Exhibit
10.1
SUBSCRIPTION
AGREEMENT
This
Subscription Agreement (this “
Agreement
”) has been executed by the subscriber set forth on the signature
page hereof (the “
Subscriber
”) in connection with the private placement offering (the “
Offering
”)
by
Akoustis Technologies, Inc.
, a Nevada corporation (the “
Company
”) of shares (the “
Shares
”)
of the Company’s common stock, par value $0.001 per share (“
Common Stock
”) issued, at a purchase
price of $1.60 per Share (the “
Purchase Price
”). This subscription is being submitted to you in accordance
with and subject to the terms and conditions described in this Agreement.
The
Shares being subscribed for pursuant to this Agreement have not been registered under the Securities Act of 1933, as amended (the
“
Securities Act
”). The Offering is being made on a reasonable best efforts basis to “accredited
investors,” as defined in Regulation D under the Securities Act.
The
undersigned acknowledges receipt of a copy of the Registration Rights Agreement, substantially in the form of
Exhibit A
hereto (the “
Registration Rights Agreement
”).
Each
closing of the Offering (a “
Closing
,” and the date on which such Closing occurs hereinafter referred
to as the “
Closing Date
”) shall take place at the offices of CKR Law LLP, at 1330 Avenue of the Americas,
New York, New York 10019).
The
Company may conduct one or more Closings for the sale of the Shares until the termination of the Offering.
Any
term sheet, disclosure schedule or other information document, delivered to the Subscriber prior to Subscriber’s execution
of this Agreement, and any such document delivered to the Subscriber after Subscriber’s execution of this Agreement and
prior to the Closing of the Subscriber’s subscription hereunder are collectively referred to as the “
Disclosure
Materials
.”
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1.
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Subscription.
The undersigned Subscriber hereby subscribes to purchase the number of Shares set
forth on the Omnibus Signature Page attached hereto, for the aggregate Purchase Price
as set forth on such Omnibus Signature Page, subject to the terms and conditions of this
Agreement and on the basis of the representations, warranties, covenants and agreements
contained herein.
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2.
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Subscription
Procedure.
To complete a subscription for the Shares, the Subscriber must fully comply
with the subscription procedure provided in paragraphs a. through c. of this Section
on or before the Closing Date.
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a.
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Subscription
Documents
. On or before the Closing Date, the Subscriber shall review, complete and
execute the Omnibus Signature Page to this Agreement and the Registration Rights Agreement,
the Investor Profile, Anti-Money Laundering Form and Investor Certification, attached
hereto following the Omnibus Signature Page (collectively, the “
Subscription
Documents
”), and deliver the Subscription Documents to the Company’s
attorneys, CKR Law LLP (“
CKR
”), at the address set forth under
the caption “
How to subscribe for Shares in the private offering of Akoustis
Technologies, Inc.
” below. Executed documents may be delivered to CKR by facsimile
or .pdf sent by electronic mail (e-mail), if the Subscriber delivers the original copies
of the documents to CKR as soon as practicable thereafter.
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b.
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Purchase
Price
. Simultaneously with the delivery of the Subscription Documents to CKR as provided
herein, and in any event on or prior to the Closing Date, the Subscriber shall deliver
to Delaware Trust Company, in its capacity as escrow agent (the “
Escrow Agent
”),
the full Purchase Price by wire transfer of immediately available funds, pursuant to
the instructions set forth under the caption “
How to subscribe for Shares in
the private offering of Akoustis Technologies, Inc.
” below. Such funds will
be held for the Purchaser’s benefit and will be returned promptly, without interest
or offset, if this Subscription Agreement is not accepted by the Company or the Offering
is terminated pursuant to its terms by the Company prior to the Closing as defined herein.
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c.
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Company
Discretion
. The Subscriber understands and agrees that the Company in its sole discretion
reserves the right to accept or reject this or any other subscription for Shares, in
whole or in part, notwithstanding prior receipt by the Subscriber of notice of acceptance
of this subscription. The Company shall have no obligation hereunder until the Company
shall execute and deliver to the Subscriber an executed copy of this Agreement. If this
subscription is rejected in whole, or the Offering is terminated, all funds received
from the Subscriber will be returned without interest or offset, and this Agreement shall
thereafter be of no further force or effect. If this subscription is rejected in part,
the funds for the rejected portion of this subscription will be returned without interest
or offset, and this Agreement will continue in full force and effect to the extent this
subscription was accepted.
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3.
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Placement
Agents.
Northland Securities, Inc., and Katalyst Securities LLC, each a broker-dealer
licensed with FINRA, has been engaged as placement agent, and the Company may engage
one or more additional FINRA-licensed broker-dealers as placement agents, for the Offering
(collectively, the “
Placement Agents
”), on a reasonable best
efforts basis. The Placement Agents and their sub-agents will be paid at closing a cash
commission of 8% of funds raised from investors in the Offering introduced by them and
will receive warrants to purchase a number of shares of Common Stock equal to 10% of
the number of Shares sold in the Offering to investors introduced by them, with a term
of five (5) years and at an exercise price of $1.60 per share (the “
Placement
Agent Warrants
”)
; the Placement Agents will receive no cash commission
or Placement Agent Warrants in connection with funds raised from existing Company investors
or investors introduced by the Company. The Placement Agent Warrants will have “weighted
average” anti-dilution protection, subject to customary exceptions. Any sub-agent
of a Placement Agent that introduces investors to the Offering will be entitled to share
in the cash fees and Placement Agent Warrants attributable to those investors as described
above, pursuant to the terms of an executed sub-agent agreement. The Company will pay
certain expenses of the Placement Agents in connection with the Offering.
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4.
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Representations
and Warranties of the Company
. The Company hereby represents and warrants to the
Subscriber, as of the Closing Date (unless otherwise specified), the following:
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a.
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Organization
and Qualification
. The Company and each of its subsidiaries is a corporation or other
business entity duly organized and validly existing in good standing under the laws of
the jurisdiction of its formation, and has the requisite corporate power to own its properties
and to carry on its business as now being conducted. The Company and each of its subsidiaries
is duly qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the assets, business, condition (financial
or otherwise), results of operations or future prospects of the Company and its subsidiaries
taken as a whole (a “
Material Adverse Effect
”). Each subsidiary
of the Company is identified on
Schedule
4a
attached hereto.
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b.
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Authorization,
Enforcement, Compliance with Other Instruments
. (i) The Company has the requisite
corporate power and authority to enter into and perform its obligations under this Agreement,
the Registration Rights Agreement and each of the other agreements and documents that
are exhibits hereto or thereto or are contemplated hereby or thereby or necessary or
desirable to effect the transactions contemplated hereby or thereby (the “
Transaction
Documents
”) and to issue the Shares, in accordance with the terms hereof
and thereof, (ii) the execution and delivery by the Company of each of the Transaction
Documents and the consummation by it of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Shares, have been, or will be at the
time of execution of such Transaction Document, duly authorized by the Company’s
Board of Directors, and no further consent or authorization is, or will be at the time
of execution of such Transaction Document, required by the Company, its respective Board
of Directors or its stockholders, (iii) each of the Transaction Documents will be duly
executed and delivered by the Company, (iv) the Transaction Documents when executed will
constitute the valid and binding obligations of the Company enforceable against the Company
in accordance with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’
rights and remedies.
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c.
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Capitalization
.
The authorized capital stock of the Company consists of 300,000,000 shares of Common
Stock and 10,000,000 shares of preferred stock. As of the date of this Agreement, the
Company has 13,061,315 shares of Common Stock and no preferred stock issued and outstanding.
All of the outstanding shares of Common Stock and of the stock of each of the Company’s
subsidiaries have been duly authorized, validly issued and are fully paid and nonassessable.
Except as set forth on
Schedule
4c
attached hereto: (i) no shares of capital stock
of the Company or any of its subsidiaries are (and the Shares will not be) subject to
preemptive rights or any other similar rights or any liens or encumbrances suffered or
permitted by the Company; (ii) there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by which the
Company or any of its subsidiaries is or may become bound to issue additional shares
of capital stock of the Company or any of its subsidiaries, (iii) there are no outstanding
debt securities of the Company or its subsidiaries, (iv) there are no agreements or arrangements
under which the Company or any of its subsidiaries is obligated to register the sale
of any of their securities under the Securities Act, (v) there are no registration statements
that have been filed but are not yet effective relating to securities of the Company,
or any outstanding comment letters from the SEC or any other regulatory agency; (vi)
there are no securities or instruments containing anti-dilution or similar provisions,
including the right to adjust the exercise, exchange or reset price under such securities,
that will be triggered by the issuance of the Shares as described in this Agreement;
and (vii) no co-sale rights, rights of first refusal or other similar rights exist with
respect to the Shares or the issuance and sale thereof. Upon request, the Company will
make available to the Subscriber true and correct copies of the Company’s Articles
of Incorporation, and as in effect on the date hereof (the “
Articles of Incorporation
”),
and the Company’s By-laws, as in effect on the date hereof (the “
By-laws
”),
and the terms of all securities exercisable for Common Stock and the material rights
of the holders thereof in respect thereto.
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d.
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Issuance
of Shares
. The Shares are duly authorized and, upon issuance in accordance with the
terms hereof, shall be duly issued, fully paid and nonassessable, and are free from all
taxes, liens and charges with respect to the issue thereof.
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e.
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No
Conflicts
. The execution, delivery and performance of each of the Transaction Documents
by the Company, and the consummation by the Company of the transactions contemplated
hereby and thereby will not (i) result in a violation of the Articles of Incorporation
or the By-laws (or equivalent constitutive document) of the Company or any of its subsidiaries
or (ii) violate or conflict with, or result in a breach of any provision of, or constitute
a default (or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Company or any subsidiary is
a party, except for those which would not reasonably be expected to have a Material Adverse
Effect, or (iii) result in a material violation of any law, rule, regulation, order,
judgment or decree (including U.S. federal and state securities laws and regulations)
applicable to the Company or any subsidiary or by which any property or asset of the
Company or any subsidiary is bound or affected. Neither the Company nor any subsidiary
is in violation of any term of or in default under its Articles of Incorporation or By-laws.
Except for those violations or defaults which would not reasonably be expected to have
a Material Adverse Effect, neither the Company nor any subsidiary is in violation of
any term of or in default under any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable
to the Company or any subsidiary. The business of the Company and its subsidiaries is
not being conducted, and shall not be conducted in violation of any law, ordinance, or
regulation of any governmental entity, except for any violation which would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse Effect. Except
as specifically contemplated by this Agreement and as required under the Securities Act
and any applicable state securities laws, neither the Company nor any of its subsidiaries
is required to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under or contemplated by this Agreement or the other Transaction
Documents in accordance with the terms hereof or thereof. Except as set forth on
Schedule
3
or
Schedule 4e
,
neither the execution and delivery by the Company of the Transaction Documents, nor the
consummation by the Company of the transactions contemplated hereby or thereby, will
require any notice, consent or waiver under any contract or instrument to which the Company
or any subsidiary is a party or by which the Company or any subsidiary is bound or to
which any of their assets is subject. All consents, authorizations, orders, filings and
registrations which the Company or any of its subsidiaries is required to obtain pursuant
to the preceding two sentences have been or will be obtained or effected on or prior
to the Closing. The Company is unaware of any facts or circumstance, which might give
rise to any of the foregoing.
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f.
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Absence
of Litigation
. Except as set forth on
Schedule
4f
,
there
is no action, suit, claim, inquiry, notice of violation, proceeding or investigation
before or by any court, public board, governmental or administrative agency, self-regulatory
organization or body now pending or, to the knowledge of the Company, threatened, against
or affecting the Company or any of its subsidiaries.
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g.
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Acknowledgment
Regarding Subscriber’s Purchase of the Shares
. The Company acknowledges and
agrees that each Subscriber is acting solely in the capacity of an arm’s length
purchaser with respect to the Transaction Documents and the transactions contemplated
hereby and thereby.
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h.
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No
General Solicitation
. Neither the Company, nor any of its affiliates, nor, to the
knowledge of the Company, any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of Regulation
D) in connection with the offer or sale of the Shares.
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i.
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No
Integrated Offering
. Neither the Company, nor any of its affiliates, nor to the knowledge
of the Company, any person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of the Shares under the Securities
Act or cause this offering of the Shares to be integrated with prior offerings by the
Company for purposes of the Securities Act.
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j.
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Employee
Relations
. Neither Company nor any of its subsidiaries is involved in any labor dispute
nor, to the knowledge of the Company, is any such dispute threatened. Neither Company
nor any subsidiary is party to any collective bargaining agreement. The Company’s
and/or its subsidiaries’ employees are not members of any union, and the Company
believes that its and its subsidiaries’ relationship with their respective employees
is good.
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k.
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Intellectual
Property Rights
. Except as set forth on
Schedule
4k
, the Company and its subsidiaries own or possess
sufficient rights to all patents, trademarks, domain names (whether or not registered)
and any patentable improvements or copyrightable derivative works thereof, websites and
intellectual property rights relating thereto, service marks, trade names, copyrights,
licenses and authorizations, and all rights with respect to the foregoing, which are
necessary for the conduct of its business as now conducted without any conflict with
the rights of others except for such conflicts that would not result in a Material Adverse
Effect. Neither Company nor any subsidiary has received any notice of infringement of,
or conflict with, the asserted rights of others with respect to any intellectual property
that it utilizes.
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(i)
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The
Company and each subsidiary has complied with all applicable Environmental Laws (as defined
below), except for violations of Environmental Laws that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Material Adverse Effect.
There is no pending or, to the knowledge of the Company, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or investigation,
inquiry or information request, relating to any Environmental Law involving the Company
or any subsidiary, except for litigation, notices of violations, formal administrative
proceedings or investigations, inquiries or information requests that, individually or
in the aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect. For purposes of this Agreement, “Environmental Law” means
any national, state, provincial or local law, statute, rule or regulation or the common
law relating to the environment or occupational health and safety, including without
limitation any statute, regulation, administrative decision or order pertaining to (i)
treatment, storage, disposal, generation and transportation of industrial, toxic or hazardous
materials or substances or solid or hazardous waste; (ii) air, water and noise pollution;
(iii) groundwater and soil contamination; (iv) the release or threatened release into
the environment of industrial, toxic or hazardous materials or substances, or solid or
hazardous waste, including without limitation emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; (v) the protection of wild
life, marine life and wetlands, including without limitation all endangered and threatened
species; (vi) storage tanks, vessels, containers, abandoned or discarded barrels, and
other closed receptacles; (vii) health and safety of employees and other persons; and
(viii) manufacturing, processing, using, distributing, treating, storing, disposing,
transporting or handling of materials regulated under any law as pollutants, contaminants,
toxic or hazardous materials or substances or oil or petroleum products or solid or hazardous
waste. As used above, the terms “release” and “environment” shall
have the meaning set forth in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
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(ii)
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To
the knowledge of the Company there is no material environmental liability with respect
to any solid or hazardous waste transporter or treatment, storage or disposal facility
that has been used by the Company or any subsidiary.
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(iii)
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The
Company and its subsidiaries (i) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective businesses
except to the extent that the failure to have such permits, licenses or other approvals
would not have a Material Adverse Effect and (ii) are in compliance, in all material
respects, with all terms and conditions of any such permit, license or approval.
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m.
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Permits;
FCC Compliance
. The Company and its subsidiaries have all authorizations, approvals,
clearances, licenses, permits, certificates or exemptions (including manufacturing approvals
and authorizations, pricing and reimbursement approvals, labeling approvals, registration
notifications or their foreign equivalent) issued by any regulatory authority or governmental
agency (collectively, “
Permits
”) required to conduct their
respective businesses as currently conducted except to the extent that the failure to
have such Permits would not have a Material Adverse Effect. The conduct of business by
the Company complies, and at all times has substantially complied, in all material respects
with the Telecommunications Act of 1996 and similar federal, state and foreign laws applicable
to the evaluation, testing, manufacturing, distribution, advertising and marketing of
each of the Company’s products, in whatever stage of development or commercialization
except to the extent that the failure to so comply would not have a Material Adverse
Effect. To the knowledge of the Company, as of the date hereof, neither the Federal Communications
Commission (the “
FCC
”) nor any comparable regulatory authority
or governmental agency is considering limiting, suspending or revoking any such Permit
or changing the marketing classification or labeling of the products of the Company or
any of its subsidiaries. To the knowledge of the Company, there is no false or misleading
information or material omission in any product application or other submission by the
Company or any of its subsidiaries to the FCC or any comparable regulatory authority
or governmental agency. The Company or its subsidiaries have fulfilled and performed
in all material respects their obligations under each Permit, and, as of the date hereof,
to the knowledge of the Company, no event has occurred or condition or state of facts
exists which would constitute a breach or default or would cause revocation or termination
of any such Permit except to the extent that such breach, default, revocation or termination
would not have a Material Adverse Effect. To the knowledge of the Company, any third
party that is a manufacturer or contractor for the Company or any of its subsidiaries
is in compliance in all material respects with all Permits insofar as they pertain to
the manufacture of product components or products for the Company. The Company and its
subsidiaries have not received any notice of adverse finding, warning letter, notice
of violation, notice of action or any other notice from the FCC or other governmental
agency alleging or asserting noncompliance with any applicable laws or Permits. The Company
and its subsidiaries have made all notifications, submissions and reports required by
applicable federal, state and foreign laws, except to the extent that the failure to
make such notifications, submission or reports would not have a Material Adverse Effect.
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n.
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Title
.
Neither the Company nor any of its subsidiaries owns any real property. Except as set
forth on
Schedule
4n
, each of the Company and its subsidiaries has
good and marketable title to all of its personal property and assets, free and clear
of any material restriction, mortgage, deed of trust, pledge, lien, security interest
or other charge, claim or encumbrance which would have a Material Adverse Effect. Except
as set forth on
Schedule 4n
, with respect
to properties and assets it leases, each of the Company and its subsidiaries is in material
compliance with such leases and holds a valid leasehold interest free of any liens, claims
or encumbrances which would have a Material Adverse Effect.
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o.
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No
Material Breaches
. Neither Company nor any subsidiary is in breach of any contract
or agreement which breach, in the judgment of the Company’s officers, has had,
or could reasonably be expected to have, a Material Adverse Effect.
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p.
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Certain
Transactions
. Except for arm’s length transactions pursuant to which the Company
or any subsidiary makes payments in the ordinary course of business upon terms no less
favorable than it could obtain from third parties, none of the officers, directors, or
employees of the Company or any subsidiary is presently a party to any transaction with
the Company or any subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any officer,
director, or any such employee has a substantial interest or is an officer, director,
trustee or partner.
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q.
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Rights
of First Refusal
. Except as set forth on
Schedule
4c
or
Schedule 4q
,
the Company is not obligated to offer the securities offered hereunder on a right of
first refusal basis or otherwise to any third parties including, but not limited to,
current or former stockholders of the Company, underwriters, brokers, agents or other
third parties.
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r.
|
Insurance
.
The Company has insurance policies of the type and in amounts customarily carried by
organizations conducting businesses or owning assets similar to those of the Company
and its subsidiaries. There is no material claim pending under any such policy as to
which coverage has been questioned, denied or disputed by the underwriter of such policy.
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s.
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SEC
Reports
. The Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Securities and Exchange Commission (the
“
SEC
”) under the Securities Exchange Act of 1934, as amended
(the “
Exchange Act
”), including pursuant to Section 13(a) or
15(d) thereof (or that it would be required to be filed by it if it were subject to the
reporting requirements of such sections), for the two years preceding the date hereof
(or such shorter period since the Company was first required by law or regulation to
file such material).
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t.
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Brokers’
Fees
. Except as set forth on
Schedule 4t
, the Company does not have any liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement, except for the
payment of fees to any Placement Agents or brokers that have been or may be retained by the Company as described in Section 3
above.
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u.
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Disclosure
Materials
. The Disclosure Materials taken as a whole do not contain 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 under which they were made, not misleading.
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v.
|
Reliance
.
The Company acknowledges that the Subscriber is relying on the representations and warranties
made by the Company hereunder and that such representations and warranties are a material
inducement to the Subscriber purchasing the Shares. The Company further acknowledges
that without such representations and warranties of the Company made hereunder, the Subscribers
would not enter into this Agreement.
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5.
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Representations,
Warranties and Agreements of the Subscriber.
The Subscriber represents and warrants
to, and agrees with, the Company the following:
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a.
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The
Subscriber has the knowledge and experience in financial and business matters necessary
to evaluate the merits and risks of its prospective investment in the Company, and has
carefully reviewed and understands the risks of, and other considerations relating to,
the purchase of Shares and the tax consequences of the investment, and have the ability
to bear the economic risks of the investment. The Subscriber can afford the loss of its
entire investment.
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b.
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The
Subscriber is acquiring the Shares for investment for its own account and not with the
view to, or for resale in connection with, any distribution thereof. The Subscriber understands
and acknowledges that the Shares have not been registered under the Securities Act or
any state securities laws, by reason of a specific exemption from the registration provisions
of the Securities Act and applicable state securities laws, which depends upon, among
other things, the bona fide nature of the investment intent as expressed herein. The
Subscriber further represents that it does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participation to any third
person with respect to any of the Shares. The Subscriber understands and acknowledges
that the offering of the Shares pursuant to this Agreement will not be registered under
the Securities Act nor under the state securities laws on the ground that the sale provided
for in this Agreement and the issuance of securities hereunder is exempt from the registration
requirements of the Securities Act and any applicable state securities laws.
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c.
|
The
Subscriber is an “accredited investor” as defined in Rule 501 of Regulation
D as promulgated by the SEC under the Securities Act, for the reason(s) specified on
the
Accredited Investor Certification
attached hereto as completed by Subscriber,
and Subscriber shall submit to the Company such further assurances of such status as
may be reasonably requested by the Company. The Subscriber resides in the jurisdiction
set forth on the Subscriber’s Omnibus Signature Page affixed hereto.
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d.
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The
Subscriber (i) if a natural person, represents that he or she is the greater of (A) 21
years of age or (B) the age of legal majority in his or her jurisdiction of residence,
and has full power and authority to execute and deliver this Agreement and all other
related agreements or certificates and to carry out the provisions hereof and thereof;
(ii) if a corporation, partnership, or limited liability company or partnership, or association,
joint stock company, trust, unincorporated organization or other entity, represents that
such entity was not formed for the specific purpose of acquiring the Shares, such entity
is duly organized, validly existing and in good standing under the laws of the state
or jurisdiction of its organization, the consummation of the transactions contemplated
hereby is authorized by, and will not result in a violation of state law or its charter
or other organizational documents, such entity has full power and authority to execute
and deliver this Agreement and all other related agreements or certificates and to carry
out the provisions hereof and thereof and to purchase and hold the Shares, the execution
and delivery of this Agreement has been duly authorized by all necessary action, this
Agreement has been duly executed and delivered on behalf of such entity and is a legal,
valid and binding obligation of such entity; or (iii) if executing this Agreement in
a representative or fiduciary capacity, represents that it has full power and authority
to execute and deliver this Agreement in such capacity and on behalf of the subscribing
individual, ward, partnership, trust, estate, corporation, or limited liability company
or partnership, or other entity for whom the Subscriber is executing this Agreement,
and such individual, partnership, ward, trust, estate, corporation, or limited liability
company or partnership, or other entity has full right and power to perform pursuant
to this Agreement and make an investment in the Company, and represents that this Agreement
constitutes a legal, valid and binding obligation of such entity. The execution and delivery
of this Agreement will not violate or be in conflict with any order, judgment, injunction,
agreement or controlling document to which the Subscriber is a party or by which it is
bound.
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e.
|
The
Subscriber understands that the Shares are being offered and sold to it in reliance on
specific exemptions from the registration requirements of United States federal and state
securities laws and that the Company is relying in part upon the truth and accuracy of,
and such Subscriber’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Subscriber set forth herein in order to determine
the availability of such exemptions and the eligibility of such Subscriber to acquire
such securities. The Subscriber further acknowledges and understands that the Company
is relying on the representations and warranties made by the Subscriber hereunder and
that such representations and warranties are a material inducement to the Company to
sell the Shares to the Subscriber. The Subscriber further acknowledges that without such
representations and warranties of the Subscriber made hereunder, the Company would not
enter into this Agreement with the Subscriber.
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|
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f.
|
The
Subscriber understands that no public market now exists, and there may never be a public
market for, the Shares, that only a limited public market for the Company’s Common
Stock exists and that there can be no assurance that an active public market for the
Common Stock will exist or continue to exist.
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|
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g.
|
The Subscriber has received and reviewed information about the Company, including the Disclosure Materials, and has had an opportunity to discuss the Company’s business, management and financial affairs with the Company’s management. The Subscriber understands that such discussions, as well as any Disclosure Materials provided by the Company, were intended to describe the aspects of the Company’s business and prospects which the Company believes to be material, but were not necessarily a thorough or exhaustive description, and except as expressly set forth in this Agreement, the Company makes no representation or warranty with respect to the completeness of such information and makes no representation or warranty of any kind with respect to any information provided by any entity other than the Company. Some of such information may include projections as to the future performance of the Company, which projections may not be realized, may be based on assumptions which may not be correct and may be subject to numerous factors beyond the Company’s control. Additionally, the Subscriber understands and represents that it is purchasing the Shares notwithstanding the fact that the Company may disclose in the future certain material information the Subscriber has not received, including (without limitation) financial statements of the Company for the current or prior fiscal periods, and any subsequent period financial statements that will be filed with the SEC, that it is not relying on any such information in connection with its purchase of the Shares and that it waives any right of action with respect to the nondisclosure to it prior to its purchase of the Shares of any such information. Each Subscriber has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Shares.
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h.
|
The
Subscriber acknowledges that none of the Company or any Placement Agents or brokers that
may be retained by the Company in connection with the Offering is acting as a financial
advisor or fiduciary of the Subscriber (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated hereby and thereby, and no investment
advice has been given by the Company or any Placement Agents or brokers that may be retained
by the Company or any of its representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby. The Subscriber further
represents to the Company that the Subscriber’s decision to enter into the Transaction
Documents has been based solely on the independent evaluation by the Subscriber and its
representatives.
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i.
|
As
of the Closing, all actions on the part of Subscriber, and its officers, directors and
partners, if applicable, necessary for the authorization, execution and delivery of this
Agreement and the Registration Rights Agreement and the performance of all obligations
of the Subscriber hereunder and thereunder shall have been taken, and this Agreement
and the Registration Rights Agreement, assuming due execution by the parties hereto and
thereto, constitute valid and legally binding obligations of the Subscriber, enforceable
in accordance with their respective terms, subject to: (i) judicial principles limiting
the availability of specific performance, injunctive relief, and other equitable remedies
and (ii) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect generally relating to or affecting creditors’ rights.
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|
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j.
|
Subscriber
represents that neither it nor, to its knowledge, any person or entity controlling, controlled
by or under common control with it, nor any person having a beneficial interest in it,
nor any person on whose behalf the Subscriber is acting: (i) is a person listed in the
Annex to Executive Order No. 13224 (2001) issued by the President of the United States
(Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit, or Support Terrorism); (ii) is named on the List of Specially Designated
Nationals and Blocked Persons maintained by the U.S. Office of Foreign Assets Control;
(iii) is a non-U.S. shell bank or is providing banking services indirectly to a non-U.S.
shell bank; (iv) is a senior non-U.S. political figure or an immediate family member
or close associate of such figure; or (v) is otherwise prohibited from investing in the
Company pursuant to applicable U.S. anti-money laundering, anti-terrorist and asset control
laws, regulations, rules or orders (categories (i) through (v), each a “
Prohibited
Subscriber
”). The Subscriber agrees to provide the Company, promptly upon
request, all information that the Company reasonably deems necessary or appropriate to
comply with applicable U.S. anti-money laundering, anti-terrorist and asset control laws,
regulations, rules and orders. The Subscriber consents to the disclosure to U.S. regulators
and law enforcement authorities by the Company and its affiliates and agents of such
information about the Subscriber as the Company reasonably deems necessary or appropriate
to comply with applicable U.S. antimony laundering, anti-terrorist and asset control
laws, regulations, rules and orders. If the Subscriber is a financial institution that
is subject to the USA Patriot Act, the Subscriber represents that it has met all of its
obligations under the USA Patriot Act. The Subscriber acknowledges that if, following
its investment in the Company, the Company reasonably believes that the Subscriber is
a Prohibited Subscriber or is otherwise engaged in suspicious activity or refuses to
promptly provide information that the Company requests, the Company has the right or
may be obligated to prohibit additional investments, segregate the assets constituting
the investment in accordance with applicable regulations or immediately require the Subscriber
to transfer the Shares. The Subscriber further acknowledges that the Subscriber will
have no claim against the Company or any of its affiliates or agents for any form of
damages as a result of any of the foregoing actions.
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|
If
the Subscriber is affiliated with a non-U.S. banking institution (a “
Foreign
Bank
”), or if the Subscriber receives deposits from, makes payments on
behalf of, or handles other financial transactions related to a Foreign Bank, the Subscriber
represents and warrants to the Company that: (1) the Foreign Bank has a fixed address,
other than solely an electronic address, in a country in which the Foreign Bank is authorized
to conduct banking activities; (2) the Foreign Bank maintains operating records related
to its banking activities; (3) the Foreign Bank is subject to inspection by the banking
authority that licensed the Foreign Bank to conduct banking activities; and (4) the Foreign
Bank does not provide banking services to any other Foreign Bank that does not have a
physical presence in any country and that is not a regulated affiliate.
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k.
|
The
Subscriber or its duly authorized representative realizes that because of the inherently
speculative nature of businesses of the kind conducted and contemplated by the Company,
the Company’s financial results may be expected to fluctuate from month to month
and from period to period and will, generally, involve a high degree of financial and
market risk that could result in substantial or, at times, even total losses for investors
in securities of the Company.
|
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l.
|
The
Subscriber has adequate means of providing for its current and anticipated financial
needs and contingencies, is able to bear the economic risk for an indefinite period of
time and has no need for liquidity of the investment in the Shares and could afford complete
loss of such investment.
|
|
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m.
|
The
Subscriber is not subscribing for Shares as a result of or subsequent to any advertisement,
article, notice or other communication, published in any newspaper, magazine or similar
media or broadcast over television, radio, or the internet, or presented at any seminar
or meeting, or any solicitation of a subscription by a person not previously known to
the Subscriber in connection with investments in securities generally.
|
|
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n.
|
The
Subscriber acknowledges that no U.S. federal or state agency or any other government
or governmental agency has passed upon the Shares or made any finding or determination
as to the fairness, suitability or wisdom of any investments therein.
|
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o.
|
The
Subscriber agrees to be bound by all of the terms and conditions of the Registration
Rights Agreement and to perform all obligations thereby imposed upon it.
|
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|
p.
|
All of the information that the Subscriber has heretofore furnished or which is set forth herein is true, correct and complete as of the date of this Agreement, and, if there should be any material change in such information prior to the admission of the undersigned to the Company, the Subscriber will immediately furnish revised or corrected information to the Company.
|
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q.
|
(For
ERISA plans only)
The fiduciary of the Employee Retirement Income Security Act of
1974 (“
ERISA
”) plan (the “
Plan
”)
represents that such fiduciary has been informed of and understands the Company’s
investment objectives, policies and strategies, and that the decision to invest “plan
assets” (as such term is defined in ERISA) in the Company is consistent with the
provisions of ERISA that require diversification of plan assets and impose other fiduciary
responsibilities. The Subscriber fiduciary or Plan (a) is responsible for the decision
to invest in the Company; (b) is independent of the Company or any of its affiliates;
(c) is qualified to make such investment decision; and (d) in making such decision, the
Purchaser fiduciary or Plan has not relied primarily on any advice or recommendation
of the Company or any of its affiliates.
|
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6.
|
Transfer
Restrictions
. The Subscriber acknowledges and agrees as follows:
|
|
|
a.
|
The
Shares have not been registered for sale under the Securities Act, in reliance on the
private offering exemption in Section 4(a)(2) thereof; other than as expressly provide
in the Registration Rights Agreement, the Company does not currently intend to register
the Shares under the Securities Act at any time in the future; and the undersigned will
not immediately be entitled to the benefits of Rule 144 with respect to the Shares.
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|
|
b.
|
The
Subscriber understands that there are substantial restrictions on the transferability
of the Shares that the certificates representing the Shares shall bear a restrictive
legend in substantially the following form (and a stop-transfer order may be placed against
transfer of such certificates or other instruments):
|
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THE COMPANY RECEIVES AN OPINION
OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY
BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS.
HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH
THE SECURITIES ACT.
The
legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Shares
upon which it is stamped, if (a) such Shares are sold pursuant to a registration statement under the Securities Act, or (b) such
holder delivers to the Company an opinion of counsel, reasonably acceptable to the Company, that a disposition of the Shares is
being made pursuant to an exemption from such registration and that the Shares, after such transfer, shall no longer be “restricted
securities” within the meaning of Rule 144.
|
|
c.
|
Each
Subscriber understands that until May 22, 2015, the Company was a “shell company”
as defined in Rule 12b-2 under the Exchange Act. Pursuant to Rule 144(i), securities
issued by a current or former shell company (that is, the Shares) that otherwise meet
the holding period and other requirements of Rule 144 nevertheless cannot be sold in
reliance on Rule 144 until
one year
after the Company (a) is no longer a shell
company; and (b) has filed current “Form 10 information“ (as defined in Rule
144(i)) with the SEC reflecting that it is no longer a shell company, and
provided
that at the time of a proposed sale pursuant to Rule 144, the Company is subject
to the reporting requirements of Section 13 or 15(d) of the Exchange Act and has filed
all reports and other materials required to be filed by Section 13 or 15(d) of the Exchange
Act, as applicable, during the preceding 12 months (or for such shorter period that the
issuer was required to file such reports and materials), other than Form 8-K reports.
As a result, the restrictive legends on certificates for the Shares cannot be removed
except in connection with an actual sale meeting the foregoing requirements or pursuant
to an effective registration statement
.
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a.
|
The
Subscriber agrees to indemnify and hold harmless the Company, the Placement Agents and
any other broker, agent or finder engaged by the Company for the Offering, and their
respective officers, directors, shareholders, members, partners, employees and agents,
(and any other persons with a functionally equivalent role of a person holding such titles
notwithstanding a lack of such title or any other title), each person who controls such
indemnified person (within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the directors, officers, shareholders, agents, members, partners
or employees (and any other persons with a functionally equivalent role of a person holding
such titles notwithstanding a lack of such title or any other title) of such controlling
person, from and against all losses, liabilities, claims, damages, costs, fees and expenses
whatsoever (including, but not limited to, any and all expenses incurred in investigating,
preparing or defending against any litigation commenced or threatened) based upon or
arising out of the Subscriber’s actual or alleged false acknowledgment, representation
or warranty, or misrepresentation or omission to state a material fact, or breach by
the Subscriber of any covenant or agreement made by the Subscriber, contained herein
or in any other document delivered by the Subscriber in connection with this Agreement.
The liability of the Subscriber under this paragraph shall not exceed the aggregate Purchase
Price paid by the Subscriber for Shares hereunder.
|
|
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b.
|
The
Company agrees to indemnify and hold harmless the Subscriber from and against all losses,
liabilities, claims, damages, costs, fees and expenses whatsoever (including, but not
limited to, any and all expenses incurred in investigating, preparing or defending against
any litigation commenced or threatened) based upon or arising out of the Company’s
actual or alleged false acknowledgment, representation or warranty, or misrepresentation
or omission to state a material fact, or breach by the Company of any covenant or agreement
made by the Company, contained herein or in any other any other Disclosure Materials.
The liability of the Company under this paragraph shall not exceed the total Purchase
Price paid by the Subscriber hereunder.
|
|
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c.
|
Promptly
after receipt by an indemnified party under this Section 7 of notice of the commencement
of any action, such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 7, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified party otherwise
than under this Section 7. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and to the extent that it may elect by
written notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof, with counsel satisfactory
to such indemnified party; provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and either (i) the indemnifying
party or parties and the indemnified party or parties mutually agree or (ii) representation
of both the indemnifying party or parties and the indemnified party or parties by the
same counsel is inappropriate under applicable standards of professional conduct due
to actual or potential differing interests between them, the indemnified party or parties
shall have the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such indemnified party
or parties. Upon receipt of notice from the indemnifying party to such indemnified party
of its election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified party
under this Section 7 for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof unless (i) the indemnified party shall have
employed counsel in connection with the assumption of legal defenses in accordance with
the proviso to the next preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel in such
circumstance), (ii) the indemnifying party shall not have employed counsel satisfactory
to the indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has authorized
the employment of counsel for the indemnified party at the expense of the indemnifying
party. No indemnifying party shall (i) without the prior written consent of the indemnified
parties (which consent shall not be unreasonably withheld), settle or compromise or consent
to the entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential parties to
such claim or action) unless such settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action effected
without its written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment of the plaintiff in
any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or judgment.
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8.
|
Revocability;
Binding Effect.
The subscription hereunder may be revoked prior to the Closing thereon,
provided that written notice of revocation is sent and is received by the Company or
a Placement Agent at least three business days prior to the Closing on such subscription.
The Subscriber hereby acknowledges and agrees that this Agreement shall survive the death
or disability of the Subscriber and shall be binding upon and inure to the benefit of
the parties and their heirs, executors, administrators, successors, legal representatives
and permitted assigns. If the Subscriber is more than one person, the obligations of
the Subscriber hereunder shall be joint and several and the agreements, representations,
warranties and acknowledgments herein shall be deemed to be made by and be binding upon
each such person and such person’s heirs, executors, administrators, successors,
legal representatives and permitted assigns.
|
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9.
|
Modification.
This Agreement shall not be modified or waived except by an instrument in writing
signed by the party against whom any such modification or waiver is sought to be enforced.
|
|
|
10.
|
Immaterial
Modifications to the Registration Rights Agreement.
The Company may, at any time
prior to the initial Closing, amend the Registration Rights Agreement if necessary to
clarify any provision therein, without first providing notice or obtaining prior consent
of the Subscriber.
|
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11.
|
Notices.
Any notice or other communication required or permitted to be given hereunder shall
be in writing and shall be mailed by certified mail, return receipt requested, or delivered
against receipt to the party to whom it is to be given (a) if to the Company, at the
address set forth above, with a copy (which shall not constitute notice) to
CKR
Law
LLP, 1330 Avenue of the Americas, New York, NY 10019,
Attention:
Barrett S. DiPaolo
, facsimile +1-212-259-8200
,
or (b) if to the Subscriber, at the address set forth on
the Omnibus Signature Page hereof (or, in either case, to such other address as the party
shall have furnished in writing in accordance with the provisions of this Section). Any
notice or other communication given by certified mail shall be deemed given at the time
of certification thereof, except for a notice changing a party’s address which
shall be deemed given at the time of receipt thereof.
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|
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12.
|
Assignability.
This Agreement and the rights, interests and obligations hereunder are not transferable
or assignable by the Subscriber, and the transfer or assignment of the Shares shall be
made only in accordance with all applicable laws.
|
|
|
13.
|
Applicable
Law.
This Agreement shall be governed by and construed in accordance with the laws
of the State of New York, without reference to the principles thereof relating to the
conflict of laws.
|
|
|
14.
|
Arbitration.
The parties agree to submit all controversies to arbitration in accordance with the
provisions set forth below and understand that:
|
|
|
a.
|
Arbitration
shall be final and binding on the parties.
|
|
|
b.
|
The
parties are waiving their right to seek remedies in court, including the right to a jury
trial.
|
|
|
c.
|
Pre-arbitration
discovery is generally more limited and different from court proceedings.
|
|
|
d.
|
The
arbitrator’s award is not required to include factual findings or legal reasoning
and any party’s right to appeal or to seek modification of rulings by arbitrators
is strictly limited.
|
|
|
e.
|
The
panel of arbitrators will typically include a minority of arbitrators who were or are
affiliated with the securities industry.
|
|
|
f.
|
All controversies which may arise between the parties concerning this Agreement shall be determined by arbitration pursuant to the rules then pertaining to the Financial Industry Regulatory Authority. Judgment on any award of any such arbitration may be entered in the courts of the State of North Carolina sitting in Mecklenburg County and the United States District Court for the Western District of North Carolina sitting in Charlotte, and any state or appellate court therefrom, or in any other court having jurisdiction of the person or persons against whom such award is rendered. Any notice of such arbitration or for the confirmation of any award in any arbitration shall be sufficient if given in accordance with the provisions of this Agreement. The parties agree that the determination of the arbitrators shall be binding and conclusive upon them. The prevailing party, as determined by such arbitrators, in a legal proceeding shall be entitled to collect any costs, disbursements and reasonable attorney’s fees from the other party. Prior to filing an arbitration, the parties hereby agree that they will attempt to resolve their differences first by submitting the matter for resolution to a mediator, acceptable to all parties, and whose expenses will be borne equally by all parties. The mediation will be held in the County of Mecklenburg, North Carolina, on an expedited basis. If the parties cannot successfully resolve their differences through mediation, the matter will be resolved by arbitration as provided above. The arbitration shall take place in the Charlotte, North Carolina, on an expedited basis.
|
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15.
|
Blue
Sky Qualification.
The purchase of Shares under this Agreement is expressly conditioned
upon the exemption from qualification of the offer and sale of the Shares from applicable
federal and state securities laws. The Company shall not be required to qualify this
transaction under the securities laws of any jurisdiction and, should qualification be
necessary, the Company shall be released from any and all obligations to maintain its
offer, and may rescind any sale contracted, in the jurisdiction.
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16.
|
Use
of Pronouns.
All pronouns and any variations thereof used herein shall be deemed
to refer to the masculine, feminine, neuter, singular or plural as the identity of the
person or persons referred to may require.
|
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17.
|
Confidentiality.
The Subscriber acknowledges and agrees that any information or data the Subscriber
has acquired from or about the Company or may acquire in the future, not otherwise properly
in the public domain, including, without limitation, the Disclosure Materials, was received
in confidence. The Subscriber agrees not to divulge, communicate or disclose, except
as may be required by law or for the performance of this Agreement, or use to the detriment
of the Company or for the benefit of any other person, or misuse in any way, any confidential
information of the Company, including any scientific, technical, trade or business secrets
of the Company and any scientific, technical, trade or business materials that are treated
by the Company as confidential or proprietary, including, but not limited to, internal
personnel and financial information of the Company or its affiliates, the manner and
methods of conducting the business of the Company or its affiliates and confidential
information obtained by or given to the Company about or belonging to third parties.
The Subscriber understands that the Company may rely on Subscriber’s agreement
of confidentiality to comply with the exemptive provisions of Regulation FD under the
Securities Act of 1933 as set forth in Rule 100(a)(b)(2)(ii) of Regulation FD. In addition,
the Subscriber acknowledges that it is aware that the United States securities laws generally
prohibit any person who is in possession of material nonpublic information about a public
company such as the Company from purchasing or selling securities of such company. The
provisions of this Section 17 are in addition to and not in replacement of any other
confidentiality agreement between the Company and the Subscriber.
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18.
|
Price
Protection.
If, during the period from the first Closing of the Offering until ninety
(90) days after the date on which the Registration Statement (as defined in the Registration
Rights Agreement) is declared effective by the SEC, the Company shall issue Additional
Shares of Common Stock (as defined below) for a consideration per share, or with an exercise
or conversion price per share, less than the Purchase Price (adjusted proportionately
(or if it cannot be adjusted proportionately, then equitably) for any event described
in clause (ii) of the following paragraph occurring after the first Closing of the Offering)
(the “
Lower Price
”), the Subscriber shall be entitled to receive
from the Company (for no additional consideration) additional Shares in an amount such
that, when added to the number of Shares purchased by Subscriber under this Agreement,
will equal the number of Shares that the Subscriber’s Purchase Price for the Shares
set forth on the Subscriber’s signature page hereof would have purchased at the
Lower Price.
|
“
Additional
Shares of Common Stock
” shall mean all shares of Common Stock issued by the Company after the first Closing of the
Offering (including without limitation any shares of Common Stock issuable upon conversion or exchange of any convertible securities
or upon exercise of any option, warrant or other right, on an as-converted or as-exercised basis, as of the date of issuance of
such security, option, warrant or right), other than: (i) shares of Common Stock issued or issuable upon conversion or exchange
of any convertible securities or exercise of any options, warrants or other rights outstanding as of the initial Closing; (ii)
shares of Common Stock issued or issuable upon exercise of the Placement Agent Warrants; (iii) shares of Common Stock issued or
issuable by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock relating to any recapitalization,
reclassification or reorganization of the capital stock of the Company or otherwise, or any consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of its assets or other transaction effected in such a way that
there is no change of control; (iv) shares of Common Stock issued in a firmly underwritten registered public offering under the
Securities Act; (v) shares of Common Stock issued or issuable pursuant to the acquisition of another entity or business by the
Company by merger, purchase of substantially all of the assets or other reorganization or pursuant to a joint venture or technology
license agreement, but not including a transaction in which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities; (vi) shares of Common Stock issued or issuable
to officers, directors and employees of, or consultants to, the Company pursuant to stock grants, option plans, purchase plans
or other employee stock incentive programs or arrangements approved by the Board of Directors, or upon exercise of options or
warrants granted to such parties pursuant to any such plan or arrangement; and (vii) securities issued to financial institutions,
institutional investors or lessors in connection with credit arrangements, equipment financings, lease arrangements or similar
transactions, in the aggregate not exceeding ten percent (10%) of the number of shares of Common Stock outstanding at any time,
and in case of clauses (iii) through (vii) above, such issuance is approved by a majority of disinterested directors of the Company
and includes no “death spiral” provision of any kind.
|
|
a.
|
This
Agreement, together with the Registration Rights Agreement and any confidentiality agreement
between the Subscriber and the Company, constitute the entire agreement between the Subscriber
and the Company with respect to the Offering and supersede all prior oral or written
agreements and understandings, if any, relating to the subject matter hereof. The terms
and provisions of this Agreement may be waived, or consent for the departure therefrom
granted, only by a written document executed by the party entitled to the benefits of
such terms or provisions.
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|
|
b.
|
The
representations and warranties of the Company and the Subscriber made in this Agreement
shall survive the execution and delivery hereof and delivery of the Shares
for a period of twelve (12) months following the Closing Date.
|
|
|
c.
|
Each
of the parties hereto shall pay its own fees and expenses (including the fees of any
attorneys, accountants, appraisers or others engaged by such party) in connection with
this Agreement and the transactions contemplated hereby, whether or not the transactions
contemplated hereby are consummated.
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|
|
d.
|
This
Agreement may be executed in one or more original or facsimile (including by an e-mail
which contains a.pdf file of an executed signature page) counterparts, each of which
shall be deemed an original, but all of which shall together constitute one and the same
instrument and which shall be enforceable against the parties actually executing such
counterparts. The exchange of copies of this Agreement and of signature pages by facsimile
transmission or in .pdf format shall constitute effective execution and delivery of this
Agreement as to the parties and may be used in lieu of the original Agreement for all
purposes. Signatures of the parties transmitted by facsimile or by e-mail of a document
in pdf format shall be deemed to be their original signatures for all purposes.
|
|
|
e.
|
Each
provision of this Agreement shall be considered separable and, if for any reason any
provision or provisions hereof are determined to be invalid or contrary to applicable
law, such invalidity or illegality shall not impair the operation of or affect the remaining
portions of this Agreement.
|
|
|
f.
|
Paragraph
titles are for descriptive purposes only and shall not control or alter the meaning of
this Agreement as set forth in the text.
|
|
|
g.
|
The
Subscriber understands and acknowledges that there may be multiple Closings for the Offering.
|
|
|
h.
|
The
Subscriber hereby agrees to furnish the Company such other information as the Company
may request prior to the Closing with respect to its subscription hereunder.
|
|
|
20.
|
Omnibus
Signature Page.
This Agreement is intended to be read and construed in conjunction
with the Registration Rights Agreement. Accordingly, pursuant to the terms and conditions
of this Agreement and the Registration Rights Agreement, it is hereby agreed that the
execution by the Subscriber of this Agreement, in the place set forth on the Omnibus
Signature Page below, shall constitute agreement to be bound by the terms and conditions
hereof and the terms and conditions of the Registration Rights Agreement, with the same
effect as if each of such separate but related agreement were separately signed.
|
|
|
21.
|
Public
Disclosure.
Neither the Subscriber nor any officer, manager, director, member, partner,
stockholder, employee, affiliate, affiliated person or entity of the Subscriber shall
make or issue any press releases or otherwise make any public statements or make any
disclosures to any third person or entity with respect to the transactions contemplated
herein and will not make or issue any press releases or otherwise make any public statements
of any nature whatsoever with respect to the Company without the Company’s express
prior approval. The Company has the right to withhold such approval in its sole discretion.
|
|
|
22.
|
Potential
Conflicts.
Legal counsel to the Company and the Placement Agents or any brokers
that may be retained by the Company in connection with the Offering, and/or their respective
affiliates, principals, representatives or employees, may now or hereafter own stock
of the Company or warrants to purchase Company stock.
|
[Signature
page follows.]
IN
WITNESS WHEREOF, the Company has duly executed this Subscription Agreement as of the ____ day of ____________, 2016.
|
|
AKOUSTIS TECHNOLOGIES,
INC.
|
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
Jeffrey B. Shealy
|
|
|
|
Title:
|
Chief Executive Officer
|
How
to subscribe for Shares in the private offering of
Akoustis
Technologies, Inc.:
|
|
1.
|
Date
and Fill
in the number of Shares being purchased and
complete and sign
the
Omnibus Signature Page.
|
|
|
2.
|
Initial
the
Investor Certification
in the appropriate place or places.
|
|
|
3.
|
Complete
and sign
the
Investor Profile
.
|
|
|
4.
|
Complete
and sign
the
Anti-Money Laundering Information Form
.
|
|
|
5.
|
Fax
or email
all forms and then send all signed original documents to:
|
CKR
LAW LLP
1330
Avenue of the Americas
New
York, NY 10019
Facsimile
Number: (212) 259-8200
Telephone
Number: (212) 259-7300
Attn:
Kathleen L. Rush
E-mail
Address: krush@CKRlaw.com
|
|
6.
|
If
you are paying the Purchase Price by wire transfer
, you should send a wire transfer
for the exact dollar amount of the Purchase Price for the number of Shares you are purchasing
according to the following instructions
:
|
|
Bank:
|
PNC Bank
|
|
|
300 Delaware Avenue
|
|
|
Wilmington, DE 19899
|
|
ABA Routing #:
|
031100089
|
|
SWIFT CODE:
|
PNCCUS33
|
|
Account Name:
|
Delaware Trust Company
|
|
Account #:
|
5605012373
|
|
Reference:
|
“FFC:
Akoustis Technologies, Inc. 79-2659 –
[INSERT SUBSCRIBER’S NAME]
”
|
Thank
you for your interest,
Akoustis
Technologies, Inc.
Akoustis Technologies, Inc.
OMNIBUS SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT AND REGISTRATION
RIGHTS AGREEMENT
The undersigned, desiring to: (i) enter
into the Subscription Agreement, dated as of ____________ ___,
1
2016 (the “Subscription
Agreement
”), between the undersigned,
Akoustis Technologies, Inc.
, a Nevada
corporation (the “
Company
”), and the other parties thereto, in or substantially
in the form furnished to the undersigned, (ii) enter into the Registration Rights Agreement (the “Registration Rights Agreement”),
among the undersigned, the Company and the other parties thereto, in or substantially in the form furnished to the undersigned
and (iii) purchase the Shares of the Company’s securities as set forth in the Subscription Agreement and below, hereby agrees
to purchase such Shares from the Company and further agrees to join the Subscription Agreement and the Registration Rights Agreement
as a party thereto, with all the rights and privileges appertaining thereto, and to be bound in all respects by the terms and conditions
thereof. The undersigned specifically acknowledges having read the representations section in the Subscription Agreement entitled
“Representations and Warranties of the Subscriber” and hereby represents that the statements contained therein are
complete and accurate with respect to the undersigned as a Subscriber.
IN WITNESS WHEREOF, the Subscriber hereby
executes this Subscription Agreement and the Registration Rights Agreement.
Dated: ___________________________, 2016
|
|
X
|
$1.60
|
=
|
$
|
|
|
Number of Shares
|
|
Purchase Price per Share
|
|
Total Purchase Price
|
|
|
SUBSCRIBER
(individual)
|
|
SUBSCRIBER
(entity)
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature
|
|
Name of Entity
|
|
|
|
|
|
|
|
|
|
|
|
|
Print Name
|
|
Signature
|
|
|
|
|
|
|
|
|
|
Print Name:
|
|
|
|
Signature (if Joint Tenants or Tenants in Common)
|
Title:
|
|
|
|
|
|
|
|
|
Address of Principal Residence:
|
|
Address of Executive Offices:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Social Security Number(s):
|
|
IRS Tax Identification Number:
|
|
|
|
|
|
|
|
|
|
|
|
|
Telephone Number:
|
|
Telephone Number:
|
|
|
|
|
|
|
|
|
|
|
|
|
Facsimile Number:
|
|
Facsimile Number:
|
|
|
|
|
|
|
|
|
|
|
|
|
E-mail Address:
|
|
E-mail Address:
|
|
|
|
|
|
|
1
Will reflect the Closing Date. Not to be completed by Subscriber.
Akoustis Technologies, Inc.
ACCREDITED INVESTOR CERTIFICATION
For Individual Investors Only
(all Individual Investors
must
INITIAL
where appropriate):
|
Initial _______
|
I have a net worth of at least US$1 million either individually or through aggregating my individual holdings and those in which I have a joint, community property or other similar shared ownership interest with my spouse.
(For purposes of calculating your net worth under this paragraph, (a)
your primary residence shall not be included as an asset
; (b) indebtedness secured by your primary residence, up to the estimated fair market value of your primary residence at the time of your purchase of the securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of your purchase of the securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of your primary residence, the amount of such excess shall be included as a liability); and (c) indebtedness that is secured by your primary residence in excess of the estimated fair market value of your primary residence at the time of your purchase of the securities shall be included as a liability.)
|
|
Initial _______
|
I have had an annual gross income for the past two years of at least US$200,000 (or US$300,000 jointly with my spouse) and expect my income (or joint income, as appropriate) to reach the same level in the current year.
|
|
Initial _______
|
I am a director or executive officer of Akoustis Technologies, Inc.
|
For Non-Individual
Investors (Entities)
(all Non-Individual
Investors must
INITIAL
where appropriate):
|
Initial _______
|
The investor certifies that it is a partnership, corporation, limited liability company or business trust that is 100% owned by persons who meet at least one of the criteria for Individual Investors set forth above (in which case each such person must complete the Accreditor Investor Certification for Individuals above as well the remainder of this questionnaire) .
|
|
Initial _______
|
The investor certifies that it is a partnership, corporation, limited liability company or business trust that has total assets of at least US$5 million and was not formed for the purpose of investing the Company.
|
|
Initial _______
|
The investor certifies that it is an employee benefit plan whose investment decision is made by a plan fiduciary (as defined in ERISA §3(21)) that is a bank, savings and loan association, insurance company or registered investment advisor.
|
|
Initial _______
|
The investor certifies that it is an employee benefit plan whose total assets exceed US$5,000,000 as of the date of this Agreement.
|
|
Initial _______
|
The undersigned certifies that it is a self-directed employee benefit plan whose investment decisions are made solely by persons who meet at least one of the criteria for Individual Investors.
|
|
Initial _______
|
The investor certifies that it is a U.S. bank, U.S. savings and loan association or other similar U.S. institution acting in its individual or fiduciary capacity.
|
|
Initial _______
|
The undersigned certifies that it is a broker-dealer registered pursuant to §15 of the Securities Exchange Act of 1934.
|
|
Initial _______
|
The investor certifies that it is an organization described in §501(c)(3) of the Internal Revenue Code with total assets exceeding US$5,000,000 and not formed for the specific purpose of investing in the Company.
|
|
Initial _______
|
The investor certifies that it is a trust with total assets of at least US$5,000,000, not formed for the specific purpose of investing in the Company, and whose purchase is directed by a person with such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of the prospective investment.
|
|
Initial _______
|
The investor certifies that it is a plan established and maintained by a state or its political subdivisions, or any agency or instrumentality thereof, for the benefit of its employees, and which has total assets in excess of US$5,000,000.
|
|
Initial _______
|
The investor certifies that it is an insurance company as defined in §2(13) of the Securities Act of 1933, or a registered investment company.
|
Akoustis Technologies, Inc.
Investor Profile
(Must be completed by Investor)
Section A - Personal Investor Information
|
Individual executing Profile or Trustee:
|
|
|
Social Security Numbers / Federal I.D. Number:
|
|
|
Date of Birth:
|
|
Marital Status:
|
|
|
Joint Party Date of Birth:
|
|
Investment Experience (Years):
|
|
|
Annual Income:
|
|
Liquid Net Worth:
|
|
|
|
|
|
|
|
Net Worth*:
|
|
|
|
|
Tax Bracket:
|
_____ 15% or below
|
_____ 25% - 27.5%
|
_____ Over 27.5%
|
|
Home City, State & Zip Code:
|
|
|
Home Phone:
|
|
Home Fax:
|
|
Home Email:
|
|
|
Employer City, State & Zip Code:
|
|
|
Bus. Phone:
|
|
Bus. Fax:
|
|
Bus. Email:
|
|
Section B – Certificate Delivery
Instructions
____ Please deliver certificate to the Employer Address listed
in Section A.
____ Please deliver certificate to the Home Address listed in
Section A.
____ Please deliver certificate to the following address: ____________________________________________
Section C – Form of Payment
–Wire Transfer
____
____ Wire
funds from my outside account according to Section 2(b) of the Subscription Agreement, Delaware Trust Company, Escrow Agent for
Akoustis Technologies, Inc. Acct# 79-2659, insert Subscriber’.
____ The funds for this investment
are rolled over, tax deferred from __________ within the allowed 60 day window.
Please check if you are a FINRA member
or affiliate of a FINRA member firm: ____
|
|
*
|
For purposes of calculating your net worth in this form, (a)
your primary residence shall
not be included as an asset
; (b) indebtedness secured by your primary residence, up to the estimated fair market value of your
primary residence at the time of your purchase of the securities, shall not be included as a liability (except that if the amount
of such indebtedness outstanding at the time of your purchase of the securities exceeds the amount outstanding 60 days before such
time, other than as a result of the acquisition of your primary residence, the amount of such excess shall be included as a liability);
and (c) indebtedness that is secured by your primary residence in excess of the estimated fair market value of your primary residence
at the time of your purchase of the securities shall be included as a liability.
|
ANTI MONEY LAUNDERING REQUIREMENTS
The USA PATRIOT Act
The USA PATRIOT Act is designed to detect,
deter, and punish terrorists in the United States and abroad. The Act imposes new anti-money laundering requirements on brokerage
firms and financial institutions. Since April 24, 2002 all brokerage firms have been required to have new, comprehensive anti-money
laundering programs.
To help you understand these efforts, we
want to provide you with some information about money laundering and our steps to implement the USA PATRIOT Act.
What is money laundering?
Money laundering is the process of disguising
illegally obtained money so that the funds appear to come from legitimate sources or activities. Money laundering occurs in connection
with a wide variety of crimes, including illegal arms sales, drug trafficking, robbery, fraud, racketeering, and terrorism.
How big is the problem and why is it
important?
The use of the U.S. financial system by
criminals to facilitate terrorism or other crimes could well taint our financial markets. According to the U.S. State Department,
one recent estimate puts the amount of worldwide money laundering activity at $1 trillion a year.
What are we required to do to eliminate
money laundering?
Under rules required by the USA PATRIOT
Act, our anti-money laundering program must designate a special compliance officer, set up employee training, conduct independent
audits, and establish policies and procedures to detect and report suspicious transaction and ensure compliance with such laws.
As part of our required program, we may ask you to provide various identification documents or other information. Until you provide
the information or documents we need, we may not be able to effect any transactions for you.
A
NTI-MONEY
LAUNDERING INFORMATION FORM
The following is required in accordance
with the AML provision of the USA PATRIOT ACT.
(Please fill out and return
with requested documentation.)
|
INVESTOR NAME:
|
|
|
|
|
|
|
|
LEGAL ADDRESS:
|
|
|
|
|
|
|
|
|
|
|
|
SSN# or TAX ID#
|
|
|
|
OF INVESTOR:
|
|
|
|
|
|
|
|
YEARLY INCOME:
|
|
|
|
|
|
|
|
NET WORTH:
|
|
*
|
* For purposes of calculating your net
worth in this form, (a)
your primary residence shall not be included as an asset
; (b) indebtedness secured by your primary
residence, up to the estimated fair market value of your primary residence at the time of your purchase of the securities, shall
not be included as a liability (except that if the amount of such indebtedness outstanding at the time of your purchase of the
securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of your primary residence,
the amount of such excess shall be included as a liability); and (c) indebtedness that is secured by your primary residence in
excess of the estimated fair market value of your primary residence at the time of your purchase of the securities shall be included
as a liability.
|
INVESTMENT OBJECTIVE(S)
(FOR ALL INVESTORS)
:
|
|
|
|
|
|
ADDRESS OF BUSINESS OR OF EMPLOYER:
|
|
|
|
|
|
|
|
|
|
|
|
FOR INVESTORS WHO ARE
INDIVIDUALS
: AGE:
|
|
|
FOR INVESTORS WHO ARE
INDIVIDUALS
: OCCUPATION:
|
|
|
|
|
|
FOR INVESTORS WHO ARE
ENTITIES
: TYPE OF BUSINESS:
|
|
IDENTIFICATION & DOCUMENTATION
AND SOURCE OF FUNDS:
|
|
1.
|
Please submit a copy of non-expired identification for the authorized signatory(ies) on the investment
documents, showing name, date of birth, address and signature.
The address shown on the identification document MUST match the
Investor’s address shown on the Investor Signature Page.
|
|
Current Driver’s License
|
or
|
Valid Passport
|
or
|
Identity Card
|
|
|
|
(
Circle one or more)
|
|
|
|
|
2.
|
If the Investor is a corporation, limited liability company, trust or other type of entity, please
submit the following requisite documents: (i) Articles of Incorporation, By-Laws, Certificate of Formation, Operating Agreement,
Trust or other similar documents for the type of entity; and (ii) Corporate Resolution or power of attorney or other similar document
granting authority to signatory(ies) and designating that they are permitted to make the proposed investment.
|
|
|
3.
|
Please advise where the funds were derived from to make the proposed investment:
|
|
Investments
|
Savings
|
Proceeds of Sale
|
Other ____________
|
|
|
|
(Circle one or more)
|
|
|
Signature:
|
|
|
|
|
|
|
|
Print Name:
|
|
|
|
|
|
|
|
Title (if applicable):
|
|
|
|
|
|
|
|
Date:
|
|
|
Schedule 3
Pursuant to the Placement Agency Agreement
by and between the Company and Northland Securities, Inc. (“Northland”), dated as of April
1, 2016, the Company is required to offer Northland the right to serve as bookrunner (in the case of a public offering) or as placement
agent (in the case of a private or registered direct offering), until October 1, 2016.
At the Company's request, Northland shall
agree to act as a joint bookrunner or co-agent with another underwriter or agent, provided that Northland shall be entitled to
(i) no less than 50% of the total allocation of the securities to the agents or underwriters and (ii) no less than its pro rata
portion of the discounts, commissions or fees to the agents or underwriters, based on the percentage of the total offering that
Northland actually places or underwrites. If Northland agrees to act in such capacity, the Company and Northland will enter into
an appropriate form of separate agreement containing customary terms and conditions to be mutually agreed upon.
Schedule 4a
Subsidiaries
Akoustis, Inc., a Delaware corporation
Schedule 4c
Capitalization
|
|
(ii)
|
Options, Warrants, etc.
|
As of December 31, 2015, the Company
had options to purchase 160,000 shares of common stock issued and outstanding and warrants to purchase 324,650 shares of common
stock issued and outstanding.
Pursuant to that certain registration
rights agreement (the “2015 Registration Rights Agreement”) entered into by the Company and the subscribers in the
private placement offering of Common Stock conducted by the Company in May and June 2015 (the “2015 Offering”), the
Company is required to maintain the effectiveness of the Registration Statement on Form S-1 declared effective by the Securities
and Exchange Commission on October 20, 2015 for a period of twenty-four (24) months. In addition, the 2015 Registration Rights
Agreement provides for customary piggyback registration rights. A copy of the 2015 Registration Rights Agreement is filed as Exhibit
10.9 to the Current Report on Form 8-K filed by the Company with the SEC on May 29, 2015, the text of which is incorporated herein
by reference.
|
|
(vi)
|
Anti-dilution or similar provisions
|
Until May 22, 2016, subscribers
in the 2015 Offering have anti-dilution protection. Subject to certain customary exceptions, if the Company issues additional shares
of Common Stock at a purchase price (or securities exchangeable or exercisable for Common Stock with an exchange or exercise price)
lower than $1.50 per share (the “Lower Price”), each such subscriber shall be entitled to receive from the Company
(for no additional consideration) additional shares of Common Stock in an amount such that when added to the number of shares purchased
in the 2015 Offering, will equal the number of shares that the subscriber’s aggregate purchase price paid in the 2015 Offering
would have purchased at the Lower Price. A copy of the Subscription Agreement containing such rights is filed as Exhibit 10.5 to
the Current Report on Form 8-K filed by the Company with the SEC on May 29, 2015, the text of which is incorporated herein by reference.
Schedule 4e
Consents
None
Schedule
4f
Litigation
None
Schedule 4k
Intellectual Property Rights
No exceptions.
Schedule 4n
Title
No exceptions
Schedule 4q
Rights of First Refusal
Pursuant to the Placement Agency
Agreement by and between the Company and Northland Securities, Inc. (“Northland”),
dated as of April 1, 2016 the Company is required to offer Northland the right to serve as
bookrunner (in the case of a public offering), or as placement agent (in the case of a private or registered direct
offering), until October 2016.
At the Company's request, Northland shall
agree to act as a joint bookrunner or co-agent with another underwriter or agent, provided that Northland shall be entitled to
(i) no less than 50% of the total allocation of the securities to the agents or underwriters and (ii) no less than its pro rata
portion of the discounts, commissions or fees to the agents or underwriters, based on the percentage of the total offering that
Northland actually places or underwrites. If Northland agrees to act in such capacity, the Company and Northland will enter into
an appropriate form of separate agreement containing customary terms and conditions to be mutually agreed upon.
Schedule
4t
Brokers’ Fees
See Schedule 3.
EXHIBIT A
Form of Registration Rights
Agreement
Exhibit
10.2
FORM OF BROKERS
WARRANT
WARRANT
NEITHER THE SECURITIES REPRESENTED HEREBY
NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “
SECURITIES ACT
”), OR UNDER THE SECURITIES LAWS OF ANY STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS
ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE
STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. UNLESS SOLD PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
AKOUSTIS TECHNOLOGIES, INC.
WARRANT
|
Warrant No. _____
|
Original Issue Date:
|
|
|
[_______][__], 2016
|
Akoustis Technologies,
Inc., a Nevada corporation (the “
Company
”), hereby certifies that, for value received, [_______] or its registered
assigns (the “
Holder
”), is entitled to purchase from the Company up to a total of [_______] shares of Common
Stock (each such share, a “
Warrant Share
” and all such shares, the “
Warrant Shares
”), at
any time and from time to time from and after the Original Issue Date and through and including [__________], 2021 (the “
Expiration
Date
”), and subject to the following terms and conditions:
1. Definitions.
As used in this Warrant, the following terms shall have the respective definitions set forth in this Section 1. Capitalized terms
that are used and not defined in this Warrant that are defined in the Agreement (as defined below) shall have the respective definitions
set forth in the Agreement.
“
Closing
Price
” means, for any date of determination, the price determined by the first of the following clauses that applies:
(i) if the Common Stock is then listed or quoted on a Trading Market, the closing bid price per share of the Common Stock for such
date (or the nearest preceding date) on such market; (ii) if prices for the Common Stock are then quoted on the OTC Bulletin Board,
the closing bid price per share of the Common Stock for such date (or the nearest preceding date) so quoted; (iii) if prices for
the Common Stock are then reported in the OTC Markets, the most recent bid price per share of the Common Stock so reported; or
(iv) in all other cases, the fair market value of a share of Common Stock as determined by an independent qualified appraiser selected
in good faith and paid for by the Company.
“
Common
Stock
” means the common stock of the Company, par value $0.001 per share, and any securities into which such common stock
may hereafter be reclassified.
“
Exercise Price
” means
$1.60, subject to adjustment in accordance with Section 9.
“
Agreement
”
means the Placement Agency Agreement, dated [__________], 2016, to which the Company and the Holder are parties.
“
Fundamental
Transaction
” means any of the following: (i) the Company effects any merger or consolidation of the Company with or into
another person, (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions,
(iii) any tender offer or exchange offer (whether by the Company or another person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property.
“
Original
Issue Date
” means the Original Issue Date first set forth on the first page of this Warrant or its predecessor instrument.
“
Registration
Rights Agreement
” means the Registration Rights Agreement, dated [__________], 2016, to which the Company and the Holder
are parties.
“
Trading
Day
” means (i) a day on which the Common Stock is traded on a Trading Market (other than the OTC Bulletin Board), or
(ii) if the Common Stock is not listed on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock
is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on
any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the OTC Markets (or
any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in clauses (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.
“
Trading
Market
” means whichever of the New York Stock Exchange, NYSE MKT, the NASDAQ Global Select Market, the NASDAQ Global
Market, the NASDAQ Capital Market or the OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date
in question.
2. Registration
of Warrant.
The Company shall register this Warrant upon records to be maintained by the Company for that purpose (the “
Warrant
Register
”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and
for all other purposes, absent actual notice to the contrary.
3. Registration
of Transfers.
The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender
of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Company at its address specified
herein. Upon any such registration or transfer, a new Warrant to purchase Common Stock, in substantially the form of this Warrant
(any such new Warrant, a “
New Warrant
”), evidencing the portion of this Warrant so transferred shall be issued
to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued
to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations of a holder of a Warrant.
4. Exercise
and Duration of Warrants.
(a)
This
Warrant shall be exercisable by the registered Holder in whole at any time and in part from time to time from the Original Issue
Date through and including the Expiration Date. At 5:30 p.m., Central time on the Expiration Date, the portion of this Warrant
not exercised prior thereto shall be and become void and of no value. The Company may not call or redeem any portion of this Warrant
without the prior written consent of the affected Holder.
(b)
Notwithstanding
anything to the contrary contained herein, the number of Warrant Shares that may be acquired by the Holder upon any exercise of
this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its affiliates (as defined
under Rule 144, “
Affiliates
”) and any other persons whose beneficial ownership of Common Stock would be aggregated
with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% of the total number of issued
and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise). For
such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. This provision shall not restrict the number of shares of Common Stock which a Holder may receive
or beneficially own in order to determine the amount of securities or other consideration that such Holder may receive in the event
of a Fundamental Transaction as contemplated in Section 9 of this Warrant. By written notice to the Company, the Holder may waive
the provisions of this Section 4(b) but any such waiver will not be effective until the 61st day after delivery of such notice,
nor will any such waiver effect any other Holder.
Notwithstanding
anything to the contrary contained herein, the number of Warrant Shares that may be acquired by the Holder upon any exercise of
this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its Affiliates and any
other persons whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d)
of the Exchange Act, does not exceed 9.999% of the total number of issued and outstanding shares of Common Stock (including for
such purpose the shares of Common Stock issuable upon such exercise). For such purposes, beneficial ownership shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. This provision shall
not restrict the number of shares of Common Stock which a Holder may receive or beneficially own in order to determine the amount
of securities or other consideration that such Holder may receive in the event of a Fundamental Transaction as contemplated in
Section 9 of this Warrant. This restriction may not be waived.
5. Delivery
of Warrant Shares.
(a)
To
effect exercises hereunder, the Holder shall not be required to physically surrender this Warrant unless the aggregate Warrant
Shares represented by this Warrant are being exercised. Upon delivery of the Exercise Notice (in the form attached hereto) to the
Company (with the attached Warrant Shares Exercise Log) at its address for notice set forth herein and upon payment of the Exercise
Price multiplied by the number of Warrant Shares that the Holder intends to purchase hereunder, the Company shall promptly (but
in no event later than three Trading Days after the Date of Exercise (as defined herein)) issue and deliver to the Holder, a certificate
for the Warrant Shares issuable upon such exercise, which, unless otherwise required by applicable law, shall be free of restrictive
legends. The Company shall, upon request of the Holder and subsequent to the date on which a registration statement covering the
resale of the Warrant Shares has been declared effective by the Securities and Exchange Commission, use its reasonable best efforts
to deliver Warrant Shares hereunder electronically through the Depository Trust Corporation or another established clearing corporation
performing similar functions, if available, provided, that, the Company may, but will not be required to change its transfer agent
if its current transfer agent cannot deliver Warrant Shares electronically through the Depository Trust Corporation. A “
Date
of Exercise
” means the date on which the Holder shall have delivered to the Company: (i) the Exercise Notice (with the
Warrant Exercise Log attached to it), appropriately completed and duly signed and (ii) if such Holder is not utilizing the cashless
exercise provisions set forth in this Warrant, payment of the Exercise Price for the number of Warrant Shares so indicated by the
Holder to be purchased.
(b)
If
by the third Trading Day after a Date of Exercise the Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to Section 5(a), then the Holder will have the right to rescind such exercise.
(c)
If
by the third Trading Day after a Date of Exercise the Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to Section 5(a), and if after such third Trading Day and prior to the receipt of such Warrant Shares, the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder
of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “
Buy-In
”), then the Company
shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions,
if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares
that the Company was required to deliver to the Holder in connection with the exercise at issue by (B) the closing bid price of
the Common Stock at the time of the obligation giving rise to such purchase obligation and (2) at the option of the Holder, either
reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver
to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise
and delivery obligations hereunder. The Holder shall provide the Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In.
(d)
The
Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other person of any obligation to the Company or any violation
or alleged violation of law by the Holder or any other person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing herein shall limit
a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates
representing Warrant Shares upon exercise of the Warrant as required pursuant to the terms hereof.
6. Charges,
Taxes and Expenses.
Issuance and delivery of Warrant Shares upon exercise of this Warrant shall be made without charge to the
Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company
shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates
for Warrant Shares or Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.
7. Replacement
of Warrant.
If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity
(which shall not include a surety bond), if requested. Applicants for a New Warrant under such circumstances shall also comply
with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe.
If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant
to the Company as a condition precedent to the Company’s obligation to issue the New Warrant.
8. Reservation
of Warrant Shares.
The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized
but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise
of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this
entire Warrant, free from preemptive rights or any other contingent purchase rights of Persons other than the Holder (taking into
account the adjustments and restrictions of Section 9). The Company covenants that all Warrant Shares so issuable and deliverable
shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly
authorized, issued and fully paid and nonassessable.
9. Certain
Adjustments.
The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment
from time to time as set forth in this Section 9.
(a) Stock
Dividends and Splits.
If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common
Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a
smaller number of shares, then in each such case the Exercise Price shall be adjusted to equal the product obtained by multiplying
the then-current Exercise Price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding
immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately
after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause
(ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.
(b) Fundamental
Transactions.
If, at any time while this Warrant is outstanding
there
is a Fundamental
Transaction, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind
of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if
it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise
in full of this Warrant (the “
Alternate Consideration
”). For purposes of any such exercise, the determination
of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion
the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components
of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon
any exercise of this Warrant following such Fundamental Transaction. At the Holder’s option and request, any successor to
the Company or surviving entity in such Fundamental Transaction shall, either (1) issue to the Holder a new warrant substantially
in the form of this Warrant and consistent with the foregoing provisions and evidencing the Holder’s right to purchase the
Alternate Consideration for the aggregate Exercise Price upon exercise thereof, or (2) purchase the Warrant from the Holder for
a purchase price, payable in cash within five Trading Days after such request (or, if later, on the effective date of the Fundamental
Transaction), equal to the Black Scholes value of the remaining unexercised portion of this Warrant on the date of such request.
The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor
or surviving entity to comply with the provisions of this paragraph (b) and insuring that the Warrant (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
(c) Number
of Warrant Shares.
Simultaneously with any adjustment to the Exercise Price pursuant to this Section 9, the number of Warrant
Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such
adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate
Exercise Price in effect immediately prior to such adjustment.
(e) Calculations.
All calculations under this Section 9 shall be made to the nearest cent or the nearest 1/100
th
of a share, as applicable.
The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account
of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.
(f) Notice
of Adjustments.
Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense will promptly
compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including
a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise
of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon
which such adjustment is based. Upon written request, the Company will promptly deliver a copy of each such certificate to the
Holder and to the Company’s Transfer Agent.
10. Payment
of Exercise Price.
The Holder may pay the Exercise Price in one of the following manners:
(a) Cash
Exercise.
The Holder may deliver immediately available funds; or
(b) Cashless
Exercise.
Pursuant to a Company Exercise, or if an Exercise Notice is delivered at a time when a registration statement permitting
the Holder to resell the Warrant Shares is not then effective or the prospectus forming a part thereof is not then available to
the Holder for the resale of the Warrant Shares, then the Holder may notify the Company in an Exercise Notice of its election to
utilize a cashless exercise, in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows:
X = Y [(A-B)/A]
where:
X = the
number of Warrant Shares to be issued to the Holder.
Y = the
number of Warrant Shares with respect to which this Warrant is being exercised.
A = the average of the Closing
Prices for the five Trading Days immediately prior to (but not including) the Exercise Date.
B = the Exercise Price.
For purposes of Rule 144 promulgated under
the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction
shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced,
on the date this Warrant was originally issued.
11. No
Fractional Shares.
No fractional shares of Warrant Shares will be issued in connection with any exercise of this Warrant.
In lieu of any fractional shares which would, otherwise be issuable, the Company shall pay cash equal to the product of such fraction
multiplied by the Closing Price of one Warrant Share on the date of exercise.
12. Notices.
Any and all notices or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall
be in writing and shall be deemed given and effective if provided pursuant to the Agreement. In case any time: (1) the Company
shall declare any cash dividend on its capital stock; (2) the Company shall pay any dividend payable in stock upon its capital
stock or make any distribution to the holders of its capital stock; (3) the Company shall offer for subscription pro rata to the
holders of its capital stock any additional shares of stock of any class or other rights; (4) there shall be any capital reorganization,
or reclassification of the capital stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially
all of its assets to, another corporation; or (5) there shall be a voluntary or involuntary dissolution, liquidation or winding
up of the Company; then, in any one or more of said cases, the Company shall give prompt written notice to the Holder. Such notice
shall also specify the date as of which the holders of capital stock of record shall participate in such dividend, distribution
or subscription rights, or shall be entitled to exchange their capital stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up, or conversion or redemption,
as the case may be. Such written notice shall be given at least 20 days prior to the action in question and not less than 20 days
prior to the record date or the date on which the Company’s transfer books are closed in respect thereto.
13. Registration
Rights.
The Holder shall be entitled to the registration rights set forth in the Registration Rights Agreement.
14. Lock
Up.
In accordance with FINRA Rule 5110(g), this Warrant shall not be sold during the Private Placement, or sold, transferred,
assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would
result in the effective economic disposition of this Warrant or the Warrant Shares, by any person for a period of 180 days immediately
following the date of effectiveness or commencement of sales of the Private Placement, except as provided in paragraph (g)(2) of
FINRA Rule 5110.
16. Miscellaneous.
(a)
This
Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns. Subject
to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder
any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed
by the Company and the Holder and their successors and assigns.
(b)
All
questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law
thereof.
(c)
The
headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(d)
In
case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability
of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will
attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor,
and upon so agreeing, shall incorporate such substitute provision in this Warrant.
(e)
Prior
to exercise of this Warrant, the Holder hereof shall not, by reason of by being a Holder, be entitled to any rights of a stockholder
with respect to the Warrant Shares.
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In witness whereof, the Company has caused this Warrant to be
duly executed by its authorized officer as of the date first indicated above.
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AKOUSTIS TECHNOLOGIES, INC.
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By:
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Name:
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Title:
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