporate power and authority to enter into this Agreement and to consummate the transactions contemplated
hereby, including the authorization, issuance and sale of the Securities as contemplated by this Agreement.
(ix) Capitalization;
the Securities; Registration Rights. All of the issued and outstanding shares of capital stock of the Company, including
the outstanding shares of Common Stock, are duly authorized and validly issued, fully paid and nonassessable, have been issued
in compliance with all federal and state and foreign securities laws, and were not issued in violation of or subject to any preemptive
rights or other similar rights to subscribe for or purchase securities that have not been waived in writing (a copy of which has
been delivered to counsel to the Representatives), and the holders thereof are not subject to personal liability by reason of
being such holders; the Securities (including the Units, Shares and Warrants) which may be sold hereunder by the Company have
been duly authorized and, the Shares, when issued, delivered and paid for in accordance with the terms of this Agreement, will
have been validly issued and will be fully paid and nonassessable, and the holders thereof will not be subject to personal liability
by reason of being such holders; and the capital stock of the Company, including the Common Stock, conforms to the description
thereof in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus. Except as otherwise stated
in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus, (A) there are no preemptive
rights or other rights to subscribe for or to purchase, or any restriction upon the voting or transfer of, any shares of Common
Stock pursuant to the Company’s charter, by-laws or any agreement or other instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is bound, (B) neither the filing of the Registration
Statement nor the offering or sale of the Securities as contemplated by this Agreement gives rise to any rights for or relating
to the registration of any shares of Common Stock or other securities of the Company (collectively “Registration Rights”)
and (C) any person to whom the Company has granted Registration Rights has agreed not to exercise such rights until after
expiration of the Lock-Up Period (as defined below). All of the issued and outstanding shares of capital stock of each of the
Company’s subsidiaries have been duly and validly authorized and issued and are fully paid and nonassessable, and, except
as otherwise described in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus, the Company
owns of record and beneficially, free and clear of any security interests, claims, liens, proxies, equities or other encumbrances,
all of the issued and outstanding shares of such stock. The Company has an authorized and outstanding capitalization as set forth
in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus under the caption “Description
of Capital Stock.” The Securities (including the Units, Shares and Warrants) conform in all material respects to the descriptions
thereof contained in the Registration Statement, the Time of Sale Disclosure Package and the Prospectus.
(x) Stock
Options. Except as described in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus,
there are no options, warrants, agreements, contracts or other rights in existence to purchase or acquire from the Company or
any subsidiary of the Company any shares of the capital stock of the Company or any subsidiary of the Company. The description
of the Company’s stock option, stock bonus and other stock plans or arrangements (the “Company Stock Plans”),
and the options (the “Options”) or other rights granted thereunder, set forth in the Time of Sale Disclosure
Package and the Prospectus accurately and fairly presents in all material respects the information required to be shown with respect
to such plans, arrangements, options and rights. Each grant of an Option (A) was duly authorized no later than the date on which
the grant of such Option was by its terms to be effective by all necessary corporate action, including, as applicable, approval
by the board of directors of the Company (or a duly constituted and authorized committee thereof) and any required stockholder
approval by the necessary number of votes or written consents, and the award agreement governing such grant (if any) was duly
executed and delivered by each party thereto and (B) was made in accordance with the terms of the applicable Company Stock
Plan, and all applicable laws and regulatory rules or requirements, including all applicable federal securities laws.
(xi) Compliance
with Laws. Except as could not, individually or in the aggregate, reasonably be likely to have a Material Adverse Effect,
the Company and each of its subsidiaries holds, and is operating in compliance with all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders of any Governmental Authority or self-regulatory body required for the conduct
of its business and all such franchises, grants, authorizations, licenses, permits, easements, consents, certifications and orders
are valid and in full force and effect; and except as could, individually or in the aggregate, reasonably be likely to have a
Material Adverse Effect, neither the Company nor any of its subsidiaries has received notice of any revocation or modification
of any such franchise, grant, authorization, license, permit, easement, consent, certification or order or has reason to believe
that any such franchise, grant, authorization, license, permit, easement, consent, certification or order will not be renewed
in the ordinary course; and except as could not, individually or in the aggregate, reasonably be likely to have a Material Adverse
Effect, the Company and each of its subsidiaries is in compliance with all applicable federal, state, local and foreign laws,
regulations, orders and decrees.
(xii) Ownership
of Assets. The Company and its subsidiaries have good and marketable title to all property (whether real or personal)
described in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus as being owned by them,
in each case free and clear of all liens, claims, security interests, other encumbrances or defects except such as are described
in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus. The property held under lease by
the Company and its subsidiaries is held by them under valid, subsisting and enforceable leases with only such exceptions with
respect to any particular lease as do not interfere in any material respect with the conduct of the business of the Company or
its subsidiaries.
(xiii) Intellectual
Property. The Company and each of its subsidiaries owns, possesses, or to the knowledge of the Company can acquire on
reasonable terms, all material Intellectual Property necessary for the conduct of the Company’s and it subsidiaries’
business as now conducted or as described in the Registration Statement, the Time of Sale Disclosure Package and the Prospectus
to be conducted. Furthermore, (A) to the knowledge of the Company, there is no infringement, misappropriation or violation by
third parties of any such Intellectual Property owned or licensed by the Company; (B) there is no pending or, to the knowledge
of the Company, threatened, action, suit, proceeding or claim by others challenging the Company’s or any of its subsidiaries’
rights in or to any such Intellectual Property owned or licensed by the Company, and to the knowledge of the Company, there are
no facts that would form a reasonable basis for any such claim; (C) the Intellectual Property owned by the Company and its subsidiaries,
and to the knowledge of the Company, the Intellectual Property licensed to the Company and its subsidiaries, has not been adjudged
invalid or unenforceable, in whole or in part, and there is no pending or, to the knowledge of the Company, threatened action,
suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property, and to the knowledge
of the Company, there are no material facts that would form a reasonable basis for any such claim; (D) there is no pending or,
to the knowledge of the Company, threatened action, suit, proceeding or claim by others that the Company or any of its subsidiaries
infringes, misappropriates or otherwise violates any Intellectual Property or other proprietary rights of others, neither the
Company or any of its subsidiaries has received any written notice of such claim and to the knowledge of the Company, there are
no material facts that would form a reasonable basis for any such claim; and (E) to the Company’s knowledge, no employee
of the Company or any of its subsidiaries is in or has ever been in violation of any term of any employment contract, patent disclosure
agreement, invention assignment agreement, non-competition agreement, non-solicitation agreement, nondisclosure agreement or any
restrictive covenant to or with a former employer where the basis of such violation relates to such employee’s employment
with the Company or any of its subsidiaries or actions undertaken by the employee while employed with the Company or any of its
subsidiaries, except as such violation would not result in a Material Adverse Effect. “Intellectual Property”
shall mean all patents, patent applications, trade and service marks, trade and service mark registrations, trade names,
copyrights, licenses, inventions, trade secrets, domain names, technology, know-how and other intellectual property.
(xiv) No
Violations or Defaults. Neither the Company nor any of its subsidiaries is in violation of its respective charter, by-laws
or other organizational documents. Neither the Company nor any of its subsidiaries is in breach of or otherwise in default, and
no event has occurred which, with notice or lapse of time or both, would constitute such a default in the performance of any material
obligation, agreement or condition contained in any bond, debenture, note, indenture, loan agreement or any other material contract,
lease or other instrument to which it is subject or by which any of them may be bound, or to which any of the material property
or assets of the Company or any of its subsidiaries is subject, except for such breach or default as is not, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect.
(xv) Taxes.
The Company and its subsidiaries have filed all federal, state, local and foreign income and franchise tax returns required to
be filed except where the failure to file could not, individually or in the aggregate, reasonably be likely to have a Material
Adverse Effect, and are not in default in the payment of any taxes which were payable pursuant to said returns or any assessments
with respect thereto, other than any which the Company or any of its subsidiaries is contesting in good faith. There is no pending
dispute with any taxing authority relating to any of such returns, and the Company has no knowledge of any proposed liability
for any tax to be imposed upon the properties or assets of the Company or any of its subsidiaries for which there is not an adequate
reserve reflected in the Company’s financial statements included in the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus.
(xvi) Exchange
Listing and Exchange Act Registration. The Common Stock is registered pursuant to Section 12(g) of the Exchange Act and
is quoted on the OTCQB Venture Marketplace (the “OTCQB”) and the Company has taken no action designed
to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company
received any notification that the Commission is contemplating terminating such registration. The Company has complied in all
material respects with the applicable requirements of the OTCQB for maintenance and inclusion of the Common Stock on the OTCQB
automated quotation system. Except as previously disclosed to counsel for the Underwriters or as set forth in the Time of Sale
Disclosure Package and the Prospectus, there are no affiliations with members of FINRA among the Company’s officers or directors
or, to the knowledge of the Company, any five percent or greater stockholders of the Company or any beneficial owner of the Company’s
unregistered equity securities that were acquired during the 180-day period immediately preceding the initial filing date of the
Registration Statement. The Company’s board of directors has, subject to the exceptions, cure periods and the phase-in periods
specified in the applicable stock exchange rules (“Exchange Rules”), validly appointed an audit committee
to oversee internal accounting controls whose composition satisfies the applicable requirements of the Exchange Rules and the
Company’s board of directors and/or the audit committee has adopted a charter that satisfies the requirements of the Exchange
Rules. The Securities shall have been approved for listing on the NYSE MKT, subject to official notice of issuance.
(xvii) Ownership
of Other Entities. Other than the subsidiaries of the Company listed in Exhibit 21.1 to the Registration Statement
or as otherwise disclosed in the Registration Statement, Time of Sale Disclosure Package and Prospectus, the Company, directly
or indirectly, owns no capital stock or other equity or ownership or proprietary interest in any corporation, partnership, association,
trust or other entity.
(xviii) Internal
Controls. The Company and its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles
in the United States and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in the Registration
Statement, in the Time of Sale Disclosure Package and in the Prospectus, the Company’s internal control over financial reporting
is effective and none of the Company, its board of directors and audit committee is aware of any “significant deficiencies”
or “material weaknesses” (each as defined by the Public Company Accounting Oversight Board) in its internal control
over financial reporting, or any fraud, whether or not material, that involves management or other employees of the Company or
its subsidiaries who have a significant role in the Company’s internal controls; and since the end of the latest audited
fiscal year, there has been no change in the Company’s internal control over financial reporting (whether or not remediated)
that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial
reporting. The Company’s board of directors has, subject to the exceptions, cure periods and the phase-in periods specified
in the applicable stock exchange rules (“Exchange Rules”), validly appointed an audit committee to oversee
internal accounting controls whose composition satisfies the applicable requirements of the Exchange Rules and the Company’s
board of directors and/or the audit committee has adopted a charter that satisfies the requirements of the Exchange Rules.
(xix) No
Brokers or Finders. Except as disclosed on Schedule 2(a)(xix), and other than as contemplated by this Agreement, the Company
has not incurred and will not incur any liability for any finder’s or broker’s fee or agent’s commission in
connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.
(xx) Insurance.
The Company and each of its subsidiaries carries, or is covered by, insurance from reputable insurers in such amounts and covering
such risks as is adequate for the conduct of its business and the value of its properties and the properties of its subsidiaries
and as is customary for companies engaged in similar businesses in similar industries; all policies of insurance and any fidelity
or surety bonds insuring the Company or any of its subsidiaries or its business, 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; there are no claims by the Company or any of its subsidiaries under any such policy or instrument as to
which any insurance company is denying liability or defending under a reservation of rights clause; neither the Company nor any
of its subsidiaries has been refused any insurance coverage sought or applied for; and neither the Company nor any of its subsidiaries
has 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 would not, individually
or in the aggregate, have a Material Adverse Effect.
(xxi) Investment
Company Act. The Company is not and, after giving effect to the offering and sale of the Securities, will not be an “investment
company,” as such term is defined in the Investment Company Act of 1940, as amended.
(xxii) Sarbanes-Oxley
Act. The Company is in compliance with all applicable provisions of the Sarbanes-Oxley Act and the rules and regulations
of the Commission thereunder.
(xxiii) Disclosure
Controls. The Company has established and maintains disclosure controls and procedures (as defined in Rules 13a-14 and
15d-14 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) and, except as disclosed
in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus, such controls and procedures are
effective in ensuring that material information relating to the Company, including its subsidiaries, is made known to the principal
executive officer and the principal financial officer.
(xxiv) Anti-Bribery
and Anti-Money Laundering Laws. Each of the Company, its subsidiaries, its affiliates and, to the Company’s knowledge,
any of their respective officers, directors, supervisors, managers, agents, or employees, has not violated, its participation
in the offering will not violate, and the Company and each of its subsidiaries has instituted and maintains policies and procedures
designed to ensure continued compliance with, each of the following laws: (A) anti-bribery laws, including but not limited to,
any applicable law, rule, or regulation of any locality, including but not limited to any law, rule, or regulation promulgated
to implement the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed
December 17, 1997, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act 2010, or any
other law, rule or regulation of similar purposes and scope or (B) anti-money laundering laws, including but not limited to, applicable
federal, state, international, foreign or other laws, regulations or government guidance regarding anti-money laundering, including,
without limitation, Title 18 US. Code section 1956 and 1957, the Patriot Act, the Bank Secrecy Act, and international anti-money
laundering principles or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on
Money Laundering, of which the United States is a member and with which designation the United States representative to the group
or organization continues to concur, all as amended, and any Executive order, directive, or regulation pursuant to the authority
of any of the foregoing, or any orders or licenses issued thereunder. The Company has instituted, maintains and enforces policies
and procedures designed to ensure compliance with anti-bribery laws.
(xxv) OFAC.
(A) Neither
the Company nor any of its subsidiaries, nor any or their directors, officers or employees, nor, to the Company’s knowledge,
any agent, affiliate or representative of the Company or its subsidiaries, is an individual or entity that is, or is owned or
controlled by an individual or entity that is:
(1) the
subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control,
the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively,
“Sanctions”), nor
(2) located,
organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar,
Cuba, Iran, Libya, North Korea, Sudan and Syria).
(B) Neither
the Company nor any of its subsidiaries will, 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 individual or entity:
(1) to
fund or facilitate any activities or business of or with any individual or entity or in any country or territory that, at the
time of such funding or facilitation, is the subject of Sanctions; or
(2) in
any other manner that will result in a violation of Sanctions by any individual or entity (including any individual or entity
participating in the offering, whether as underwriter, advisor, investor or otherwise).
(C) For
the past five years, neither the Company nor any of its subsidiaries has knowingly engaged in, and is not now knowingly engaged
in, any dealings or transactions with any individual or entity, or in any country or territory, that at the time of the dealing
or transaction is or was the subject of Sanctions.
(xxvi) Compliance
with Environmental Laws. Except as disclosed in the Time of Disclosure Package and the Prospectus, neither the Company
nor any of its subsidiaries is in violation of any statute, any rule, regulation, decision or order of any Governmental Authority
or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), owns or operates any real property contaminated with any substance that is subject to any Environmental
Laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or is subject to any claim relating
to any Environmental Laws, which violation, contamination, liability or claim would individually or in the aggregate, have a Material
Adverse Effect; and the Company is not aware of any pending investigation which would reasonably be expected to lead to such a
claim. Except as disclosed in the Time of Disclosure Package and the Prospectus, neither the Company nor any of its subsidiaries
anticipates incurring any material capital expenditures relating to compliance with Environmental Laws.
(xxvii) Compliance with Occupational Laws. The Company and each of its subsidiaries (A) is in compliance with any and all
applicable foreign, federal, state and local laws, rules, regulations, treaties, statutes and codes promulgated by any and all
Governmental Authorities (including pursuant to the Occupational Health and Safety Act) relating to the protection of human health
and safety in the workplace (“Occupational Laws”); (B) has received all permits, licenses or other approvals
required of it under applicable Occupational Laws to conduct its business as currently conducted; and (C) is in compliance with
all terms and conditions of such permit, license or approval, except in the case of clauses (A), (B) and (C) as are not, individually
or in the aggregate, reasonably be likely to result in a Material Adverse Effect. No action, proceeding, revocation proceeding,
writ, injunction or claim is pending or, to the Company’s knowledge, threatened against the Company or any of its subsidiaries
relating to Occupational Laws, and the Company does not have knowledge of any facts, circumstances or developments relating to
its operations or cost accounting practices that could reasonably be expected to form the basis for or give rise to such actions,
suits, investigations or proceedings.
(xxviii) ERISA
and Employee Benefits Matters. (A) To the knowledge of the Company, no “prohibited transaction” as defined
under Section 406 of ERISA or Section 4975 of the Code and not exempt under ERISA Section 408 or the regulations or published
interpretations thereunder has occurred with respect to any Employee Benefit Plan. Neither the Company nor any ERISA Affiliate
maintains, sponsors, participates in, contributes to or has any liability or obligation in respect of any Employee Benefit Plan
subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA, or Section 412 of the Code or any “multiemployer
plan” as defined in Section 3(37) of ERISA or any multiple employer plan for which the Company or any ERISA Affiliate has
or could incur liability under Section 4063 or 4064 of ERISA. No Employee Benefit Plan provides or promises, or at any time provided
or promised, retiree health, retiree life insurance, or other retiree welfare benefits except as may be required by the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, or similar state law. Each Employee Benefit Plan is and has been operated
in material compliance with its terms and all applicable laws, including but not limited to ERISA and the Code and, to the knowledge
of the Company, no event has occurred (including a “reportable event” as such term is defined in Section 4043 of ERISA)
and no condition exists that would subject the Company or any ERISA Affiliate to any material tax, fine, lien, penalty or liability
imposed by ERISA, the Code or other applicable law. Each Employee Benefit Plan intended to be qualified under Code Section 401(a)
has a favorable determination or opinion letter from the IRS upon which it can rely, and any such determination or opinion letter
remains in effect and has not been revoked; to the knowledge of the Company, nothing has occurred since the date of any such determination
or opinion letter that is reasonably likely to adversely affect such qualification; (B) neither the Company nor any of its subsidiaries
has any Foreign Benefit Plans; and (C) the Company does not have any obligations under any collective bargaining agreement with
any union and, to the knowledge of the Company, no organization efforts are underway with respect to Company employees. As used
in this Agreement, “Code” means the Internal Revenue Code of 1986, as amended; “Employee
Benefit Plan” means any “employee benefit plan” within the meaning of Section 3(3) of ERISA, including,
without limitation, all stock purchase, stock option, stock-based severance, employment, change-in-control, medical, disability,
fringe benefit, bonus, incentive, deferred compensation, employee loan and all other employee benefit plans, agreements, programs,
policies or other arrangements, whether or not subject to ERISA, under which (x) any current or former employee, director or independent
contractor of the Company or its subsidiaries has any present or future right to benefits and which are contributed to, sponsored
by or maintained by the Company or any of its respective subsidiaries and (y) the Company or any of its subsidiaries has any present
or future obligation or liability; “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended; “ERISA Affiliate” means any member of the company’s controlled group as defined in
Code Section 414(b), (c), (m) or (o); and “Foreign Benefit Plan” means any Employee Benefit Plan established,
maintained or contributed to outside of, and subject to applicable laws other than those of, the United States of America or any
state thereof, or which covers any employee working or residing outside of the United States who is subject to applicable laws
other than those of the United States or any state thereof with respect to such Employee Benefit Plan.
(xxix) Business
Arrangements. Except as disclosed in the Registration Statement, the Time of Sale Disclosure Package and the Prospectus,
neither the Company nor any of its subsidiaries has granted any material rights to develop, manufacture, produce, assemble, distribute,
license, market or sell its products to any other person and is not bound by any material agreement that affects the exclusive
right of the Company or such subsidiary to develop, manufacture, produce, assemble, distribute, license, market or sell its products.
(xxx) Labor
Matters. To the Company’s knowledge, 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 would, individually
or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(xxxi) Restrictions
on Subsidiary Payments to the Company. No subsidiary of the Company is currently prohibited, directly or indirectly, from
paying any dividends to the Company, from making any other distribution on such subsidiary’s capital stock, from repaying
to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s property
or assets to the Company or any other subsidiary of the Company, except as described in or contemplated by the Time of Sale Disclosure
Package and the Prospectus.
(xxxii) Disclosure
of Legal Matters. There are no statutes, regulations, legal or governmental proceedings or contracts or other documents
required to be described in the Time of Sale Disclosure Package or in the Prospectus or included as exhibits to the Registration
Statement that are not described or included as required.
(xxxiii) Statistical
Information. Any third-party statistical and market-related data included in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus are based on or derived from sources that the Company believes to be reliable and accurate
in all material respects.
(xxxiv) Forward-looking
Statements. No forward-looking statement (within the meaning of Section 27A of the Act and Section 21E of the
Exchange Act) contained in the Registration Statement, the Time of Sale Disclosure Package or the Prospectus has been made or
reaffirmed without a reasonable basis or has been disclosed other than in good faith.
(xxxv) Public
Filings. The Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and each of the documents
filed by the Company pursuant to the Exchange Act subsequent thereto when they were filed with the Commission conformed in all
material respects to the requirements of the Exchange Act were filed on a timely basis with the Commission and none of such documents
contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(xxxvi) Related
Party Transactions. To the Company’s knowledge, no transaction has occurred between or among the Company, on the
one hand, and any of the Company’s officers, directors or five percent or greater stockholders or any affiliate or affiliates
of any such officer, director or five percent or greater stockholders that is required to be described that is not so described
in the Registration Statement, the Time of Sale Disclosure Package and the Prospectus. The Company has not, directly or indirectly,
extended or maintained credit, or arranged for the extension of credit, or renewed an extension of credit, in the form of a personal
loan to or for any of its directors or executive officers in violation of applicable laws, including Section 402 of the Sarbanes-Oxley
Act.
(b) Effect
of Certificates. Any certificate signed by any officer of the Company and delivered to you or to counsel for the Representatives
shall be deemed a representation and warranty by the Company to the Underwriters as to the matters covered thereby.
|
3. |
Purchase, Sale
and Delivery of Securities. |
(a) Firm
Units. On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions
herein set forth, the Company agrees to issue and sell the Firm Units to the several Underwriters, and each Underwriter agrees,
severally and not jointly, to purchase from the Company the number of Firm Units set forth opposite the name of such Underwriter
in Schedule I hereto. The purchase price for each Firm Unit shall be $[l] per Unit (the “Per Unit Price”).
The Shares and Warrants included in the Firm Units shall be immediately separable as of the First Closing Date. In making this
Agreement, each Underwriter is contracting severally and not jointly; except as provided in paragraph (d) of this Section 3, the
agreement of each Underwriter is to purchase only the respective number of Firm Units specified in Schedule I.
(b) Option
Securities. On the basis of the representations, warranties and agreements herein contained, but subject to the terms
and conditions herein set forth, the Company hereby grants to the several Underwriters an option to purchase all or any portion
of the Option Units, the Option Shares and/or the Option Warrants (either separately or together, subject to the limitations set
forth in the first paragraph of this Agreement), and the right to purchase all or any portion of the Option Units at the Per Unit
Price, the Option Shares at a price of $[l] per Share, and/or the Option Warrants at a price of $[l] per Warrant (either separately
or together), for use solely in covering any over-allotments made by the Underwriters in the sale and distribution of the Firm
Units. The option granted hereunder may be exercised in whole or in part at any time (but not more than once) within 30 days after
the effective date of this Agreement upon notice (confirmed in writing) by the Representatives to the Company setting forth the
aggregate number of Option Units, Option Shares and/or Option Warrants as to which the several Underwriters are exercising the
option and the date and time, as determined by you, when the Option Units, the Option Shares and/or Option Units are to be delivered,
but in no event earlier than the First Closing Date (as defined below) nor earlier than the second business day or later than
the tenth business day after the date on which the option shall have been exercised. The Option Units, Option Shares and/or Option
Warrants to be purchased by each Underwriter shall be in the same proportion as the number of Firm Units to be purchased by such
Underwriter is of the total number of Firm Units to be purchased by the several Underwriters, as adjusted by the Representatives
in such manner as the Representatives deem advisable to avoid fractional Shares and Warrants. No Option Units, Option Shares or
Option Warrants shall be sold and delivered unless the Firm Units previously have been, or simultaneously are, sold and delivered.
(c) Payment
and Delivery.
(i) The
Securities to be purchased by each Underwriter hereunder, in book-entry form in such authorized denominations and registered in
such names as you may request upon at least forty-eight hours’ prior notice to the Company, shall be delivered by or on
behalf of the Company to you, through the facilities of the Depository Trust Company (“DTC”), for the
account of such Underwriter, with any transfer taxes payable in connection with the transfer of the Securities to the Underwriters
duly paid, against payment by or on behalf of such Underwriter of the purchase price therefor by wire transfer of Federal (same-day)
funds to the account specified by the Company to you at least forty-eight hours in advance. The time and date of such delivery
and payment shall be, with respect to the Firm Units, 9:30 a.m., New York City time, on [l] or such other time and date as
you and the Company may agree upon in writing, and, with respect to the Option Units, Option Shares and/or Option Warrants, 9:30 a.m.,
New York City time, on the date specified by you in each written notice given by you of the election to purchase such Option Units,
Option Shares and/or Option Warrants, or such other time and date as you and the Company may agree upon in writing. Such time
and date for delivery of the Firm Units is herein called the “First Closing Date”, each such time and
date for delivery of the Option Units, Option Shares and/or Option Warrants, if not the First Closing Date, is herein called a
“Second Closing Date”, and each such time and date for delivery is herein called a “Closing”.
(ii) The
documents to be delivered at each Closing by or on behalf of the parties hereto pursuant to Section 5 hereof, including the
cross receipt for the Securities and any additional documents requested by the Underwriters pursuant to Section 5(j) hereof,
will be delivered at the offices of the Company, and the Securities will be delivered to you, through the facilities of the DTC,
for the account of such Underwriter, all at such Closing.
(d) Purchase
by Representatives on Behalf of Underwriters. It is understood that you, individually and not as Representatives of the
several Underwriters, may (but shall not be obligated to) make payment to the Company, on behalf of any Underwriter for the Securities
to be purchased by such Underwriter. Any such payment by you shall not relieve any such Underwriter of any of its obligations
hereunder. Nothing herein contained shall constitute any of the Underwriters an unincorporated association or partner with the
Company.
|
4. |
Covenants. The
Company covenants and agrees with the several Underwriters as follows: |
(a) Required
Filings. The Company will prepare and file a Prospectus with the Commission containing the Rule 430A Information
omitted from the Preliminary Prospectus within the time period required by, and otherwise in accordance with the provisions of,
Rules 424(b) and 430A of the Rules and Regulations. If the Company has elected to rely upon Rule 462(b) of the Rules
and Regulations to increase the size of the offering registered under the Act and the Rule 462(b) Registration Statement has not
yet been filed and become effective, the Company will prepare and file the Rule 462 Registration Statement with the Commission
within the time period required by, and otherwise in accordance with the provisions of, Rule 462(b) of the Rules and Regulations
and the Act. The Company will prepare and file with the Commission, promptly upon your request, any amendments or supplements
to the Registration Statement or Prospectus that, in your opinion, may be necessary or advisable in connection with the distribution
of the Securities by the Underwriters; and the Company will furnish you and counsel for the Representatives a copy of any proposed
amendment or supplement to the Registration Statement or Prospectus and will not file any amendment or supplement to the Registration
Statement or Prospectus to which you shall reasonably object by notice to the Company after having been furnished a copy a reasonable
time prior to the filing.
(b) Notification
of Certain Commission Actions. The Company will advise you, promptly after it shall receive notice or obtain knowledge
thereof, of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, or any
post-effective amendment thereto or preventing or suspending the use of any Preliminary Prospectus, the Time of Sale Disclosure
Package, the Prospectus or any issuer free writing prospectus, of the suspension of the qualification of the Securities for offering
or sale in any jurisdiction, or of the initiation or threatening of any proceeding for any such purpose; and the Company will
promptly use commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop
order should be issued.
(c) Continued
Compliance with Securities Laws. Within the time during which a prospectus (assuming the absence of Rule 172) relating
to the Securities is required to be delivered under the Act by any Underwriter or any dealer, the Company will comply with all
requirements imposed upon it by the Act, as now and hereafter amended, and by the Rules and Regulations, 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, the Time of Sale Disclosure Package and the Prospectus; provided further that the Company use its commercially reasonable
efforts to keep the Registration Statement continuously effective under the Securities Act as required by the warrant agreement
governing the Warrants. If during such period any event occurs as a result of which the Registration Statement or the Prospectus
(or if the Prospectus is not yet available to prospective purchasers, the Time of Sale Disclosure Package) would include an untrue
statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances
then existing, not misleading, or if during such period it is necessary to amend the Registration Statement or supplement the
Prospectus (or if the Prospectus is not yet available to prospective investors, the Time of Sale Disclosure Package) to comply
with the Act, the Company promptly will (x) notify you of such untrue statement or omission, (y) amend the Registration Statement
or supplement the Prospectus (or, if the Prospectus is not yet available to prospective purchasers, the Time of Sale Disclosure
Package) (at the expense of the Company) so as to correct such statement or omission or effect such compliance and (z) notify
you when any amendment to the Registration Statement is filed or becomes effective or when any supplement to the Prospectus (or,
if the Prospectus is not yet available to prospective purchasers, the Time of Sale Disclosure Package) is filed.
(d) Blue
Sky Qualifications. The Company shall take or cause to be taken all necessary action to qualify the Securities for sale
under the securities laws of such domestic United States or foreign jurisdictions as you reasonably designate and to continue
such qualifications in effect so long as required for the distribution of the Securities, except that the Company shall not be
required in connection therewith to qualify as a foreign corporation or to execute a general consent to service of process in
any state.
(e) Provision
of Documents. The Company will furnish, at its own expense, to the Underwriters and counsel for the Representatives copies
of the Registration Statement (three of which will be signed and will include all consents and exhibits filed therewith), and
to the Underwriters and any dealer each Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus, and all amendments
and supplements to such documents, in each case as soon as available and in such quantities as you may from time to time reasonably
request.
(f) Rule
158. The Company will make generally available to its security holders as soon as practicable, but in no event later than
15 months after the end of the Company’s current fiscal quarter, an earnings statement (which need not be audited) covering
a 12-month period beginning after the effective date of the Registration Statement (which, for purposes of this paragraph, will
be deemed to be the effective date of the Rule 462(b) Registration Statement, if applicable) that shall satisfy the provisions
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations.
(g) Payment
and Reimbursement of Expenses. The Company, whether or not the transactions contemplated hereunder are consummated or
this Agreement is terminated, will pay or cause to be paid (A) all expenses (including transfer taxes allocated to the respective
transferees) incurred in connection with the delivery to the Underwriters of the Securities, (B) all expenses and fees (including,
without limitation, fees and expenses of the Company’s accountants and counsel) in connection with the preparation, printing,
filing, delivery, and shipping of the Registration Statement (including the financial statements therein and all amendments, schedules,
and exhibits thereto), the Securities, each Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus, and any
amendment thereof or supplement thereto, and the printing, delivery, and shipping of this Agreement and other underwriting documents,
including Blue Sky Memoranda (covering the states and other applicable jurisdictions), (C) all filing fees and fees incurred in
connection with the qualification of the Securities for offering and sale by the Underwriters or by dealers under the securities
or blue sky laws of the states and other jurisdictions which you shall designate, (D) the fees and expenses of any transfer agent
or registrar, (E) the reasonable out-of-pocket accountable fees and disbursements incurred by the Underwriters in connection with
the offer, sale or marketing of the Securities and performance of the Underwriters’ obligations hereunder, including all
reasonable out-of-pocket accountable fees and disbursements of Underwriters’ counsel, and for the avoidance of doubt, excluding
any general overhead, salaries, supplies, or similar expenses of the Underwriters incurred in the normal conduct of business,
(F) listing fees, if any, (G) all fees, expenses and disbursements relating to background checks of the Company’s officers
and directors (H) the cost and expenses of the Company relating to investor presentations or any “road show” undertaken
in connection with marketing of the Securities, including, without limitation, expenses associated with the preparation or dissemination
of any electronic road show, expenses associated with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such consultants, and the cost of any aircraft chartered in
connection with the road show, and (I) all other costs and expenses of the Company incident to the performance of its obligations
hereunder that are not otherwise specifically provided for herein. The expenses to be paid by the Company and reimbursed to the
Underwriters under Subsection 4(g) shall not exceed $150,000. If this Agreement is terminated by you pursuant to Section 8 hereof
or if the sale of the Securities provided for herein is not consummated by reason of any failure, refusal or inability on the
part of the Company to perform any agreement on its part to be performed, or because any other condition of the Underwriters’
obligations hereunder required to be fulfilled by the Company is not fulfilled, the Company will reimburse the several Underwriters
for all reasonable out-of-pocket accountable disbursements (including but not limited to fees and disbursements of counsel, printing
expenses, travel expenses, postage, facsimile and telephone charges) incurred by the Underwriters in connection with their investigation,
preparing to market and marketing the Securities or in contemplation of performing their obligations hereunder.
(h) Use
of Proceeds. The Company will apply the net proceeds from the sale of the Securities to be sold by it hereunder for the
purposes set forth in the Time of Sale Disclosure Package and in the Prospectus and will file such reports with the Commission
with respect to the sale of the Securities and the application of the proceeds therefrom as may be required in accordance with
Rule 463 of the Rules and Regulations.
(i) Company
Lock Up. The Company will not, without the prior written consent of Representatives, from the date of execution of this
Agreement and continuing to and including the date 90 days after the date of the Prospectus (the “Lock-Up Period”),
(A) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or (B) enter into
any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (A) or (B) above is to be settled by delivery of Common Stock or such other securities,
in cash or otherwise, except to the Underwriters pursuant to this Agreement and (x) grants of options, shares of Common Stock
and other awards to purchase or receive shares of Common Stock under the Company Stock Plans that are in effect as of or prior
to the date hereof, (y) issuances of shares of Common Stock upon the exercise of options or other awards granted under such
Company Stock Plans or the Company’s preferred stock outstanding as of the date hereof pursuant to the terms thereof as
of such date or (z) in connection with any acquisition, collaboration, licensing or other strategic transaction or any debt financing
transaction; provided, that in the case of this clause (z), such issuances shall not exceed, in the aggregate 2.0% of the total
shares of Common Stock outstanding immediately after the issuance and sale of the Shares. The Company agrees not to accelerate
the vesting of any option or warrant or the lapse of any repurchase right prior to the expiration of the Lock-Up Period.
(j) Stockholder
Lock-Ups. The Company has caused to be delivered to you prior to the date of this Agreement a letter, in the form of Exhibit
B hereto (the “Lock-Up Agreement”), from each individual or entity listed on Schedule II.
The Company will issue stop-transfer instructions to its transfer agent and registrar for the Common Stock with respect to any
transaction or contemplated transaction that would constitute a breach of or default under the applicable Lock-Up Agreement and
will not release the stop transfer instructions without the written approval of the Underwriters.
(k) No
Market Stabilization or Manipulation. The Company has not taken and will not take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or result in, or which has constituted, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of the Securities, and has not effected any sales
of Common Stock which are required to be disclosed in response to Item 701 of Regulation S-K under the Act which have
not been so disclosed in the Registration Statement.
(l) Free
Writing Prospectuses. The Company represents and agrees that, unless it obtains the prior written consent of the Representatives,
and each Underwriter represents and agrees that, unless it obtains the prior written consent of the Company and the Representatives,
it has 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.
5. Conditions
of Underwriters’ Obligations. The obligations of the several Underwriters hereunder are subject to the accuracy,
as of the date hereof and at each of the First Closing Date and the Second Closing Date (as if made at such Closing Date), of
and compliance with all representations, warranties and agreements of the Company contained herein, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) Required
Filings; Absence of Certain Commission Actions. The Registration Statement shall have become effective not later than
5:30 p.m., Eastern time, on the date of this Agreement, or such later time and date as you, as Representatives of the several
Underwriters, shall approve and all filings required by Rules 424, 430A and 433 of the Rules and Regulations shall have been
timely made (without reliance on Rule 424(b)(8) or Rule 164(b)); no stop order suspending the effectiveness of the Registration
Statement or any part thereof or any amendment thereof, nor suspending or preventing the use of the Time of Sale Disclosure Package,
the Prospectus shall have been issued; no proceedings for the issuance of such an order shall have been initiated or threatened;
and any request of the Commission for additional information (to be included in the Registration Statement, the Time of Sale Disclosure
Package, the Prospectus or otherwise) shall have been complied with to your satisfaction.
(b) Continued
Compliance with Securities Laws. No Underwriter shall have advised the Company that (i) the Registration Statement or
any amendment thereof or supplement thereto contains an untrue statement of a material fact which, in your opinion, is material
or omits to state a material fact which, in your opinion, is required to be stated therein or necessary to make the statements
therein not misleading, or (ii) the Time of Sale Disclosure Package or the Prospectus, or any amendment thereof or supplement
thereto, contains an untrue statement of fact which, in your opinion, is material, or omits to state a fact which, in your opinion,
is material and is required to be stated therein, or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading.
(c) Absence
of Certain Events. Except as contemplated in the Time of Sale Disclosure Package and in the Prospectus, subsequent to
the date of the most recent financial statements of the Company included in the Time of Sale Disclosure Package and the Prospectus,
neither the Company nor any of its subsidiaries shall have declared or paid any dividends or made any distribution of any kind
with respect to its capital stock or any Material Adverse Change or any development which could reasonably be expected to result
in any Material Adverse Change (whether or not arising in the ordinary course of business), that, in your judgment, makes it impractical
or inadvisable to offer or deliver the Securities on the terms and in the manner contemplated in the Time of Sale Disclosure Package
and in the Prospectus.
(d) Opinion
of Company Counsel. On each Closing Date, there shall have been furnished to you, as Representatives of the several Underwriters,
the opinion and negative assurance letter of K&L Gates LLP, counsel for the Company, in the form agreed by K&L Gates LLP.
(e) Opinion
of Underwriters’ Counsel. On each Closing Date, there shall have been furnished to you, as Representatives of the
several Underwriters, such opinion or opinions from Faegre Baker Daniels LLP, counsel for the Representatives, dated such Closing
Date and addressed to you, with respect to the formation of the Company, the validity of the Securities, the Registration Statement,
the Time of Sale Disclosure Package or the Prospectus and other related matters as you reasonably may request, and such counsel
shall have received such papers and information as they request to enable them to pass upon such matters.
(f) Opinion
of Company Intellectual Property Counsel. On each Closing Date, there shall have been furnished to you, as Representatives
of the Several Underwriters, the opinion of McDermott Will & Emery LLP, special intellectual property counsel for the Company,
in the form agreed by McDermott Will & Emery LLP.
(g) Comfort
Letters. On the date hereof, on the effective date of any post-effective amendment to the Registration Statement filed
after the date hereof and on each Closing Date, you, as Representatives of the several Underwriters, shall have received a letter
containing statements and information of the type ordinarily included in accountants’ “comfort letters” from
SingerLewak LLP and Kelly & Company, each dated such date and addressed to you, in form and substance satisfactory to you.
(h) Officers’
Certificate. On each Closing Date, there shall have been furnished to you, as Representatives of the several Underwriters,
a certificate, dated such Closing Date and addressed to you, signed by the chief executive officer and by the chief financial
officer of the Company, to the effect that:
(i) The
representations and warranties of the Company in this Agreement are true and correct as if made at and as of such Closing Date,
and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied
at or prior to such Closing Date; and
(ii) No
stop order or other order suspending the effectiveness of the Registration Statement or any part thereof or any amendment thereof
or the qualification of the Securities for offering or sale, nor suspending or preventing the use of the Time of Sale Disclosure
Package, the Prospectus or any issuer free writing prospectus, has been issued, and no proceeding for that purpose has been instituted
or, to the best of their knowledge, is contemplated by the Commission or any state or regulatory body.
(i) Lock-Up
Agreement. The Representatives shall have received all of the Lock-Up Agreements referenced in Section 4 and the Lock-Up
Agreements shall remain in full force and effect.
(j) Other
Documents. The Company shall have furnished to you and counsel for the Representatives such additional documents, certificates
and evidence as you or they may have reasonably requested.
(k) FINRA
No Objections. FINRA shall have raised no objection to the fairness and reasonableness of the underwriting terms and arrangements.
(l) Exchange
Listing. The Securities to be delivered on such Closing Date will have been approved for listing on the NYSE MKT.
All
such opinions, certificates, letters and other documents will be in compliance with the provisions hereof only if they are satisfactory
in form and substance to you and counsel for the Representatives. The Company will furnish you with such conformed copies of such
opinions, certificates, letters and other documents as you shall reasonably request.
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6. |
Indemnification and
Contribution. |
(a) Indemnification
by the Company. The Company agrees to indemnify and hold harmless each Underwriter, its affiliates, directors and officers
and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act, from and against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise (including in settlement of any litigation if such settlement is effected with the written consent
of the Company), insofar as such losses, claims, damages or liabilities (or actions in respect thereof) (i) arise out of
or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement,
including the 430A Information and any other information deemed to be a part of the Registration Statement at the time of effectiveness
and at any subsequent time pursuant to the Rules and Regulations, if applicable, the Time of Sale Disclosure Package, the Prospectus,
or any amendment or supplement thereto, any issuer free writing prospectus, any issuer information that the Company has filed
or is required to file pursuant to Rule 433(d) of the Rules and Regulations, or any road show as defined in Rule 433(h) under
the Act (a “road show”), or (ii) 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, and
will reimburse each Underwriter for any legal or other expenses reasonably incurred by it in connection with investigating or
defending against such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that
the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out
of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and
in conformity with written information furnished to the Company by you, or by any Underwriter through you, specifically for use
in the preparation thereof; it being understood and agreed that the only information furnished by an Underwriter consists of the
information described as such in Section 6(e).
(b) Indemnification
by the Underwriters. Each Underwriter will, severally and not jointly, indemnify and hold harmless the Company, its affiliates,
directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the Act and Section
20 of the Exchange Act, from and against any losses, claims, damages or liabilities to which the Company may become subject, under
the Act or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such losses, claims, damages or liabilities (or actions in respect thereof) (i) arise out of or
are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the
Time of Sale Disclosure Package, the Prospectus, or any amendment or supplement thereto, any issuer free writing prospectus, any
issuer information that the Company has filed or is required to file pursuant to Rule 433(d) of the Rules and Regulations, or
any road show, or (ii) arise out of or are based upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged omission was made in conformity with written information
furnished to the Company by you, or by such Underwriter through you, specifically for use in the preparation thereof (it being
understood and agreed that the only information furnished by an Underwriter consists of the information described as such in Section 6(e)),
and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating
or defending against any such loss, claim, damage, liability or action as such expenses are incurred.
(c) Notice
and Procedures. Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement
of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under
such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying
party shall not relieve the indemnifying party from any liability that it may have to any indemnified party except to the extent
such indemnifying party has been materially prejudiced by such failure (through the forfeiture of substantive rights or defenses).
In case any such action shall be brought against any indemnified party, and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in, and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of the indemnifying party’s election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that if, in your sole judgment, it is advisable for the Underwriters to be represented as a
group by separate counsel, you shall have the right to employ a single counsel (in addition to local counsel) to represent all
Underwriters who may be subject to liability arising from any claim in respect of which indemnity may be sought by the Underwriters
under subsection (a) above, in which event the reasonable fees and expenses of such separate counsel shall be borne by the indemnifying
party or parties and reimbursed to the Underwriters as incurred. An indemnifying party shall not be obligated under any settlement
agreement relating to any action under this Section 6 to which it has not agreed in writing. In addition, no indemnifying
party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld or delayed)
effect any settlement of any pending or threatened proceeding unless such settlement includes an unconditional release of such
indemnified party for all liability on claims that are the subject matter of such proceeding and does not include a statement
as to, or an admission of, fault, culpability or a failure to act by or on behalf of an indemnified party. Notwithstanding the
foregoing, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel pursuant to this Section 6(c), such indemnifying party agrees that it shall be liable for any
settlement effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
(d) Contribution;
Limitations on Liability; Non-Exclusive Remedy. If the indemnification provided for in this Section 6 is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred
to in subsection (a) or (b), (i) in such proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other from the offering of the Securities or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriters
on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and commissions received by the Underwriters, in each case as
set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriters and the parties’ relevant intent, knowledge, access
to information and opportunity to correct or prevent such untrue statement or omission. The Company and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this subsection (d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the first sentence of this subsection (d). The amount paid
by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating
or defending against any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total underwriting
discounts and commissions received by such Underwriter with respect to the Securities exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting obligations and not joint. The remedies provided
for in this Section 6 are not exclusive and shall not limit any rights or remedies that might otherwise be available to any indemnified
party at law or in equity.
(e) Information
Provided by the Underwriters. The Underwriters severally confirm and the Company acknowledges that the statements with
respect to the public offering of the Securities by the Underwriters set forth in the [second] paragraph under the caption “Underwriting”
and the estimate of the Underwriters’ reasonable out-of-pocket accountable fees and disbursements in connection with the
offering of the Securities in the Time of Sale Disclosure Package and in the Prospectus are correct and constitute the only information
concerning the Underwriters furnished in writing to the Company by or on behalf of the Underwriters specifically for inclusion
in the Registration Statement, any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus or any issuer free
writing prospectus.
7. Representations
and Agreements to Survive Delivery. All representations, warranties, and agreements of the Company herein or in certificates
delivered pursuant hereto, and the agreements of the several Underwriters and the Company contained in Section 6 hereof, shall
remain operative and in full force and effect regardless of any investigation made by or on behalf of any Underwriter or any controlling
person thereof, or the Company or any of its officers, directors, or controlling persons, and shall survive delivery of, and payment
for, the Securities to and by the Underwriters hereunder and any termination of this Agreement.
(a) Right
to Terminate. You shall have the right to terminate this Agreement by giving notice as hereinafter specified at any time
at or prior to the First Closing Date, and the option referred to in Section 3(b), if exercised, may be cancelled at any
time prior to the Second Closing Date, if (i) any condition of the Underwriters’ obligations hereunder is not capable of
being fulfilled at or prior to such Closing Date, (ii) trading on The Nasdaq Stock Market or New York Stock Exchange shall have
been wholly suspended, (iii) minimum or maximum price for trading shall have been fixed, or maximum ranges for prices for
securities shall have been required, on The Nasdaq Stock Market or New York Stock Exchange, by such Exchange or by order of the
Commission or any other Governmental Authority, (iv) a banking moratorium shall have been declared by federal, New York,
California or Minnesota state authorities, or (v) there shall have occurred any outbreak or escalation of hostilities or any change
in financial markets or any calamity or crisis that, in your judgment, is material and adverse and makes it impractical or inadvisable
to proceed with the completion of the sale of and payment for the Securities in the manner contemplated in the Time of Sale Disclosure
Package or the Prospectus. Any such termination shall be without liability of any party to any other party except that the provisions
of Section 4(g) and Section 6 hereof shall at all times be effective.
(b) Notice
of Termination. If you elect to terminate this Agreement as provided in this Section, the Company shall be notified promptly
by you by telephone, confirmed by letter.
|
9. |
Default
by the Company. |
(a) Default
by the Company. If the Company shall fail at the First Closing Date to sell and deliver the Securities which it is obligated
to sell hereunder, then this Agreement shall terminate without any liability on the part of any Underwriter.
(b) No
Relief from Liability. No action taken pursuant to this Section shall relieve the Company from liability, if any, in respect
of any default hereunder.
10. Notices.
Except as otherwise provided herein, all communications hereunder shall be in writing and, if to the Underwriters, shall
be mailed via overnight delivery service or hand delivered via courier, to the Representatives c/o Northland Securities, Inc.
45 South Seventh Street, Suite 2000, Minneapolis, Minnesota 55402, to the attention of Investment Banking; and (ii) if to the
Company, shall be mailed or delivered to it at 9400 Toledo Way, Irvine, California 92618, Attention: [●]. Any party to this
Agreement may change such address for notices by sending to the parties to this Agreement written notice of a new address for
such purpose.
11. Persons
Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns and the controlling persons, officers and directors referred to in Section 6. Nothing
in this Agreement is intended or shall be construed to give to any other person, firm or corporation any legal or equitable remedy
or claim under or in respect of this Agreement or any provision herein contained. The term “successors and assigns”
as herein used shall not include any purchaser, as such purchaser, of any of the Securities from any of the several Underwriters.
12. Absence
of Fiduciary Relationship. The Company acknowledges and agrees that: (a) the Representatives have been retained solely
to act as underwriters in connection with the sale of the Securities and that no fiduciary, advisory or agency relationship between
the Company and the Representatives has been created in respect of any of the transactions contemplated by this Agreement, irrespective
of whether the Representatives have advised or is advising the Company on other matters; (b) the price and other terms of the
Securities set forth in this Agreement were established by the Company following discussions and arms-length negotiations with
the Representatives and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated by this Agreement; (c) it has been advised that the Representatives and their affiliates
are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that the Representatives
have no obligation to disclose such interest and transactions to the Company by virtue of any fiduciary, advisory or agency relationship;
(d) it has been advised that the you are acting, in respect of the transactions contemplated by this Agreement, solely for the
benefit of the Underwriters, and not on behalf of the Company; (e) it waives to the fullest extent permitted by law, any claims
it may have against the Underwriters for breach of fiduciary duty or alleged breach of fiduciary duty in respect of any of the
transactions contemplated by this Agreement and agrees that the Underwriters shall have no liability (whether direct or indirect)
to the Company in respect of such a fiduciary duty claim on behalf of or in right of the Company, including stockholders, employees
or creditors of the Company.
13. Governing
Law; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the laws of the State
of New York. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates)
and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
14. Counterparts.
This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts
shall each be deemed to be an original and all such counterparts shall together constitute one and the same instrument.
15. General
Provisions. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof,
including that certain engagement letter dated June 10, 2015, by and between the Company and the Representatives, except for the
provisions contained in Sections 11 (Announcement of Offering), 16 (Research Matters), 17 (Other Investment Banking Services),
18 (Severability) and 19 (Future Services) that remain in full force and effect. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing
by each party whom the condition is meant to benefit. The Section headings herein are for the convenience of the parties only
and shall not affect the construction or interpretation of this Agreement. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision
hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.
[Signature
Page Follows]
Please
sign and return to the Company the enclosed duplicates of this letter whereupon this letter will become a binding agreement between
the Company and the several Underwriters in accordance with its terms.
|
Very truly yours, |
|
|
|
Ener-Core,
Inc. |
|
|
|
By: |
|
|
Name: |
|
|
Title: |
|
Confirmed
as of the date first
above
mentioned, on behalf of
the
Representatives and the other several
Underwriters
named in Schedule I hereto.
Northland
Securities, Inc.
Lake
Street Capital Markets, LLC
[Signature
Page to Purchase Agreement]
SCHEDULE
I
|
Underwriter |
|
Number
of Firm Units (1) |
|
|
Northland Securities, Inc. |
|
[●] |
|
|
Lake Street Capital Markets,
LLC |
|
[●] |
|
|
[●] |
|
[●] |
|
|
|
|
|
|
|
Total |
|
[●] |
|
|
|
|
|
|
(1) |
The Underwriters
may purchase additional Option Units, Option Shares and/or Option Warrants to the extent the option described in Section 3(b)
of the Agreement is exercised, in the proportions and in the manner described in the Agreement. |
SCHEDULE
II
List
of Individuals and Entities Executing Lock-Up Agreements
Alain J.
Castro
Boris A.
Maslov
Domonic
J. Carney
Michael
J. Hammons
Christopher
J. Brown
Jeffrey
A. Horn
Bennet P.
Tchaikovsky
Ian C. Copeland
Eric Helenek
Douglas
A. Hamrin
SAIL Exit
Partners, LLC
SCHEDULE
III
Pricing
Information
Firm Units
offered by the Company: [●]
Option Units:
[●]
Price to
the public: $[●] per Unit
Price to
the Underwriters: $[●] per Unit
EXHIBIT
A
Form
of Warrant Agreement
This
Warrant Agreement (“Warrant Agreement”) is made as of , 2015,
by and between Ener-Core, Inc., a Delaware corporation, (the “Company”), and VStock Transfer, LLC (the “Warrant
Agent”).
WHEREAS,
the Company is engaged in a public offering (the “Public Offering”) of [___________] units (the “Units”),
each composed of a share of common stock, par value $0.0001 per share (the “Common Stock”) and one warrant
(the “Warrant”) entitling its holder to purchase 0.25 of a share of Common Stock, subject to adjustment
as set forth herein (the “Warrant Shares”) (including the additional Units issuable to the underwriters if
the underwriters’ over-allotment option is exercised);
WHEREAS,
the Company has filed, with the Securities and Exchange Commission (the “SEC”), a registration statement on
Form S-1 (Registration No. 333-205916), as amended (the “Registration Statement”), for the registration, under
the Securities Act of 1933, as amended (the “Act”), of Units, Common Stock, the Warrants and the Warrant Shares;
and
WHEREAS,
the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection
with the issuance, registration, transfer, exchange, redemption and exercise of the Warrants; and
WHEREAS,
the Company desires to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and exercised,
and the respective rights, limitation of rights and immunities of the Company, the Warrant Agent and the holders of the Warrants;
and
WHEREAS,
all acts and things have been done and performed which are necessary to make the Warrants, when executed on behalf of the Company
and countersigned by or on behalf of the Warrant Agent, as provided herein, the legally valid and binding obligations of the Company,
and to authorize the execution and delivery of this Warrant Agreement.
NOW,
THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:
1.
Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company for the Warrants,
and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions
set forth in this Warrant Agreement.
2.
Warrants.
2.1
Form of Warrant. Each Warrant shall be: (a) issued in registered form only, (b) in substantially the form of Exhibit A
hereto (a “Warrant Certificate”), the provisions of which are incorporated herein, and (c) signed by, or bear
the facsimile signature of, the Chairman of the Board or, the Chief Executive Officer or the President, and the Treasurer, Secretary
or Assistant Secretary of the Company. In the event the person whose facsimile signature has been placed upon any Warrant shall
have ceased to serve in the capacity in which such person signed the Warrant before such Warrant is issued, it may be issued with
the same effect as if he or she had not ceased to be such at the date of issuance.
2.2
Effect of Countersignature. Unless and until countersigned by the Warrant Agent pursuant to this Warrant Agreement, a Warrant
shall be invalid and of no effect and may not be exercised by the holder thereof.
2.3
Registration.
2.3.1
Warrant Register. The Warrant Agent shall maintain books (the “Warrant Register“), for the registration
of the original issuance and transfers of the Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue
and register the Warrants in the names of the respective holders thereof in such denominations and otherwise in accordance with
instructions delivered to the Warrant Agent by the Company. Except as provided in this Section 2.3.1, upon the initial issuance
of the Warrants, to the extent the Warrants are DTC eligible as of such date, all of the Warrants shall initially be represented
by one or more Warrant Certificates reflecting book-entry of ownership (each a “Book-Entry Warrant Certificate”),
deposited with the Depository Trust Company (the “Depository”) and registered in the name of Cede & Co.,
a nominee of the Depository. Ownership of beneficial interests in the Book-Entry Warrant Certificates shall be shown on, and the
transfer of such ownership shall be effected through, records maintained (i) by the Depository or its nominee for each Book-Entry
Warrant Certificate; (ii) by institutions that have accounts with the Depository (such institution, with respect to a Warrant
in its account, a “Participant”); or (iii) directly on the book-entry records of the Warrant Agent with respect
only to owners of beneficial interests that request such direct registration.
If
the Warrants are not DTC-eligible at the issuance date or the Depository subsequently ceases to make its book-entry settlement
system available for the Warrants, the Company may instruct the Warrant Agent regarding making other arrangements for book-entry
settlement within ten (10) business days after the Depository ceases to make its book-entry settlement available. In the event
that the Company does not make alternative arrangements for book-entry settlement within ten (10) business days, or the Warrants
are not eligible for, or it is no longer necessary to have the Warrants available in, book-entry form, the Warrant Agent shall
provide written instructions to the Depository to deliver to the Warrant Agent for cancellation each Book-Entry Warrant Certificate,
and the Company shall instruct the Warrant Agent to deliver to the Depository definitive Warrant Certificates in physical form
evidencing such Warrants.
At
the request of any Holder of Warrants, submitted to the Warrant Agent via the Depositary as the initial Registered Holder as to
Book-Entry Warrants, the Warrant Agent shall deliver to such purchaser definitive Warrant Certificates in physical form, registered
in the name of such purchaser, evidencing the Warrants purchased by such Holder.
2.3.2
Registered Holder; Beneficial Owners. Prior to due presentment for registration of transfer of any Warrant, the Company
and the Warrant Agent may deem and treat the person in whose name such Warrant shall be registered upon the Warrant Register (“Registered
Holder”) as the absolute owner of such Warrant and of each Warrant represented thereby (notwithstanding any notation
of ownership or other writing on the Warrant Certificate made by anyone other than the Company or the Warrant Agent), for the
purpose of any exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by
any notice to the contrary. The term “beneficial owner” shall mean any person in whose name ownership of a beneficial
interest in the Warrants evidenced by a Book-Entry Warrant Certificate is recorded in the records maintained by the Depository
or its nominee or a Participant. Any reference herein to the term Holder or Registered Holder shall include a beneficial owner
who has received definitive Warrant Certificates registered in its name.
2.4
Separate Issuance of Warrants. The Common Stock and the Warrants comprising the Units shall be issued separately and shall
be transferable separately immediately upon issuance. The Common Stock and the Warrants comprising the Units will begin to trade
separately on or promptly after the date that is the effective date of the Registration Statement (the “Detachment Date”).
Holders of the Common Stock and Warrants may combine such securities to trade as Units pursuant to Section 5.1.
2.5
Uncertificated Warrants. Notwithstanding the foregoing and anything else herein to the contrary, the Warrants may be issued
in uncertificated form.
3.
Terms and Exercise of Warrants.
3.1
Warrant Price. Each Warrant shall, when countersigned by the Warrant Agent, entitle the Registered Holder thereof, subject
to the provisions of such Warrant and of this Warrant Agreement, to purchase from the Company the number of shares of Common Stock
stated therein, at the price of $ per whole share of Common Stock, subject to the adjustments provided in Section 4 hereof
and in the last sentence of this Section 3.1. The term “Warrant Price” as used in this Warrant Agreement refers
to the price per whole share at which Common Stock may be purchased at the time such Warrant is exercised. The Company, in its
sole discretion, may lower the Warrant Price at any time prior to the Expiration Date (as defined below); provided, that any such
reduction remains in effect for no less than ten business days and shall be identical in percentage terms among all of the then
outstanding Warrants.
3.2
Duration of Warrants. A Warrant may be exercised only during the period (“Exercise Period”) commencing
on the date of closing of the Company’s initial public offering of the Warrants and terminating at 5:00 p.m., New York City
time, on , 20201 (“Expiration Date”). Each Warrant
not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights in respect thereof
under this Warrant Agreement shall cease at the close of business on the Expiration Date. The Company may extend the duration
of the Warrants by delaying the Expiration Date; provided, however, that the Company will provide notice of not less than 20 days
to Registered Holders of such extension and that such extension shall be identical in duration among all of the then outstanding
Warrants.
3.3
Exercise of Warrants.
3.3.1
Payment. Subject to the provisions of the Warrant and this Warrant Agreement, a Warrant, when countersigned by the Warrant
Agent, may be exercised by the Registered Holder thereof by surrendering at the office of the Warrant Agent, or at the office
of its successor as Warrant Agent, at 18 Lafayette Place, Woodmere, NY 11598, (i) the Warrant Certificate evidencing the Warrants
to be exercised, or, in the case of a Book-Entry Warrant Certificate, the Warrants to be exercised (the “Book-Entry Warrants”)
shown on the records of the Depository to an account of the Warrant Agent at the Depository designated for such purpose in writing
by the Warrant Agent to the Depository from time to time, (ii) the subscription form, as set forth in the Warrant Certificate
(the “Election to Purchase”), properly completed and duly executed by the Registered Holder on the reverse
of the Warrant Certificate or, in the case of a Book-Entry Warrant Certificate, properly delivered by the Participant in accordance
with the Depository’s procedures, and (iii), payment in full, in lawful money of the United States, in cash, by wire of
same day funds or by certified or bank cashier’s check payable to the order of the Company, the Warrant Price for such number
of Warrant Shares totaling whole shares of Common Stock as to which the Warrant is exercised and any and all applicable taxes
due in connection with the exercise of the Warrant, the exchange of the Warrant for the Warrant Shares, and the issuance of the
Warrant Shares. In no event will interest accrue on funds deposited with the Warrant Agent in respect of an exercise or attempted
exercise of Warrants.
3.3.2
Fractional Shares. Notwithstanding any provision to the contrary contained in this Warrant Agreement, the Company shall
not be required to issue any fractional shares of Common Stock in connection with the exercise of Warrants for Warrant Shares,
and in any case where the Registered Holder would be entitled under the terms of the Warrants to receive a fractional share of
Common Stock as a Warrant Share upon the exercise of such Registered Holder’s Warrants, issue or cause to be issued only
the largest whole number of aggregate Warrant Shares issuable on such exercise (and such remaining fractional shares will be disregarded);
provided, that if more than one Warrant certificate is presented for exercise at the same time by the same Registered Holder,
the number of Warrant Shares which shall be issuable upon the exercise thereof shall be computed on the basis of the aggregate
number of Warrant Shares issuable on exercise of all such Warrants.
3.3.3
Issuance of Certificates. As soon as practicable after the exercise of any Warrant and the clearance of the funds in payment
of the Warrant Price, the Warrant Agent shall advise the Company and its transfer agent regarding (i) the number of Warrant Shares
issuable upon such exercise in accordance with the terms and conditions of this Warrant Agreement, (ii) the instructions of each
Holder with respect to delivery of the Warrant Shares issuable upon such exercise, and the delivery of definitive Warrant Certificates,
as appropriate, evidencing the balance, if any, of the Warrants remaining after such exercise, (iii) in case of a Book-Entry Warrant
Certificate, the notation that shall be made to the records maintained by the Depository, its nominee for each Book-Entry Warrant
Certificate, or a Participant, as appropriate, evidencing the balance, if any, of the Warrants remaining after such exercise and
(iv) such other information as the Company or such transfer agent and registrar shall reasonably require. Promptly thereafter
and no later than three (3) business days later, the Company shall instruct its transfer agent to issue to the Registered Holder
of such Warrant a certificate or certificates representing the number of full shares of Common Stock to which he, she or it is
entitled, registered in such name or names as may be directed by him, her or it, provided, in lieu of delivering physical certificates
representing the Warrant Shares issuable upon exercise, and provided the Company’s transfer agent is participating in the
Depository’s Fast Automated Securities Transfer program, the Company shall use its reasonable best efforts to cause its
transfer agent to electronically transmit the Warrant Shares issuable upon exercise to the Registered Holder by crediting the
account of the Participant of record with the Depository or through its Deposit Withdrawal Agent Commission system. If such Warrant
shall not have been exercised or surrendered in full, a new countersigned Warrant Certificate for the number of shares as to which
such Warrant shall not have been exercised or surrendered, or, in case of a Book-Entry Warrant Certificate, a notation shall be
made to the records maintained by the Depository or nominee for each Book-Entry Warrant Certificate, as appropriate, evidencing
the balance, if any, of the Warrants remaining after such exercise. Notwithstanding the foregoing, the Company shall not be obligated
to deliver any securities pursuant to the exercise of a Warrant unless (a) a registration statement under the Act with respect
to the Common Stock issuable upon exercise of such Warrants is effective and a current prospectus relating to the shares of Common
Stock issuable upon exercise of the Warrants is available for delivery to the Registered Holder of the Warrant or (b) in the opinion
of counsel to the Company, the exercise of the Warrants is exempt from the registration requirements of the Act and such securities
are qualified for sale or exempt from qualification under applicable securities laws of the states or other jurisdictions in which
the Registered Holder resides. Warrants may not be exercised by, or securities issued to, any Registered Holder in any state in
which such exercise or issuance would be unlawful. In the event a registration statement under the Act with respect to the Common
Stock underlying the Warrants is not effective or a prospectus is not available, or because such exercise would be unlawful with
respect to a Registered Holder in any state, the Registered Holder shall not be entitled to exercise such Warrants and such Warrants
may have no value and expire worthless. In no event will the Company be obligated to pay such Registered Holder any cash consideration
upon exercise or otherwise “net cash settle” the Warrant.
1
5 years following the date of closing of the initial public offering of the Warrants
3.3.4
Valid Issuance. The validity of any exercise of Warrants will be determined by the Company in its reasonable discretion.
The Warrant Agent shall notify a holder of any purported invalidity of any exercise of Warrants. All shares of Common Stock issued
upon the proper exercise or surrender of a Warrant in conformity with this Warrant Agreement shall be validly issued, fully paid
and nonassessable.
3.3.5
Date of Issuance. Each person or entity in whose name any such certificate for shares of Common Stock is issued shall,
for all purposes, be deemed to have become the holder of record of such shares on the date on which the Warrant was surrendered
and payment of the Warrant Price was made, irrespective of the date of delivery of such certificate, except that, if the date
of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to
have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are
open (the “Exercise Date”). If any of (A) the Warrant Certificate or the Book-Entry Warrants, (B) the Election
to Purchase, or (C) the Warrant Price therefor, is received by the Warrant Agent after 5:00 P.M., New York time, on the specified
Exercise Date, the Warrants will be deemed to be received and exercised on the Business Day next succeeding the Exercise Date,
subject to clearance of the funds. If the date specified as the Exercise Date is not a Business Day, the Warrants will be deemed
to be received and exercised on the next succeeding day that is a Business Day, subject to clearance of the funds. If the Warrants
are received or deemed to be received after the Expiration Date, the exercise thereof will be null and void and any funds delivered
to the Warrant Agent will be returned to the Registered Holder as soon as practicable.
4.
Adjustments.
4.1
Stock Dividends, Split-Ups. If, after the date hereof, and subject to the provisions of Section 4.6 below, the number of
outstanding shares of Common Stock is increased by a stock dividend payable in shares of Common Stock, or by a split-up of shares
of Common Stock, or other similar event, then, on the effective date of such stock dividend, split-up or similar event, the number
of shares of Common Stock issuable on exercise of each Warrant shall be increased in proportion to such increase in outstanding
shares of Common Stock.
4.2
Extraordinary Dividend. If the Company, at any time during the Exercise Period, shall pay a dividend or make a distribution
in cash, securities or other assets to the holders of Common Stock (or other shares of the Company’s capital stock into
which the Warrants are exercisable), other than (a) as described in Sections 4.1, 4.3 or 4.5, (b) regular quarterly or other periodic
dividends, (c) in connection with the conversion rights of the holders of Common Stock upon consummation of a business combination,
or (d) in connection with the Company’s liquidation and the distribution of its assets (any such non-excluded event being
referred to herein as an “Extraordinary Dividend”), then the Warrant Price shall be decreased, effective immediately
after the effective date of such Extraordinary Dividend, by the amount of cash and/or the fair market value (as determined by
the Company’s Board of Directors, in good faith) of any securities or other assets paid on each share of Common Stock in
respect of such Extraordinary Dividend.
4.3
Aggregation of Shares. If, after the date hereof, and subject to the provisions of Section 4.7, the number of outstanding
shares of Common Stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Common
Stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification
or similar event, the number of shares of Common Stock issuable on exercise of each Warrant shall be decreased in proportion to
such decrease in outstanding shares of Common Stock.
4.4
Adjustments in Exercise Price. Whenever the number of shares of Common Stock purchasable upon the exercise of the Warrants
is adjusted, as provided in Sections 4.1 and 4.3 above, the Warrant Price shall be adjusted (to the nearest cent) by multiplying
such Warrant Price, immediately prior to such adjustment, by a fraction, (a) the numerator of which shall be the number of shares
of Common Stock purchasable upon the exercise of the Warrants immediately prior to such adjustment, and (b) the denominator of
which shall be the number of shares of Common Stock so purchasable immediately thereafter.
4.5
Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding
shares of Common Stock (other than a change covered by Sections 4.1 or 4.3 hereof or one that solely affects the par value of
such shares of Common Stock), or, in the case of any merger or consolidation of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification
or reorganization of the outstanding shares of Common Stock), or, in the case of any sale or conveyance to another corporation
or entity of the assets or other property of the Company as an entirety or substantially as an entirety, in connection with which
the Company is dissolved, the Registered Holders shall thereafter have the right to purchase and receive, upon the basis and upon
the terms and conditions specified in the Warrants and in lieu of the shares of Common Stock of the Company immediately theretofore
purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other
securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon
a dissolution following any such sale or transfer, that the Registered Holder would have received if such Registered Holder had
exercised his, her or its Warrant(s) immediately prior to such event; and if any reclassification also results in a change in
shares of Common Stock covered by Sections 4.1 or 4.3, then such adjustment shall be made pursuant to Sections 4.1, 4.3, 4.4 and
this Section 4.5. The provisions of this Section 4.5 shall similarly apply to successive reclassifications, reorganizations, mergers
or consolidations, sales or other transfers.
4.6
Notices of Changes in Warrant. Upon every adjustment of the Warrant Price or the number of shares of Common Stock issuable
upon exercise of a Warrant, the Company shall give written notice thereof to the Warrant Agent, which notice shall state the Warrant
Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon
the exercise of a Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation
is based. Upon the occurrence of any event specified in Sections 4.1, 4.2, 4.3 or 4.4 the Company shall give written notice to
each Registered Holder, at the last address set forth for such Registered Holder in the Warrant Register, of the record date or
the effective date of the event. Failure to give such notice, or any defect therein, shall not affect the legality or validity
of such event.
4.7
Form of Warrant. The form of Warrant Certificate need not be changed because of any adjustment pursuant to this Section
4, and Warrants issued after such adjustment may state the same Warrant Price and the same number of shares as is stated in the
Warrants initially issued pursuant to this Warrant Agreement. However, the Company may, at any time, in its sole discretion, make
any change in the form of Warrant that the Company may deem appropriate and that does not affect the substance thereof, and any
Warrant thereafter issued or countersigned, whether in exchange or substitution for an outstanding Warrant or otherwise, may be
in the form as so changed.
4.8
Notice of Certain Transactions. In the event that the Company shall (a) offer to holders of all its Common Stock rights
to subscribe for or to purchase any securities convertible into shares of Common Stock or shares of stock of any class or any
other securities, rights or options, (b) issue any rights, options or warrants entitling all the holders of Common Stock to subscribe
for shares of Common Stock, or (c) make a tender offer, redemption offer or exchange offer with respect to the Common Stock, the
Company shall send to the Registered Holders a notice of such action or offer. Such notice shall be mailed to the Registered Holders
at their addresses as they appear in the Warrant Register, which shall specify the record date for the purposes of such dividend,
distribution or rights, or the date such issuance or event is to take place and the date of participation therein by the holders
of Common Stock, if any such date is to be fixed, and shall briefly indicate the effect of such action on the Common Stock and
on the number and kind of any other shares of stock and on other property, if any, and the number of shares of Common Stock and
other property, if any, issuable upon exercise of each Warrant and the Warrant Price after giving effect to any adjustment pursuant
to this Section 4 which would be required as a result of such action. Such notice shall be given as promptly as practicable after
the Company has taken any such action.
5.
Transfer and Exchange of Warrants.
5.1
Transfer of Warrants. The Warrants may be transferred or exchanged separately or each Warrant may be transferred together
with Common Stock in such proportions as originally offered by the Company as a Unit. Each transfer of a Unit on the register
relating to such Units shall operate also to transfer the Warrants included in such Unit. Holders who intend to transfer or trade
Units must contact the Warrant Agent to confirm and complete the documentation required to constitute and transfer the Units.
5.2
Registration of Transfer. The Warrant Agent shall register the transfer, from time to time, of any outstanding Warrant
into the Warrant Register, upon surrender of such Warrant for transfer, properly endorsed with signatures properly guaranteed
and accompanied by appropriate instructions for transfer, or properly noticed by the Depositary as contemplated by Section 5.3.
Upon any such transfer, a new Warrant, including Book-Entry Warrants, as applicable, representing an equal aggregate number of
Warrants shall be issued and the old Warrant shall be cancelled by the Warrant Agent. The Warrants so cancelled shall be delivered
by the Warrant Agent to the Company from time to time upon the Company’s request.
5.3
Procedure for Surrender of Warrants. Warrants may be surrendered to the Warrant Agent, together with a written request
for exchange or transfer, and, thereupon, the Warrant Agent shall issue in exchange therefor one or more new Warrants as requested
by the Registered Holder of the Warrants so surrendered, representing an equal aggregate number of Warrants; provided, however,
that, in the event a Warrant surrendered for transfer bears a restrictive legend, the Warrant Agent shall not cancel such Warrant
and shall issue new Warrants in exchange therefor until the Warrant Agent has received an opinion of counsel for the Company stating
that such transfer may be made and indicating whether the new Warrants must also bear a restrictive legend. Notwithstanding anything
else in this Section 5.3, if a Book-Entry Warrant, the holder or Participant shall notify the Depositary in accordance with the
Depository’s procedures of a requested transfer and the Depositary shall provide notice to an account of the Warrant Agent
at the Depository designated for such purpose in writing by the Warrant Agent to the Depository from time to time, of a transfer
to be recorded in the records maintained by the Depository, its nominee for each Book-Entry Warrant Certificate, or a Participant,
as appropriate, evidencing the balance, if any, of the Warrants remaining after such transfer and the new name in which the transferred
Book Entry Warrants are to be held.
5.4
Fractional Warrants. The Warrant Agent shall not be required to effect any registration of transfer or exchange which will
result in the issuance of a Warrant Certificate for a fraction of a Warrant.
5.5
Service Charges. No service charge shall be made for any exchange or registration of transfer of Warrants. Any fees payable
to the Warrant Agent for such transfers shall be paid by the Company to the Warrant Agent.
5.6
Warrant Execution and Countersignature. The Warrant Agent is hereby authorized to countersign and to deliver, in accordance
with the terms of this Warrant Agreement, the Warrants required to be issued pursuant to the provisions of this Section 5, including
applying the Company’s signature thereto..
6.
Other Provisions Relating to Rights of Registered Holders of Warrants.
6.1
No Rights as Stockholder. A Warrant does not entitle the Registered Holder thereof to any of the rights of a stockholder
of the Company, including, without limitation, the right to receive dividends, or other distributions, exercise any preemptive
rights to vote or to consent or to receive notice as stockholders in respect of the meetings of stockholders or the election of
directors of the Company or any other matter.
6.2
Lost, Stolen Mutilated or Destroyed Warrants. If any Warrant is lost, stolen, mutilated or destroyed, the Company and the
Warrant Agent may, on such terms as to indemnity or otherwise as they may in their discretion impose (which terms shall in all
cases include posting of a lost security bond by or on behalf of the Registered Holder, and in the case of a mutilated Warrant,
include the surrender thereof), issue a new Warrant of like denomination, tenor and date as the Warrant so lost, stolen, mutilated
or destroyed. Any such new Warrant shall constitute a substitute contractual obligation of the Company, whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone.
6.3
Reservation of Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued
shares of Common Stock that will be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant to this
Warrant Agreement.
6.4
Registration of Common Stock. The Company agrees to use its best efforts to maintain the effectiveness of the Registration
Statement until the expiration of the Warrants in accordance with the provisions of this Warrant Agreement; provided, however,
that the Company shall not be obligated to deliver Common Stock and shall not have penalties for failure to deliver Common Stock
if a registration statement is not effective or a current prospectus is not on file with the SEC at the time of exercise by the
Registered Holder. In addition, to the extent not completed at the time of the initial issuance of the Warrants, the Company agrees
to use its reasonable efforts to register such securities under the blue sky laws of the states of residence of the exercising
Registered Holders to the extent an exemption under the Act is not available for the exercise of the Warrants. In no event will
the Registered Holder of a Warrant be entitled to receive a net-cash settlement or shares of Common Stock or other consideration
as of result of the Company’s non-compliance with this Section 6.4. The provisions of this Section 6.4 may not be modified,
amended or deleted without the prior written consent of Northland Securities, Inc. or Lake Street Capital Markets, LLC, the representative
of the underwriters (the “Underwriters”).
7.
Concerning the Warrant Agent and Other Matters.
7.1
Payment of Taxes. The Company will, from time to time, promptly pay all taxes and charges that may be imposed upon the
Company or the Warrant Agent in respect of the issuance or delivery of shares of Common Stock upon the exercise of Warrants, but
the Company shall not be obligated to pay any transfer taxes in respect of the Warrants or such shares.
7.2
Resignation, Consolidation, or Merger of Warrant Agent.
7.2.1
Appointment of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties
and be discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the
Company. If the office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall
appoint, in writing, a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment
within a period of 30 days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by
the Registered Holder of the Warrant (who shall, with such notice, submit his, her or its Warrant for inspection by the Company),
then the Registered Holder of any Warrant may apply to the Supreme Court of the State of New York for the County of New York for
the appointment of a successor Warrant Agent. Any successor Warrant Agent, whether appointed by the Company or by such court,
shall be a corporation organized and existing under the laws of the State of New York, in good standing and having its principal
office at 18 Lafayette Place, Woodmere, NY 11598 in the State of New York, and be authorized under such laws to exercise corporate
trust powers and subject to supervision or examination by federal or state authorities. After appointment, any successor Warrant
Agent shall be vested with all the authority, powers, rights, immunities, duties and obligations of its predecessor Warrant Agent
with like effect as if originally named as Warrant Agent hereunder, without any further act or deed; but, if for any reason it
becomes necessary or appropriate, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument
transferring to such successor Warrant Agent all the authority, powers, and rights of such predecessor Warrant Agent hereunder;
and, upon request of any successor Warrant Agent, the Company shall make, execute, acknowledge, and deliver any and all instruments
in writing for more fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers,
rights, immunities, duties and obligations.
7.2.2
Notice of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice
thereof to the predecessor Warrant Agent and the transfer agent for the Common Stock not later than the effective date of any
such appointment.
7.2.3
Merger or Consolidation of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may
be consolidated or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party shall
be the successor Warrant Agent under this Warrant Agreement without any further act on the part of the Company or the Warrant
Agent.
7.2.4
Confidentiality. The Warrant Agent and the Company agree that all books, records, information and data pertaining to the
business of the other party, including inter alia, personal, non-public Holder information, which are exchanged or received pursuant
to the negotiation or the carrying out of this Warrant Agreement shall remain confidential, and shall not be voluntarily disclosed
to any other person, except as may be required by law, including, without limitation, pursuant to subpoenas from state or federal
government authorities.
7.3
Fees and Expenses of Warrant Agent.
7.3.1
Remuneration. The Company agrees to pay the Warrant Agent reasonable remuneration for its services as Warrant Agent hereunder
as set forth on Exhibit B hereto and will reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent
may reasonably incur in the execution of its duties hereunder.
7.3.2
Further Assurances. The Company agrees to perform, execute, acknowledge and deliver, or cause to be performed, executed,
acknowledged and delivered, all such further and other acts, instruments and assurances as may reasonably be required by the Warrant
Agent for the carrying out or performing of the provisions of this Warrant Agreement.
7.4
Liability of Warrant Agent.
7.4.1
Reliance on Company Statement. Whenever, in the performance of its duties under this Warrant Agreement, the Warrant Agent
shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a statement signed by the Chief Executive Officer, Chief Financial Officer
or Chairman of the Board of the Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for
any action taken or suffered in good faith by it pursuant to the provisions of this Warrant Agreement.
7.4.2
Indemnity. The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct or bad faith.
The Company agrees to indemnify the Warrant Agent and hold it harmless against any and all liabilities, including judgments, costs
and reasonable counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Warrant Agreement, except
as a result of the Warrant Agent’s gross negligence, willful misconduct or bad faith.
7.4.3
Exclusions. The Warrant Agent shall have no responsibility with respect to the validity of this Warrant Agreement or with
respect to the validity or execution of any Warrant (except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Warrant Agreement or in any Warrant; nor shall it be responsible
to make any adjustments required under the provisions of Section 4 hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it, by any act
hereunder, be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock
to be issued pursuant to this Warrant Agreement or any Warrant or as to whether any shares of Common Stock will when issued be
valid and fully paid and nonassessable.
7.5
Acceptance of Agency. The Warrant Agent hereby accepts the agency established by this Warrant Agreement and agrees to perform
the same upon the terms and conditions herein set forth and, among other things, shall account promptly to the Company with respect
to Warrants exercised and concurrently account for, and pay to the Company, all moneys received by the Warrant Agent for the purchase
of shares of the Company’s Common Stock through the exercise of Warrants.
8.
Miscellaneous Provisions.
8.1
Successors. All the covenants and provisions of this Warrant Agreement by or for the benefit of the Company or the Warrant
Agent shall bind and inure to the benefit of their respective successors and assigns.
8.2
Notices. Any notice, statement or demand authorized by this Warrant Agreement to be given or made by the Warrant Agent
or by the Registered Holder of any Warrant to or on the Company shall be delivered by hand or sent by registered or certified
mail or overnight courier service, addressed (until another address is filed in writing by the Company with the Warrant Agent)
as follows:
Ener-Core,
Inc.
9400
Toledo Way
Irvine, California
92618
(949)
616-3300
Attention:
Chief Financial Officer
Any
notice, statement or demand authorized by this Warrant Agreement to be given or made by the Registered Holder of any Warrant or
by the Company to or on the Warrant Agent shall be delivered by hand or sent by registered or certified mail or overnight courier
service, addressed (until another address is filed in writing by the Warrant Agent with the Company), as follows:
VStock
Transfer, LLC
18
Lafayette Place
Woodmere,
New York 11598
Attention:
Shay Galam
Any
notice, sent pursuant to this Warrant Agreement shall be effective, if delivered by hand, upon receipt thereof by the party to
whom it is addressed, if sent by overnight courier, on the next business day of the delivery to the courier, and if sent by registered
or certified mail on the third day after registration or certification thereof
8.3
Applicable Law. The validity, interpretation, and performance of this Warrant Agreement and of the Warrants shall be governed
in all respects by the laws of the State of Delaware, without giving effect to conflict of laws. The Company and the Warrant Agent
hereby agree that any action, proceeding or claim against either of them arising out of or relating in any way to this Warrant
Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern
District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company and the
Warrant Agent hereby waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Any such process or summons to be served upon the Company or the Warrant Agent may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 8.2
hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the party receiving such service in
any action, proceeding or claim.
8.4
Persons Having Rights under this Warrant Agreement. Nothing in this Warrant Agreement expressed and nothing that may be
implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation
other than the parties hereto and the Registered Holders of the Warrants and, for the purposes of Sections 6.4, 8.2 and 8.8 hereof,
the Underwriters, any right, remedy, or claim under or by reason of this Warrant Agreement or of any covenant, condition, stipulation,
promise, or agreement hereof. Each Underwriter shall be deemed to be a third-party beneficiary of this Warrant Agreement with
respect to Sections 6.4, 8.2 and 8.8 hereof. All covenants, conditions, stipulations, promises, and agreements contained in this
Warrant Agreement shall be for the sole and exclusive benefit of the parties hereto (and the Underwriters with respect to the
Sections 6.4, 8.2 and 8.8 hereof) and their successors and assigns and of the Registered Holders of the Warrants.
8.5
Examination of the Warrant Agreement. A copy of this Warrant Agreement shall be available at all reasonable times at the
office of the Warrant Agent at 18 Lafayette Place, Woodmere, NY 11598, for inspection by the Registered Holder of any Warrant.
The Warrant Agent may require any such Registered Holder to submit his, her or its Warrant for inspection.
8.6
Counterparts- Facsimile Signatures. This Warrant Agreement may be executed in any number of counterparts, and each of such
counterparts shall, for all purposes, be deemed to be an original, and all such counterparts shall together constitute one and
the same instrument. Facsimile signatures shall constitute original signatures for all purposes of this Warrant Agreement.
8.7
Effect of Headings. The section headings herein are for convenience only and are not part of this Warrant Agreement and
shall not affect the interpretation thereof
8.8
Amendments. This Warrant Agreement and any Warrant certificate may be amended by the parties hereto by executing a supplemental
warrant agreement (a “Supplemental Agreement”), without the consent of any of the Warrant Holders, for
the purpose of (i) curing any ambiguity, or curing, correcting or supplementing any defective provision contained herein, or making
any other provisions with respect to matters or questions arising under this Warrant Agreement that is not inconsistent with the
provisions of this Warrant Agreement or the Warrant certificates, (ii) evidencing the succession of another corporation to the
Company and the assumption by any such successor of the covenants of the Company contained in this Warrant Agreement and the Warrants,
(iii) evidencing and providing for the acceptance of appointment by a successor Warrant Agent with respect to the Warrants, (iv)
adding to the covenants of the Company for the benefit of the Registered Holders or surrendering any right or power conferred
upon the Company under this Warrant Agreement, or (viii) amending this Warrant Agreement and the Warrants in any manner that the
Company may deem to be necessary or desirable and that will not adversely affect the interests of the Registered Holders in any
material respect. All other modifications or amendments, including any amendment to increase the Warrant Price or shorten the
Exercise Period, shall require the written consent of each of the Underwriter and the Registered Holders of a majority of the
then outstanding Warrants. Notwithstanding the foregoing, the Company may lower the Warrant Price or extend the duration of the
Exercise Period in accordance with Sections 3.1 and 3.2, respectively, without such consent.
8.9
Severability. This Warrant Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of this Warrant Agreement or of any other term or provision hereof. Furthermore,
in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part
of this Warrant Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be
valid and enforceable.
8.10
Business Day. For purposes of this Warrant Agreement a business day is any day other than a Saturday, Sunday or a day that
NYSE MKT is closed for trading.
[SIGNATURE
PAGE FOLLOWS]
[SIGNATURE
PAGE TO THE WARRANT AGREEMENT]
IN
WITNESS WHEREOF, this Warrant Agreement has been duly executed by the parties hereto as of the day and year first above written.
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ENER-CORE,
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VSTOCK
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EXHIBIT
A
Form
of Warrant Certificate
SPECIMEN
WARRANT CERTIFICATE
NUMBER |
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WARRANTS |
W- ____________ |
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(THIS
WARRANT WILL BE VOID IF NOT EXERCISED PRIOR TO 5:00 P.M.,
NEW
YORK CITY TIME, ON [_____], 20202)
ENER-CORE,
INC.
CUSIP
29272A115
WARRANT
THIS
WARRANT CERTIFICATE CERTIFIES THAT, for value received or registered agents, is the registered holder of a Warrant or
Warrants expiring on a date which is five years from the date of the Company’s initial public offering of this warrant
(the “Warrant”) to purchase ___ fully paid and non-assessable shares (the “Shares”) of
common stock, par value $0.0001 per share (the “Common Stock”), of ENER-CORE, INC., a Delaware corporation
(the “Company”), for each Warrant evidenced by this Warrant Certificate.
The
Warrant entitles the holder thereof to purchase from the Company, commencing upon consummation of the Company’s initial
public offering of this warrant, such number of Shares at the price of $[____]3 per whole share of Common Stock (the
“Warrant Price”), upon surrender of this Warrant Certificate with duly completed subscription form (see reverse)
(or, in the case of a Book-Entry Warrant Certificate, the Book-Entry Warrants to be exercised shown on the records of the Depository
to an account of the Warrant Agent at the Depository designated for such purpose in writing by the Warrant Agent to the Depository
from time to time),and payment of the Warrant Price at the office or agency of the Warrant Agent, VStock Transfer, LLC (such payment
to be made by check made payable to the Warrant Agent), but only subject to the conditions set forth herein and in the Warrant
Agreement between the Company and VStock Transfer, LLC. In no event shall the registered holder(s) of this Warrant be entitled
to receive a net-cash settlement, Shares or other consideration in lieu of physical settlement in Shares of the Company. The Warrant
Agreement provides that, upon the occurrence of certain events, the Warrant Price and the number of Warrant Shares purchasable
hereunder, set forth on the face hereof, may be adjusted, subject to certain conditions. The term Warrant Price as used in this
Warrant Certificate refers to the price per Share at which Shares may be purchased at the time the Warrant is exercised.
This
Warrant will expire on the date first above written if it is not exercised prior to such date by the registered holder pursuant
to the terms of the Warrant Agreement or if it is not redeemed by the Company prior to such date.
No
fraction of a share of the Common Stock will be issued upon any exercise of a Warrant. If, upon exercise of a Warrant, a
holder would be entitled to receive a Share or Shares representing a fractional interest in a share of Common Stock, the
Company will, upon exercise, issue or cause to be issued only the largest whole number of Shares issuable on such exercise
(and such fractional remainders will be disregarded).
Upon
any exercise of the Warrant for less than the total number of full Shares provided for herein, there shall be issued to the registered
holder(s) hereof or its assignee(s) a new Warrant Certificate covering the number of Shares for which the Warrant has not been
exercised.
Warrant
Certificates, when surrendered at the office or agency of the Warrant Agent by the registered holder(s) hereof in person or by
attorney duly authorized in writing, may be exchanged in the manner and subject to the limitations provided in the Warrant Agreement,
but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor and evidencing
in the aggregate a like number of Warrants.
2 Insert date
five years from the date of closing of the initial public offering of this warrant.
3 The exercise
price shall be 120% of the offering price of the units in the Company’s initial public offering of this warrant, per whole
share of common stock.
Upon
due presentment for registration of transfer of the Warrant Certificate at the office or agency of the Warrant Agent, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to
the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without
charge except for any applicable tax or other governmental charge.
The
Company and the Warrant Agent may deem and treat the registered holder(s) as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by anyone) for the purpose of any exercise hereof, of
any distribution to the registered holder(s), and for all other purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary.
This
Warrant does not entitle the registered holder(s) to any of the rights of a stockholder of the Company.
COUNTERSIGNED:
VSTOCK TRANSFER,
LLC
WARRANT
AGENT
AUTHORIZED
OFFICER
DATED:
CHIEF EXECUTIVE
OFFICER
SECRETARY
[REVERSE
OF CERTIFICATE]
SUBSCRIPTION
FORM
(“Election
to Purchase”)
To
Be Executed by the Registered Holder(s) in Order to Exercise Warrants
The
undersigned Registered Holder(s) irrevocably elect(s) to exercise Warrants
represented by this Warrant Certificate, and to purchase the shares of Common Stock issuable upon the exercise of such Warrants,
and requests that Certificates for such shares shall be issued in the name(s) of
(PLEASE
TYPE OR PRINT NAME(S) AND ADDRESS)
.
(SOCIAL
SECURITY OR TAX IDENTIFICATION NUMBER(S))
and
be delivered to |
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(PLEASE
PRINT OR TYPE NAME(S) AND ADDRESS) |
and, if
such number of Warrants shall not be all the Warrants evidenced by this Warrant Certificate, that a new Warrant Certificate for
the balance of such Warrants be registered in the name of, and delivered to, the Registered Holder(s) at the address(es) stated
below:
Dated:
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(SIGNATURE(S)) |
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(ADDRESS(ES)) |
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(TAX
IDENTIFICATION NUMBER(S)) |
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ASSIGNMENT
To
Be Executed by the Registered Holder in Order to Assign Warrants
For Value
Received, hereby sell(s), assign(s), and transfer(s) unto
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(PLEASE
TYPE OR PRINT NAME(S) AND ADDRESS(ES)) |
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(SOCIAL
SECURITY OR TAX IDENTIFICATION NUMBER(S))
and
be delivered to |
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(PLEASE
PRINT OR TYPE NAME(S) AND ADDRESS(ES)) |
of the Warrants
represented by this Warrant Certificate, and hereby irrevocably constitute and
appoint
__________________ Attorney to transfer this Warrant Certificate on the books of the Company, with full power of substitution in
the premises.
Dated:
NOTICE:
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s)
Guaranteed:
THE SIGNATURE(S)
MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15).
EXHIBIT
B
Form
of Lock-Up Agreement
Common
Stock Lock-Up Agreement
________________,
2015
Northland
Securities, Inc.
As representative
of the underwriters named
in Schedule
I to the Purchase Agreement
referred
to below
c/o Northland
Securities, Inc.
45
South Seventh Street, Suite 2000
Minneapolis,
Minnesota 55402
Ladies
and Gentlemen:
As
an inducement to the underwriters (the “Underwriters”) to execute a purchase agreement (the “Purchase
Agreement”) providing for a public offering (the “Offering”) of common stock, par value
$0.0001 per share (the “Common Stock”), of Ener-Core, Inc., a Nevada corporation, and any successor
(by merger, conversion or otherwise) thereto (the “Company”), the undersigned hereby agrees that without,
in each case, the prior written consent of Northland Securities, Inc. (“Northland”) during the period
specified in the second succeeding paragraph (the “Lock-Up Period”), the undersigned will not (1) offer,
pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, make any short sale or otherwise transfer or dispose of, directly
or indirectly, any shares of Common Stock or any securities convertible into, exercisable or exchangeable for or that represent
the right to receive Common Stock (including without limitation, Common Stock which may be deemed to be beneficially owned by
the undersigned in accordance with the rules and regulations of the Securities and Exchange Commission and securities which may
be issued upon exercise of a stock option or warrant) whether now owned or hereafter acquired (the “Lock-Up Securities”);
(2) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership
of the Lock-Up Securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise; (3) make any demand for or exercise any right with respect to, the registration
of any Common Stock or any security convertible into or exercisable or exchangeable for Common Stock; or (4) publicly disclose
the intention to do any of the foregoing.
The
undersigned agrees that the foregoing restrictions preclude the undersigned from engaging in any hedging or other transaction
which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the Lock-Up Securities
even if such Lock-Up Securities would be disposed of by someone other than the undersigned. Such prohibited hedging or other transactions
would include without limitation any short sale or any purchase, sale or grant of any right (including without limitation any
put or call option) with respect to any of the Lock-Up Securities or with respect to any security that includes, relates to, or
derives any significant part of its value from such Lock-Up Securities.
The
initial Lock-Up Period will commence on the date of this Agreement and end on the date that is 90 days from the date of the final
prospectus used to sell Common Stock in the Offering pursuant to the Purchase Agreement.
Notwithstanding
the foregoing, and subject to the conditions below, the undersigned may transfer the Lock-Up Securities during the Lock-Up Period
without the prior written consent of Northland: (i) as a bona fide gift or gifts; (ii) to any immediate family of the undersigned
or to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned; (iii) if the
undersigned is a corporation, partnership, limited liability company, trust or other business entity (1) transfers to another
corporation, partnership, limited liability company, trust or other business entity that is a direct or indirect affiliate (as
defined in Rule 405 promulgated under the Securities Act of 1933, as amended) of the undersigned or (2) distributions to limited
partners, limited liability company members or stockholders of the undersigned; (iv) if the undersigned is a trust, transfers
to the beneficiary of such trust; (v) pursuant to a qualified domestic order or in connection with a divorce settlement; (vi)
transfers by testate succession or intestate succession; (vii) pursuant to the Purchase Agreement; (viii) to the undersigned’s
affiliates (as defined in Rule 405 promulgated under the Securities Act of 1933, as amended) or to any investment fund or other
entity controlled or managed by the undersigned; and (ix) pursuant to a bona fide third-party tender offer, merger, consolidation
or other similar transaction made to all holders of the Company’s securities involving a “change of control”
(as defined below) of the Company, provided that in the event that such tender offer, merger, consolidation or other such transaction
is not completed, such securities held by the undersigned shall remain subject to the restrictions on transfer set forth in this
Agreement; provided, in the case of clauses (i) through (ix), that (x) such transfer shall not involve a disposition for
value, (y) the donee, trustee, distributee or transferee, as the case may be, agrees in writing with the Underwriters to be bound
by the terms of this Lock-Up Agreement, and (z) no filing by any party under Section 16(a) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), shall be required or shall be made voluntarily in connection with such
transfer. For purposes of this Agreement, “immediate family” shall mean any relationship by blood, marriage
or adoption, nor more remote than first cousin. For the purposes of clause (ix), “change of control”
shall mean the transfer (whether by tender offer, merger, consolidation or other similar transaction), in one transaction or a
series of related transactions, to a person or group of affiliated persons (other than an Underwriter pursuant to the Offering),
of the Company’s voting securities if, after such transfer, such person or group of affiliated persons would hold more than
50% of the outstanding voting securities of the Company (or the surviving entity).
In
addition, the foregoing restrictions shall not apply to (i) the exercise of stock options granted pursuant to the Company’s
equity incentive plans, warrants or any other securities convertible into or exchangeable or exercisable for Common Stock, in
each case disclosed in the prospectus relating to the Offering, provided that (a) the shares of Common Stock received upon such
exercise, exchange or conversion shall remain subject to the terms of this Agreement and (b) the undersigned is not required to,
and does not voluntarily, file a report under Section 16(a) of the Exchange Act reporting a reduction in beneficial ownership
of shares of Common Stock during the Lock-Up Period; (ii) the establishment of any contract, instruction or plan (a “Plan”)
that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act; or (iii) transactions relating
to shares of Common Stock or any other securities convertible into or exchangeable or exercisable for Common Stock of the Company
acquired by the undersigned on the open market following completion of the Offering if and only if (a) such sales are not required
to be reported in any public report or filing with the Commission during the Lock-Up Period and (b) the undersigned does not otherwise
voluntarily effect any public filing or report regarding such sales during the Lock-Up Period; provided that no sales of
the Lock-Up Securities shall be made pursuant to such a Plan prior to the expiration of the Lock-Up Period, and such a Plan may
only be established if no public announcement of the establishment or existence thereof and no filing with the Securities and
Exchange Commission or other regulatory authority in respect thereof or transactions thereunder or contemplated thereby, by the
undersigned, the Company or any other person, shall be required, and no such announcement or filing is made voluntarily, by the
undersigned, the Company or any other person, prior to the expiration of the Lock-Up Period (as such may have been extended pursuant
to the provisions hereof). In addition, the restrictions on transfer and disposition of Lock-Up Securities during the Lock-Up
Period shall not apply to (x) the sale and transfer of Common Stock to the Underwriters in the Offering pursuant to the terms
of the Purchase Agreement, or (y) the repurchase of Lock-Up Securities by the Company in connection with the termination
of the undersigned’s employment with the Company.
In
furtherance of the foregoing, the Company and its transfer agent and registrar are hereby authorized to decline to make any transfer
of shares of Common Stock if such transfer would constitute a violation or breach of this Agreement.
The
undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Agreement and
that upon request, the undersigned will execute and additional documents necessary to ensure the validity or enforcement of this
Agreement. All authority herein conferred or agreed to be conferred and any obligations of the undersigned shall be binding upon
the successors, assigns, heirs or personal representatives of the undersigned.
This
Agreement shall lapse and become null and void in its entirety, and the undersigned shall be released from all obligations under
this Agreement, if (i) either the Company, on the one hand, or the Underwriters, on the other hand, notify the other that
it does not intend to proceed with the Offering, (ii) the registration statement filed with the Securities and Exchange Commission
with respect to the contemplated Offering is withdrawn, (iii) the Purchase Agreement does not become effective, or if the
Purchase Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior to payment
for and delivery of the Common Stock to be sold thereunder, or (iv) the Offering is not completed by November 30, 2015.
The
undersigned understands that the Underwriters are entering into the Purchase Agreement and proceeding with the Offering in reliance
upon this Agreement.
This
Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.
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Very
truly yours, |
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Printed
Name of Holder |
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Signature |
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Printed
Name & Title of Person Signing |
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(if signing as custodian,
trustee, or on behalf of an entity) |
B-4
Exhibit
5.1
|
K&L
Gates LLP
1
Park Plaza
Twelfth
Floor
Irvine,
CA 92614
T
+1 949 253 0900 F +1 949 253 0902 klgates.com |
|
Ener-Core,
Inc.
9400 Toledo Way
Irvine, California 92618 |
November
16, 2015
Ladies
and Gentlemen:
We have acted as transaction counsel
to Ener-Core, Inc., a Delaware corporation (the “Company”), in connection with the Registration Statement on
Form S-1, as amended (File No. 333-205916) (the “Registration Statement”), filed with the Securities and Exchange
Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”),
for the registration of (i) 2,250,000 units (the “Firm Units”) of the Company, each such Unit representing
one authorized but unissued share of common stock of the Company, par value $0.0001 per share (“Common Stock”),
and a warrant to purchase 0.25 of a share of Common Stock (the “Warrant Shares”), (ii) (a) up to an additional
337,500 units (the “Option Units”, and together with the Firm Units, the “Units”), (b) up to an
additional 337,500 shares of Common Stock (the “Option Shares”) and (c) additional warrants to purchase up
to an aggregate of 84,375 shares of Common Stock (the “Option Warrants” and such underlying shares of Common
Stock, the “Option Warrant Shares”) (such securities not to exceed, in the aggregate, 15% of each of the shares
of Common Stock and Warrants underlying the Firm Units, whether issued as part of the Option Units or separately) that the underwriters
will have a right to purchase from the Company to cover over-allotments, if any, (iii) all shares of Common Stock issued as part
of the Units (together with the Option Shares, the “Shares”), (iv) all Warrants issued as part of the Units
(together with the Option Warrants, the “Warrants”), and (v) all shares of Common Stock underlying the Warrants
(altogether, the “Securities”). This opinion is being furnished to you in accordance with the requirements
of Item 601(b)(5) of Regulation S-K under the Securities Act.
You have requested our opinion as to
the matters set forth below in connection with the Registration Statement. For purposes of rendering this opinion, we have examined:
(i) the Registration Statement, (ii) the Certificate of Incorporation of the Company, (iii) the Bylaws of the Company, (iv) certain
resolutions of the Board of Directors of the Company and such other records of corporate actions of the Company relating to the
Registration Statement and the authorization for issuance and sale of the Securities, and matters in connection therewith, (v)
the following documents, each in the form filed (or to be filed by amendment) with the Commission as exhibits to the Registration
Statement: (a) the Purchase Agreement (as proposed to be entered into by and between the Company and the underwriters (the “Purchase
Agreement”)), (b) the form of Unit Certificate, and (c) the Warrant Agreement proposed to be entered by and between
the Company and VStock Transfer, LLC, as warrant agent (the “Warrant Agreement”), and (vi) the Company’s
stock ledger. We have also made such other investigation as we have deemed appropriate. We have examined and relied upon certificates
of public officials and, as to certain matters of fact that are material to our opinion; we have also relied on a certificate
of an officer of the Company.
In rendering our opinion, we have made
the assumptions that are customary in opinion letters of this kind, including the assumptions of the genuineness of all signatures
on original documents, the authenticity of all documents submitted to us as originals, the conformity to originals of all documents
submitted to us as copies thereof, and the due execution and delivery of all documents where due execution and delivery are prerequisites
to the effectiveness thereof. We have also assumed the following: (i) the Purchase Agreement as executed constitutes a legal,
valid, and binding obligation of each of the parties thereto (other than the Company) in accordance with its terms under New York
law, (ii) the Warrant Agreement as executed constitutes a legal, valid, and binding obligation of each of the parties thereto
(other than the Company) in accordance with its terms under Delaware law,
(iii) the Company will have sufficient authorized and unissued shares of Common Stock at the time of each issuance of a share
of Common Stock offered and sold pursuant to the Purchase Agreement (whether upon exercise of a Warrant or otherwise) for such
issuance, (iv) the Company’s Board of Directors will adopt a resolution, providing that all shares of Common Stock shall
be uncertificated in accordance with Section 158 of the Delaware General Corporation Law (the “DGCL”), prior
to their issuance, (v) the issuance of each share of Common Stock offered and sold pursuant to the Purchase Agreement (whether
upon exercise of a Warrant or otherwise) will be duly noted in the Company’s stock ledger upon its issuance, (vi) the Company
will receive consideration for each share of Common Stock offered and sold pursuant to the Purchase Agreement (whether upon exercise
of a Warrant or otherwise) at least equal to the par value of such share of Common Stock and in the amount required by the Purchase
Agreement, (vi) the resolutions of the Board of Directors of the Company relating to the Purchase Agreement, the Registration
Statement and the authorization for issuance and sale of the Securities, and matters in connection therewith, have not been revoked,
rescinded or amended as of the date hereof and are in full force and effect, (vii) the Prospectus has not been withdrawn, amended
or revoked in any manner adverse to our opinion prior to payment for the Securities, and (viii) (a) the submission by the parties
to the exclusive jurisdiction of the courts of State of New York or the United States District Court for the Southern District
of New York contained in Section 8.3 of the Warrant Agreement has been freely agreed to by the parties, (b) such provision would
not be determined to be unreasonable at the time of any legal action or proceeding, and (c) such provision would not place any
of the parties to the Warrant Agreement at a substantial and unjust disadvantage or otherwise deny such party of its day in court.
We have not verified any of those assumptions.
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Page
2
November
16, 2015 |
The opinions expressed in numbered paragraphs
2 and 3 below, are limited to the laws of the State of Delaware or the DGCL, in the case of the opinions expressed in numbered
paragraph 2 below, and the opinion expressed in numbered paragraph 1 below is limited to the laws of the State of New York.
Based
upon and subject to the foregoing, it is our opinion that:
| 1. | The
Units have been duly authorized by the Company and when issued, delivered and paid for
in accordance with the terms of the Purchase Agreement, will represent the valid and
binding obligations of the Company, enforceable against the Company in accordance with
their terms (subject to the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, receivership, moratorium, and other laws affecting the rights and remedies
of creditors or secured parties generally and to the exercise of judicial discretion
in accordance with the general principles of equity, whether applied by a court of law or
equity). |
| 2. | The
Shares, the Warrant Shares, the Option Shares and the Option Warrant Shares have been
duly authorized by the Company and, when issued and delivered in accordance with the
terms of the Purchase Agreement and the Warrant Agreement, as applicable, will be validly
issued, fully paid and nonassessable. |
| 3. | The
Warrants and the Option Warrants have been duly authorized by the Company, and when issued,
delivered and paid for in accordance with the terms of the Purchase Agreement and the
Warrant Agreement, will represent the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms (subject to the effect of bankruptcy,
insolvency, fraudulent conveyance, reorganization, receivership, moratorium, and other
laws affecting the rights and remedies of creditors or secured parties generally and
to the exercise of judicial discretion in accordance with the general principles of equity,
whether applied by a court of law or equity). |
Our
opinions in paragraphs 1 and 3 above are subject to the following additional qualifications:
A. We
express no opinion with respect to (i) waivers of the benefits of statutory, regulatory or constitutional rights, unless and to
the extent that the statute, regulation or constitution, as applicable, explicitly allows such waiver, and (ii) waivers of other
benefits to the extent that they cannot be waived under applicable law.
B. We
express no opinion as to any provision of any agreement that purports to bind a person or entity that is not a party to the agreement
or purporting to preclude modification of the agreement other than in writing.
We
hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm in
the Prospectus under the caption “Legal Matters.” In giving our consent, we do not hereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations thereunder.
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Yours truly, |
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/s/
K&L Gates LLP |
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K&L
Gates LLP
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