UNDERWRITING AGREEMENT
Roth Capital Partners, LLC
888 San Clemente Drive
Newport Beach, CA 92660
Ladies and Gentlemen:
Torchlight Energy Resources, Inc., a Nevada
corporation
(the “
Company
”), proposes,
subject to the terms and conditions stated herein, to issue and
sell to Roth Capital Partners, LLC (the “
Underwriter
”), an
aggregate of 5,000,000 authorized but unissued shares (the
“
Firm
Shares
”) of Common Stock, par value $0.001 per share
(the “
Common
Stock
”), of the Company. The Company also proposes,
subject to the terms and conditions stated herein, to issue and
sell to the Underwriter an aggregate of up to 750,000 additional
shares of Common Stock (the “
Additional Shares
”), as
may be necessary to cover over-allotments made in connection with
the offering. The Firm Shares and Additional Shares are
collectively referred to as the “
Shares
.”
The Company and the Underwriter hereby confirm their agreement as
follows:
1.
Registration
Statement and Final Prospectus
.
The Company has prepared and filed with the Securities and Exchange
Commission (the “
Commission
”)
a registration statement on Form S-3 (File No. 333-220181) under
the Securities Act of 1933, as amended (the
“
Securities
Act
”) and the rules and
regulations (the “
Rules and
Regulations
”) of the
Commission thereunder, and such amendments to such registration
statement (including post effective amendments) as may have been
required to the date of this Underwriting Agreement (the
“
Agreement
”).
Such registration statement (including any post effective
amendments), has been declared effective by the Commission. Such
registration statement, as amended (including post effective
amendments thereto), the exhibits and any schedules thereto and the
documents and information otherwise deemed to be a part thereof or
included therein by the Securities Act or otherwise pursuant to the
Rules and Regulations, is herein called the
“
Registration
Statement
.” If the
Company has filed or files an abbreviated registration statement
pursuant to Rule 462(b) under the Securities Act (the
“
Rule 462 Registration
Statement
”), then any
reference herein to the term Registration Statement shall include
such Rule 462 Registration Statement. The Company will file with
the Commission pursuant to Rule 424 under the Securities Act a
prospectus supplement relating to the Shares to the form of
prospectus included in the Registration
Statement.
As used
in this Agreement:
“
Base
Prospectus
” means the
prospectus included in the Registration Statement at the time it
was declared effective by the Commission, including any documents
incorporated therein by reference.
“
Issuer Free Writing
Prospectus
” means
any “issuer free writing
prospectus” as defined in Rule 433 of the Rules and
Regulations relating to the Shares.
“
Preliminary
Prospectus
” means any
preliminary prospectus supplement, subject to completion, relating
to the Shares, filed by the Company with the Commission pursuant to
Rule 424(b) of the Rules and Regulations for use in connection with
the offering and sale of the Shares, together with the Base
Prospectus attached to or used with such preliminary prospectus
supplement, including any documents incorporated therein by
reference.
“
Prospectus
”
means the final prospectus supplement, relating to the Shares,
filed by the Company with the Commission pursuant to Rule 424(b) of
the Rules and Regulations that discloses the public offering price
and other final terms of the Shares, together with the Base
Prospectus attached to or used with such final prospectus
supplement, including any documents incorporated therein by
reference.
“
Statutory
Prospectus
” means the
Preliminary Prospectus, if any, and the Base Prospectus, each as
amended and supplemented immediately prior to the Time of Sale,
including any document incorporated by reference therein, and any
prospectus supplement.
“
Time of
Sale
” means 9:00 a.m.,
New York City time, on the date of this
Agreement.
“
Time of Sale
Disclosure Package
” means
(i) the Statutory Prospectus, and (ii) each Issuer Free Writing
Prospectus relating to the offering of the Shares, if any, filed or
used by the Company on or before the Time of Sale, all considered
together.
For purposes of this Agreement, all references to
the Registration Statement, the Rule 462 Registration Statement,
the Base Prospectus, the Preliminary Prospectus, the Prospectus, or
any amendment or supplement to any of the foregoing shall be deemed
to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis, and Retrieval system. All
references in this Agreement to amendments or supplements to the
Registration Statement, the Rule 462 Registration Statement, the
Base Prospectus, the Preliminary Prospectus or the Prospectus shall
be deemed to mean and include the subsequent filing of any document
under the Securities Exchange Act of 1934, as amended (the
“
Exchange
Act
”), that is deemed to
be incorporated therein by reference therein or otherwise deemed by
the Rules and Regulations to be a part thereof.
2.
Representations
and Warranties Regarding the Offering.
(a)
The
Company represents and warrants to, and agrees with, the
Underwriter, as of the date hereof and as of the Closing Date,
except as otherwise indicated, as follows:
(i)
At
each time of effectiveness, at the date hereof and at the Closing
Date, the Registration Statement and any post-effective amendment
thereto, complied or will comply in all material respects with the
requirements of the Securities Act and the Rules and Regulations
and did not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading. The
Time of Sale Disclosure Package as of the date hereof and at the
Closing Date, and the Prospectus, as amended or supplemented, at
the time of filing pursuant to Rule 424(b) of the Rules and
Regulations and at the Closing Date, did not and will not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. The representations and warranties
set forth in the two immediately preceding sentences shall not
apply to statements in or omissions from the Registration Statement
or any post-effective amendment thereto or the Prospectus in
reliance upon, and in conformity with, written information
furnished to the Company by the Underwriter specifically for use in
the preparation thereof. The Registration Statement contains all
exhibits and schedules required to be filed by the Securities Act
or the Rules and Regulations. No order preventing or suspending the
effectiveness or use of the Registration Statement or the
Prospectus is in effect and no proceedings for such purpose have
been instituted or are pending, or, to the knowledge of the
Company, are contemplated or threatened by the
Commission
, and any
request on the part of the Commission for additional information
has been complied with.
(ii)
The
documents incorporated by reference in the Registration Statement,
the Time of Sale Disclosure Package, and the Prospectus, when they
became effective or were filed with the Commission, as the case may
be, complied in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, were filed on a
timely basis with the Commission (except as otherwise disclosed
therein or amendments thereto) and none of such documents, when
they were filed (or, if amendments to such documents were filed,
when such amendments were filed), contained an untrue statement of
a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading. Any further documents
so filed and incorporated by reference in the Registration
Statement, the Time of Sale Disclosure Package or the Prospectus,
when such documents are filed with the Commission, will comply in
all material respects to the requirements of the Exchange Act, and
will 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.
(iii)
As
of the filing date of the Registration Statement and as of any
update of the Registration Statement pursuant to Section 10(a)(3)
of the Securities Act (including the filing of any Annual Report on
Form 10-K), the Company was eligible to file a “shelf”
Registration Statement on Form S-3 with the
Commission.
(iv)
At
the time of filing of the Registration Statement and at the date
hereof, the Company was not and is not an “ineligible
issuer,” as defined in Rule 405 of the Rules and Regulations
or an “excluded issuer” as defined in Rule 164 of the
Rules and Regulations. Each Issuer Free Writing Prospectus listed
on Schedule I satisfied, as of its issue date and at all
subsequent times through the Prospectus Delivery Period (as defined
below), all other conditions as may be applicable to its use as set
forth in Rules 164 and 433 of the Rules and Regulations, including
any legend, record-keeping or other requirements.
(v)
The
financial statements of the Company, together with the related
notes, included or incorporated by reference in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus
comply in all material respects with the requirements of the
Securities Act and the Exchange Act and fairly present the
financial condition of the Company and its consolidated
subsidiaries as of the dates indicated and the results of their
operations and changes in cash flows for the periods therein
specified in conformity with generally accepted accounting
principles consistently applied throughout the periods involved;
and the supporting schedules included in the Registration Statement
present fairly the information required to be stated
therein.
There are no financial
statements (historical or pro forma) that are required to be
included in the Registration Statement, the Time of Sale Disclosure
Package or the Prospectus that are not included or incorporated by
reference as required.
(vi)
Briggs
& Veselka Co., who certified the financial statements of the
Company and its subsidiaries and supporting schedules included or
incorporated by reference in the Time of Sale Disclosure Package
and the Prospectus, is an independent public accounting firm with
respect to the Company and its subsidiaries within the meaning of
the Securities Act, the Rules and Regulations and the rules and
regulations of the Public Company Accounting Oversight Board
(United States).
(vii)
The
Company had a reasonable basis for, and made in good faith, each
“forward-looking statement” (within the meaning of
Section 27A of the Securities Act or Section 21E of the Exchange
Act) contained or incorporated by reference in the Registration
Statement, the Time of Sale Disclosure Package or the
Prospectus.
(viii)
All
statistical or market-related data included or incorporated by
reference in the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus are based on or derived from
sources that the Company reasonably believes to be reliable and
accurate, and the Company has obtained the written consent to the
use of such data from such sources, to the extent
required.
(ix)
The
statements relating to legal matters, documents or proceedings
included in each of the Registration Statement, the Time of Sale
Information, the Preliminary Prospectus and the Prospectus under
the captions “Description of Common Stock and Preferred
Stock,” and “Business” as the case may be, in
each case are accurate in all material respects and fairly
summarize such matters, documents or proceedings. All material
contracts, agreements or other documents that are required to be
filed with the Commission as exhibits pursuant to the Securities
Act or the Exchange Act have been filed as required.
(x)
The
Shares have been or will be qualified for sale under the securities
laws of such jurisdictions (United States and foreign) as the
Underwriter determines, or are or will be exempt from the
qualification and broker-dealer requirements of such
jurisdictions.
(xi)
The
Company has not taken, directly or indirectly, any action that is
designed to or that has constituted or that would reasonably be
expected to cause or result in the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of the Shares.
(xii)
Subject
to Section 5(d) below, the Company represents and warrants that it
has not prepared or had prepared on its behalf or used or referred
to any Issuer Free Writing Prospectus in connection with the
offering of the Shares. Subject to Section 5(d) below, the Company
has not distributed and the Company will not distribute, prior to
the completion of the distribution of the Shares, any offering
material in connection with the offering of the Shares other than
the Base Prospectus, the Preliminary Prospectus, the Issuer Free
Writing Prospectus, the Prospectus and the Registration Statement,
and copies of the documents, if any, incorporated by reference
therein.
(xiii)
The
Company is not and, after giving effect to the offering and sale of
the Shares, will not be an “investment company,” as
such term is defined in the Investment Company Act of 1940, as
amended.
(xiv)
Any
certificate signed by any officer of the Company and delivered to
the Underwriter or to the Underwriter’s counsel shall be
deemed a representation and warranty by the Company to the
Underwriter as to the matters covered thereby.
3.
Representations
and Warranties Regarding the Company.
(a)
The
Company represents and warrants to and agrees with, the
Underwriter, except as set forth in the Registration Statement, the
Time of Sale Disclosure Package and the Prospectus, as
follows:
(i)
The
Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Nevada.
The Company has the corporate power and authority to own, lease and
operate its properties and to conduct its business as currently
being carried on and as described in the Registration Statement,
the Time of Sale Disclosure Package and the Prospectus, and is duly
qualified to do business as a foreign corporation to transact
business and is in good standing in each jurisdiction in which it
owns or leases real property or in which the conduct of its
business makes such qualification necessary and in which the
failure to so qualify would have or is reasonably likely to result
in a material adverse effect upon the business, prospects,
properties, operations, condition (financial or otherwise) or
results of operations of the Company and its subsidiaries, taken as
a whole, or in its ability to perform its obligations under this
Agreement (a “
Material Adverse
Effect
”).
(ii)
Each
subsidiary of the Company has been duly incorporated or organized
and is validly existing as a corporation or limited liability
company in good standing under the laws of the jurisdiction of its
incorporation or organization, as applicable, has corporate or
similar power and authority to own, lease and operate its
properties and to conduct its business as currently being carried
on and as described in Registration Statement, the Time of Sale
Disclosure Package and the Prospectus and is duly qualified to
transact business and is in good standing in, each jurisdiction in
which such qualification is required, whether by reason of the
ownership of property or the conduct of business, except where the
failure to so qualify or be in good standing would not have a
Material Adverse Effect; and all of the issued and outstanding
capital stock of, or other equity interest in each subsidiary has
been duly authorized and validly issued, is fully paid (in the case
of an interest in a limited liability company, to the extent
required under the organizational documents of such subsidiary) and
nonassessable (except as such nonassessability may be affected by
Article 101.206 of the Texas Business Organizations Code, as
applicable) and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity. None of the outstanding
shares of capital stock of, or other equity interests in, any
subsidiary of the Company were issued in violation of the
preemptive or similar rights of any security holder of such
subsidiary.
(iii)
The
Company has the power and authority to enter into this Agreement.
This Agreement has been duly authorized, executed and delivered by
the Company, and constitutes a valid, legal and binding obligation
of the Company, enforceable in accordance with its terms, except as
rights to indemnity hereunder may be limited by federal or state
securities laws and except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting
the rights of creditors generally and subject to general principles
of equity.
(iv)
The
execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not (a)
result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any law, rule or regulation to
which the Company or any subsidiary is subject, or by which any
property or asset of the Company or any subsidiary is bound or
affected, (b) conflict with, result in any violation or breach of,
or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any agreement, lease,
credit facility, debt, note, bond, mortgage, indenture or other
instrument (the “
Contracts
”)
or obligation or other understanding to which the Company or any
subsidiary is a party of by which any property or asset of the
Company or any subsidiary is bound or affected, or (c) result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, the Company’s articles of
incorporation or bylaws, each as are presently in
effect.
(v)
All
consents, approvals, orders, authorizations and filings required on
the part of the Company and its subsidiaries in connection with the
execution, delivery or performance of this Agreement have been
obtained or made, other than such consents, approvals, orders and
authorizations the failure of which to make or obtain is not
reasonably likely to result in a Material Adverse
Effect.
(vi)
The
Common Stock is registered pursuant to Section 12(b) of the
Exchange Act and is listed on the Nasdaq Capital Market (the
“
Exchange
”)
and the Company has taken no action designed to, or likely to have
the effect of, terminating the registration of the Common Stock
under the Exchange Act or delisting the Common Stock from the
Exchange nor has the Company received any notification that the
Commission or the Exchange is contemplating terminating such
registration or listing. The Company has complied in all material
respects with the applicable requirements of the Exchange for
maintenance of inclusion of the Common Stock on the Exchange. When
issued, the Shares will be listed on the
Exchange.
(vii)
As
of April 18, 2018, the Company had 150,000,000 shares of Common
Stock authorized, of which 63,379,286 shares were issued and
outstanding, and 10,000,000 shares of Preferred Stock authorized,
none of which were issued and outstanding. All of the issued and
outstanding shares of capital stock of the Company, including the
outstanding shares of Common Stock, are duly authorized and validly
issued, fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, were not
issued in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities that have not been
waived in writing (a copy of which has been delivered to counsel to
the Underwriter); the Shares which may be sold hereunder by the
Company have been duly authorized and, when issued, delivered and
paid for in accordance with the terms of this Agreement, will have
been validly issued and will be fully paid and nonassessable; and
the capital stock of the Company, including the Common Stock,
conforms to the description thereof in the Registration Statement,
in the Time of Sale Disclosure Package and in the Prospectus. There
are no preemptive rights or other rights to subscribe for or to
purchase, or any restriction upon the voting or transfer of, any
shares of Common Stock pursuant to the Company’s articles of
incorporation or bylaws, each as presently in effect, or any
agreement or other instrument to which the Company is a party or by
which the Company is bound. As of December 31, 2017, except as
disclosed in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus, there are no options,
warrants, agreements, contracts or other rights in existence to
purchase or acquire from the Company or any subsidiary of the
Company any shares of the capital stock of the Company or any
subsidiary of the Company.
(viii)
Except
for the entities set forth on Exhibit 21.1 of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2017,
the Company does not own, directly or indirectly, any capital stock
or other ownership interest in any partnership, corporation,
business trust, limited liability company, limited liability
partnership, joint stock company, trust, unincorporated
association, joint venture or other entity.
(ix)
Each
of the Company and its subsidiaries has filed all foreign, federal,
state and local returns (as hereinafter defined) required to be
filed with taxing authorities prior to the date hereof or has duly
obtained extensions of time for the filing thereof except where the
failure to file would reasonably be expected to have a Material
Adverse Effect. Each of the Company and its subsidiaries has paid
all taxes (as hereinafter defined) shown as due on such returns
that were filed and has paid all taxes imposed on or assessed
against the Company or such respective subsidiary. The provisions
for taxes payable, if any, shown on the financial statements filed
with or as part of the Registration Statement are sufficient for
all accrued and unpaid taxes, whether or not disputed, and for all
periods to and including the dates of such consolidated financial
statements. No issues have been raised (and are currently pending)
by any taxing authority in connection with any of the returns or
taxes asserted as due from the Company or its subsidiaries, and no
waivers of statutes of limitation with respect to the returns or
collection of taxes have been given by or requested from the
Company or its subsidiaries, which, if adversely determined, would
have a Material Adverse Effect. The term “taxes” mean
all federal, state, local, foreign, and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties or
other taxes, fees, assessments, or charges of any kind whatever,
together with any interest and any penalties, additions to tax, or
additional amounts with respect thereto. The term
“returns” means all returns, declarations, reports,
statements, and other documents required to be filed in respect to
taxes.
(x)
No
subsidiary of the Company is currently prohibited, directly or
indirectly, under any agreement or other instrument to which it is
a party or is subject, from paying any dividends to the Company,
from making any other distribution on such subsidiary’s
equity securities or similar ownerships interest, from repaying to
the Company any loans or advances to such subsidiary from the
Company or from transferring any of such subsidiary’s
properties or assets to the Company or any other subsidiary of the
Company.
(xi)
Except
as set forth in the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus since the respective dates as
of which information is given in the Registration Statement, the
Time of Sale Disclosure Package or the Prospectus, (a) neither the
Company nor any of its subsidiaries has incurred any material
liabilities or obligations, direct or contingent, or entered into
any material transactions other than in the ordinary course of
business, (b) the Company has not declared or paid any dividends or
made any distribution of any kind with respect to its capital
stock, (c) there has not been any change in the capital stock of
the Company or any of its subsidiaries (other than a change in the
number of outstanding shares of Common Stock due to the issuance of
shares upon the exercise of outstanding options or warrants
or the issuance of restricted stock
awards or restricted stock units under the Company’s existing
stock awards plan
, or any new
grants thereof in the ordinary course of
business)
, (d) there has not
been any material change in the Company’s long-term or
short-term debt, and (e) there has not been the occurrence of any
Material Adverse Effect.
(xii)
There
is not pending or, to the knowledge of the Company, threatened, any
action, suit or proceeding to which the Company or any of its
subsidiaries is a party or of which any property or assets of the
Company is the subject before or by any court or governmental
agency, authority or body, or any arbitrator or mediator, which is
reasonably likely to result in a Material Adverse
Effect.
(xiii)
Neither
the Company, nor any director or officer thereof, is or has been
the subject of any action involving a claim of violation of or
liability under federal or state securities laws or a claim of
breach of fiduciary duty, or any criminal statute during the term
of such director or officer’s tenure with the Company, nor,
to the knowledge of the Company, prior to such tenure that is of a
nature that would be required to be disclosed pursuant to Item 103
of Regulation S-K with regard to the Company or Item 401 of
Regulation S-K with regard to the Company’s officers or
directors. There has not been, and to the knowledge of the Company,
there is not pending or contemplated, any investigation by the
Commission involving the Company, other than routine reviews of the
Company’s Commission filings which are not currently pending
with respect to the Prospectus or the Registration
Statement.
(xiv)
None
of the officers or directors of the Company and, to the knowledge
of the Company, none of the employees of the Company 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 entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director,
trustee or partner, in each case as would be required to be
disclosed pursuant to the requirements of Item 404 of Regulation
S-K.
(xv)
The
Company and each of its subsidiaries holds, and is in compliance
with, all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates and orders
(“
Permits
”)
of any governmental or self-regulatory agency, authority or body
required for the conduct of its business, and all such Permits are
in full force and effect, in each case except where the failure to
hold, or comply with, any of them is not reasonably likely to
result in a Material Adverse Effect.
(xvi)
The
Company and its subsidiaries have good and marketable title to all
property (whether real or personal) described in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus
as being owned by them that are material to the business of the
Company, in each case free and clear of all liens, claims, security
interests, other encumbrances or defects, except those that are not
reasonably likely to result in a Material Adverse Effect. The
property held under lease by the Company and its subsidiaries is
held by them under valid, subsisting and enforceable leases with
only such exceptions with respect to any particular lease as do not
interfere in any material respect with the conduct of the business
of the Company or its subsidiaries.
(xvii)
The
Company and each of its subsidiaries owns or possesses or has valid
right to use all patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses, inventions, trade secrets and
similar rights (“
Intellectual
Property
”) necessary for
the conduct of the business of the Company and its subsidiaries as
currently carried on and as described in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus.
To the knowledge of the Company, no action or use by the Company or
any of its subsidiaries will involve or give rise to any
infringement of, or license or similar fees for, any Intellectual
Property of others, except where such action, use, license or fee
is not reasonably likely to result in a Material Adverse Effect.
Neither the Company nor any of its subsidiaries has received any
notice alleging any such infringement or fee.
(xviii)
The
Company and its subsidiaries maintain an effective system of
“disclosure controls and procedures” (as defined in
Rule 13a-15(e) of the Exchange Act) that is designed to
ensure that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms,
including controls and procedures designed to ensure that such
information is accumulated and communicated to the Company’s
management as appropriate to allow timely decisions regarding
required disclosure. The Company and its subsidiaries have carried
out evaluations of the effectiveness of their disclosure controls
and procedures as required by Rule 13a-15 of the Exchange
Act.
(xix)
The
Company maintains
on a
consolidated basis (a) effective internal control over financial
reporting as defined in Rule 13a-15(f) and
Rule 15d-15(f) under the Exchange Act, and (b) a system
of internal accounting controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with
management’s general or specific authorizations, (B)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted
accounting principles in the United States and to maintain
accountability for assets, (C) access to assets is permitted only
in accordance with management’s general or specific
authorization, (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences, and
(E) the interactive data in eXtensible Business Reporting Language
included or incorporated by reference in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus
fairly present the information called for in all material respects
and are prepared in accordance with the Commission’s rules
and guidelines applicable thereto. The Company has established and
maintains and evaluates “disclosure controls and
procedures” (as such term is defined in Rule 13a-15 and Rule
15d-15 under the Exchange Act) and “internal control over
financial reporting” (as such term is defined in Rule 13a-15
and Rule 15d-15 under the Exchange Act). The Company’s
certifying officers have evaluated the effectiveness of the
Company’s disclosure controls and procedures and the Company
presented in its Annual Report on Form 10-K for the year ended
December 31, 2017 the conclusions of the Company’s certifying
officers about the effectiveness of such disclosure controls and
procedures.
(xx)
Except
as disclosed in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, since the end of the
Company’s most recent audited fiscal year, there has been (a)
no material weakness in the Company’s internal control over
financial reporting (whether or not remediated) and (b) no change
in the Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially
affect, the Company’s internal control over financial
reporting.
(xxi)
There
is (a) no unfair labor practice complaint pending against the
Company or any of its subsidiaries, nor to the Company’s
knowledge, threatened against it or any of its subsidiaries, before
the National Labor Relations Board, any state or local labor
relation board or any foreign labor relations board, and no
grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Company
or any of its subsidiaries, or, to the Company’s knowledge,
threatened against it or any of its subsidiaries and (b) no
labor disturbance by the employees of the Company or any of its
subsidiaries exists or, to the Company’s knowledge, is
imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or its
subsidiaries, principal suppliers, manufacturers, customers or
contractors, that could reasonably be expected, singularly or in
the aggregate, to have a Material Adverse Effect. The Company is
not aware that any key employee or significant group of employees
of the Company or any subsidiary plans to terminate employment with
the Company or any such subsidiary.
(xxii)
No
“prohibited transaction” (as defined in
Section 406 of the Employee Retirement Income Security Act of
1974, as amended, including the regulations and published
interpretations thereunder (“
ERISA
”),
or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the “
Code
”))
or “accumulated funding deficiency” (as defined in
Section 302 of ERISA) or any of the events set forth in
Section 4043(b) of ERISA (other than events with respect to
which the thirty (30)-day notice requirement under
Section 4043 of ERISA has been waived) has occurred or could
reasonably be expected to occur with respect to any employee
benefit plan of the Company or any of its subsidiaries which would
reasonably be expected to, singularly or in the aggregate, have a
Material Adverse Effect. Each employee benefit plan of the Company
or any of its subsidiaries is in compliance in all material
respects with applicable law, including ERISA and the Code. The
Company and its subsidiaries have not incurred and would not
reasonably be expected to incur liability under Title IV of ERISA
with respect to the termination of, or withdrawal from, any pension
plan (as defined in ERISA). Each pension plan for which the Company
or any of its subsidiaries would have any liability that is
intended to be qualified under Section 401(a) of the Code is
so qualified, and to the Company’s knowledge nothing has
occurred, whether by action or by failure to act, which could,
singularly or in the aggregate, cause the loss of such
qualification.
(xxiii)
There
is and has been no failure on the part of the Company and any of
the Company’s directors or officers, in their capacities as
such, to comply with any provision of the Sarbanes-Oxley Act of
2002 and the rules and regulations promulgated in connection
therewith, including Section 402 related to loans and Sections 302
and 906 related to certifications.
(xxiv)
The
operations of the Company and its subsidiaries are and have been
conducted at all times in compliance in all material respects with
applicable financial recordkeeping and reporting requirements of
the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the
rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
Governmental Entity (as defined below) (collectively, the
“
Money Laundering
Laws
”); and no action,
suit or proceeding by or before any Governmental Entity involving
the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company,
threatened. “
Governmental
Entity
” shall be defined
as any arbitrator, court, governmental body, regulatory body,
administrative agency or other authority, body or agency (whether
foreign or domestic) having jurisdiction over the Company or any of
its subsidiaries or any of their respective properties, assets or
operations.
(xxv)
Neither
the Company nor, any of its subsidiaries, or any director or
officer of the Company or any subsidiary, nor, to the knowledge of
the Company, any employee, representative, agent, affiliate of the
Company or any of its subsidiaries or any other person acting on
behalf of the Company or any of its subsidiaries, is aware of or
has taken any action, directly or indirectly, that would result in
a violation by such persons of the Foreign Corrupt Practices Act of
1977, as amended, and the rules and regulations thereunder (the
“
FCPA
”),
including, without limitation, making use of the mails or any means
or instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay or authorization of the
payment of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any
candidate for foreign political office, in contravention of the
FCPA and the Company and, to the knowledge of the Company, its
affiliates have conducted their businesses in compliance with the
FCPA and have instituted and maintain policies and procedures
designed to ensure and promote continued compliance
therewith.
(xxvi)
Neither
the Company nor any of its subsidiaries nor, to the knowledge of
the Company, any director, officer, employee, representative, agent
or affiliate of the Company or any of its subsidiaries is currently
subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department
(“
OFAC
”);
and the Company will not directly or indirectly use the proceeds of
the Offering of the Shares contemplated hereby, or lend, contribute
or otherwise make available such proceeds to any person or entity,
for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by
OFAC.
(xxvii)
The
Company and each of its subsidiaries carries, or is covered by,
insurance in such amounts and covering such risks as is adequate
for the conduct of its business and the value of its properties and
as is customary for companies engaged in similar businesses in
similar industries.
(xxviii)
No
labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company, is
imminent that is reasonably likely to result in a Material Adverse
Effect.
(xxix)
Neither
the Company nor any of its subsidiaries is in violation, breach or
default under its articles of incorporation, bylaws or other
equivalent organizational or governing documents, except where the
violation is not reasonably likely to result in a Material Adverse
Effect.
(xxx)
The
information underlying the estimates of the reserves of the Company
and its subsidiaries, which was supplied by the Company to PeTech
Enterprises, Inc. (the “
Reserve
Engineer
”), for purposes
of preparing the reserve reports incorporated by reference into the
Registration Statement, Time of Sale Disclosure Package and the
Prospectus (the “
Reserve
Reports
”),
including production and costs of
operation and estimates of future capital expenditures and other
future exploration and development costs, was true and correct in
all material respects on the dates such estimates were made, and
such information was supplied and prepared in good faith, with a
reasonable basis and in accordance with customary industry
practices; other than normal production of the reserves, the impact
of changes in prices and costs, and fluctuations in demand for oil
and natural gas, and except as disclosed in or contemplated by each
of the Registration Statement, the Time of Sale Disclosure Package
and the Prospectus, the Company is not aware of any facts or
circumstances that would in the aggregate result in a material
adverse change in the aggregate net proved reserves, or the
aggregate present value or the standardized measure of the future
net cash flows therefrom, as described in each of the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus
and as reflected in the Reserve Reports; and the estimates of such
reserves and the standardized measure of such reserves as described
in each of the Registration Statement, the Time of Sale Disclosure
Package and the Prospectus and reflected in the Reserve Reports
referenced therein have been prepared in good faith and in a manner
that complies with the applicable requirements of the rules under
the Securities Act with respect to such estimates. The Reserve
Engineer was, as of the respective dates of the Reserve Reports
prepared by it, and is, as of the date hereof, an independent
petroleum engineer with respect to the Company and its
subsidiaries.
(xxxi)
As
of the date hereof, (i) all royalties, rentals, deposits and other
amounts owed under the oil and gas leases constituting the oil and
gas properties of the Company and its subsidiaries have been
properly and timely paid (other than amounts held in suspense
accounts pending routine payments or related to disputes about the
proper identification of royalty owners), and no amount of proceeds
from the sale or production attributable to the oil and gas
properties of the Company and its subsidiaries are currently being
held in suspense by any purchaser thereof, except where such
amounts due could not, individually or in the aggregate, have a
Material Adverse Effect, and (ii) there are no claims under
take-or-pay contracts pursuant to which natural gas purchasers have
any make-up rights affecting the interests of the Company, and its
subsidiaries in their oil and gas properties, except where such
claims could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(xxxii)
Neither
the Company, its subsidiaries nor, to its knowledge, any other
party is in violation, breach or default of any Contract that
is reasonably likely to result in a Material Adverse
Effect.
(xxxiii)
No
relationship, direct or indirect, exists between or among the
Company or any of its subsidiaries, on the one hand, and the
directors, officers, equityholders, customers or suppliers of the
Company or any of its subsidiaries, on the other, that is required
by the Securities Act to be described in a registration statement
that is not described or incorporated by reference in each of the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus. There are no outstanding loans, extensions of credit or
advances or guarantees of indebtedness by the Company to or for the
benefit of any of the officers or directors of the Company or any
of the members of the families of any of them.
(xxxiv)
The
Company and its subsidiaries are in compliance with all foreign,
federal, state and local rules, laws and regulations relating to
the use, treatment, storage and disposal of hazardous or toxic
substances or waste and protection of health and safety or the
environment which are applicable to their businesses, except where
the failure to comply has not had and would not reasonably be
expected to have, singularly or in the aggregate, a Material
Adverse Effect. There has been no storage, generation,
transportation, handling, treatment, disposal, discharge, emission,
or other release of any kind of toxic or other wastes or other
hazardous substances by, due to, or caused by the Company or any of
its subsidiaries (or, to the Company’s knowledge, any other
entity for whose acts or omissions the Company or any of its
subsidiaries is or may otherwise be liable) upon any of the
property now or previously owned or leased by the Company or any of
its subsidiaries, or upon any other property, in violation of any
law, statute, ordinance, rule, regulation, order, judgment, decree
or permit or which would, under any law, statute, ordinance, rule
(including rule of common law), regulation, order, judgment, decree
or permit, give rise to any liability, except for any violation or
liability which has not had and would not reasonably be expected to
have, singularly or in the aggregate, a Material Adverse Effect;
and there has been no disposal, discharge, emission or other
release of any kind onto such property or into the environment
surrounding such property of any toxic or other wastes or other
hazardous substances with respect to which the Company or any of
its subsidiaries has knowledge.
(xxxv)
There
are no claims, payments, issuances, arrangements or understandings
for services in the nature of a finder’s, consulting or
origination fee with respect to the introduction of the Company to
the Underwriter or the sale of the Shares hereunder or any other
arrangements, agreements, understandings, payments or issuances
with respect to the Company that may affect the Underwriter’s
compensation, as determined by the Financial Industry Regulatory
Authority, Inc. (“
FINRA
”).
(xxxvi)
Except
as disclosed to the Underwriter in writing, the Company has not
made any direct or indirect payments (in cash, securities or
otherwise) to (a) any person, as a finder’s fee, investing
fee or otherwise, in consideration of such person raising capital
for the Company or introducing to the Company persons who provided
capital to the Company, (b) any member of FINRA, or (c) any person
or entity that has any direct or indirect affiliation or
association with any FINRA member within the 12-month period prior
to the date on which the Registration Statement is filed with the
Commission (“
Filing
Date
”) or
thereafter.
(xxxvii)
To
the Company’s knowledge, no (a) officer or director of the
Company or its subsidiaries, (b) owner of 5% or more of the
Company’s unregistered securities or that of its subsidiaries
or (c) owner of any amount of the Company’s unregistered
securities acquired within the 180-day period prior to the Filing
Date, has any direct or indirect affiliation or association with
any FINRA member, except as set forth in the Registration
Statement, the Time of Sale Disclosure Package or the Prospectus,
or as otherwise disclosed in writing to the Underwriter. The
Company will advise the Underwriter and its counsel if it becomes
aware that any officer, director or stockholder of the Company or
its subsidiaries is or becomes an affiliate or associated person of
a FINRA member participating in the offering of the Shares
contemplated by this Agreement.
(xxxviii)
Except
as described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, there are no contracts,
agreements or understandings between the Company and any person
granting such person the right (other than rights which have been
waived in writing or otherwise satisfied) to require the Company to
file a registration statement under the Securities Act with respect
to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in
any securities being registered pursuant to any other registration
statement filed by the Company under the Securities
Act.
(xxxix)
Other
than the Underwriter or any other broker dealer authorized by the
Underwriter, no person has the right to act as a placement agent,
underwriter or as a financial advisor in connection with the sale
of the Shares contemplated hereby.
4.
Purchase,
Sale and Delivery of Shares
.
(a)
On
the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell the Firm Shares to the
Underwriter, and the Underwriter agrees to purchase from the
Company the Firm Shares. The purchase price to be paid by the
Underwriter to the Company for the Firm Shares shall be $1.0752 per
share (the “
Per Share
Price
”).
(b)
On
the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set
forth, the Company hereby grants to the Underwriter an option to
purchase some or all of the Additional Shares, and the Underwriter
shall have the right to purchase all or any portion of the
Additional Shares at the price per share equal to the Per Share
Price, as may be necessary to cover over-allotments made in
connection with the transactions contemplated hereby. This option
may be exercised by the Underwriter at any time and from time to
time on or before the thirtieth (30th) day following the date
hereof, upon written notice from the Underwriter to the Company
(the “
Option
Notice
”). The Option
Notice shall set forth the aggregate number of Additional Shares as
to which the option is being exercised, and the date and time when
the Additional Shares are to be delivered (such date and time being
herein referred to as the “
Option Closing
Date
”);
provided
,
however
, that, unless the Company and the Underwriter
otherwise agree, the Option Closing Date shall not be earlier than
the Closing Date (as defined below) with respect to the Firm
Shares, nor earlier than the first business day after the date on
which the option shall have been exercised, nor later than the
fifth business day after the date on which the option shall have
been exercised.
Payment
of the purchase price for and delivery of the Additional Shares
shall be made on the Option Closing Date in the same manner and at
the same office as the payment for the Firm Shares as set forth in
subparagraph (c) below.
(c)
The
Firm Shares will be delivered by the Company to the Underwriter
against payment of the purchase price therefor by wire transfer of
same day funds payable to the order of the Company at the offices
of Roth Capital Partners, LLC, 888 San Clemente Drive, Newport
Beach, California 92660, or such other location as may be mutually
acceptable, at 10:00 a.m. New York City time, on the second (or if
the Firm Shares are priced, as contemplated by Rule 15c6-1(c) under
the Exchange Act, after 4:30 p.m. Eastern time, the fourth)
business day following the date hereof, or at such other time and
date as the Underwriter and the Company determine pursuant to Rule
15c6-1(a) under the Exchange Act, or, in the case of the Additional
Shares, at such date and time set forth in the Option Notice. The
time and date of delivery of the Firm Shares or the Additional
Shares, as applicable, is referred to herein as the
“
Closing
Date
.” Delivery of the
Firm Shares and Additional Shares shall be made by credit through
full fast transfer to the accounts at The Depository Trust Company
designated by the Underwriter.
5.
Covenants
.
The Company covenants and agrees with
the Underwriter as follows:
(a)
The
Company shall prepare the Prospectus in a form approved by the
Underwriter and file such Prospectus with the Commission pursuant
to Rule 424(b) under the Securities Act not later than 10:00 a.m.,
Eastern Time on the first business day following the execution and
delivery of this Agreement, or, if applicable, such earlier time as
may be required by the Rules and Regulations.
(b)
During
the period beginning on the date hereof and ending on the later of
the Closing Date or such date as determined by the Underwriter, the
Prospectus is no longer required by law to be delivered in
connection with sales by an underwriter or dealer (the
“
Prospectus Delivery
Period
”), prior to
amending or supplementing the Registration Statement, including any
Rule 462 Registration Statement, the Time of Sale Disclosure
Package or the Prospectus, the Company shall furnish to the
Underwriter for review and comment a copy of each such proposed
amendment or supplement, and the Company shall not file any such
proposed amendment or supplement to which the Underwriter
reasonably objects.
(c)
From
the date of this Agreement until the end of the Prospectus Delivery
Period, the Company shall promptly advise the Underwriter in
writing (i) of the receipt of any comments of, or requests for
additional or supplemental information from, the Commission, (ii)
of the time and date of any filing of any post-effective amendment
to the Registration Statement or any amendment or supplement to the
Time of Sale Disclosure Package or the Prospectus, (iii) of the
time and date that any post-effective amendment to the Registration
Statement becomes effective and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending its
use or the use of the Time of Sale Disclosure Package, or of any
proceedings to remove, suspend or terminate from listing or
quotation the Common Stock from any securities exchange upon which
it is listed for trading or included or designated for quotation,
or of the threatening or initiation of any proceedings for any of
such purposes. If the Commission shall enter any such stop order at
any time during the Prospectus Delivery Period, the Company will
use its reasonable efforts to obtain the lifting of such order at
the earliest possible moment. Additionally, the Company agrees that
it shall comply with the provisions of Rules 424(b), 430B and 430C,
as applicable, under the Securities Act and will use its reasonable
efforts to confirm that any filings made by the Company under Rule
424(b) or Rule 433 were received in a timely manner by the
Commission (without reliance on Rule 424(b)(8) or Rule 164(b) of
the Securities Act).
(d)
During
the Prospectus Delivery Period, the Company will comply with all
requirements imposed upon it by the Securities Act, as now and
hereafter amended, and by the Rules and Regulations, as from time
to time in force, and by the Exchange Act, as now and hereafter
amended, so far as necessary to permit the continuance of sales of
or dealings in the Shares as contemplated by the provisions hereof,
the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus. If during such period any event occurs the result
of which the Prospectus would include an untrue statement of a
material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances then
existing, not misleading, or if during such period it is necessary
or appropriate in the opinion of the Company or its counsel or the
Underwriter or its counsel to amend the Registration Statement or
supplement the Prospectus to comply with the Securities Act, the
Company will promptly notify the Underwriter and will amend the
Registration Statement or supplement the Prospectus so as to
correct such statement or omission or effect such compliance. If at
any time during the Prospectus Delivery Period there occurred or
occurs an event or development the result of which such Issuer Free
Writing Prospectus conflicted or would conflict with the
information contained in the Registration Statement or any
Prospectus or included or would include, when taken together with
the Time of Sale Disclosure Package, an untrue statement of a
material fact or omitted or would omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances prevailing at that subsequent time, not
misleading, the Company will promptly notify the Underwriter and
will promptly amend or supplement, at its own expense, such Issuer
Free Writing Prospectus to eliminate or correct such conflict,
untrue statement or omission.
(e)
The
Company covenants that it will not, unless it obtains the prior
written consent of the Underwriter, make any offer relating to the
Securities that would constitute an Issuer Free Writing Prospectus
or that would otherwise constitute a “free writing
prospectus” (as defined in Rule 405 of the Securities Act)
required to be filed by the Company with the Commission or retained
by the Company under Rule 433 of the Securities Act. In the event
that the Underwriter expressly consents in writing to any such free
writing prospectus (a “
Permitted Free Writing
Prospectus
”), the Company
covenants that it shall (i) treat each Permitted Free Writing
Prospectus as an Issuer Free Writing Prospectus, and (ii) comply
with the requirements of Rules 164 and 433 of the Rules and
Regulations applicable to such Permitted Free Writing Prospectus,
including in respect of timely filing with the Commission,
legending and record keeping.
(f)
The
Company will furnish to the Underwriter and counsel for the
Underwriter copies of the Registration Statement, the Prospectus
and all amendments and supplements to such documents, in each case
as soon as available and in such quantities as the Underwriter may
from time to time reasonably request.
(g)
The
Company will make generally available to its security holders as
soon as practicable, but in any event not later than 15 months
after the end of the Company’s current fiscal quarter, an
earnings statement (which need not be audited) covering a 12-month
period that shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 of the Rules and
Regulations.
(h)
The
Company will not take, directly or indirectly, during the
Prospectus Delivery Period, any action designed to or which might
reasonably be expected to cause or result in, or that has
constituted, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Shares.
(i)
The
Company, whether or not the transactions contemplated hereunder are
consummated or this Agreement is terminated, will pay or cause to
be paid (i) all expenses (including transfer taxes allocated to the
respective transferees) incurred by the Underwriter in connection
with the delivery of the Shares, including the reasonable legal
fees of the Underwriter’s counsel, road show activities, data
services and research, and all other costs and expenses incident to
the performance of Underwriter’s obligations under this
Agreement that are not otherwise specifically provided for herein,
up to a maximum amount of $90,000 for all such expenses and fees,
(ii) all expenses and fees (including, without limitation, fees and
expenses of the Company’s counsel) in connection with the
preparation, printing, filing, delivery, and shipping of the
Registration Statement (including the financial statements therein
and all amendments, schedules, and exhibits thereto), the Shares,
the Time of Sale Disclosure Package, the Prospectus, any Issuer
Free Writing Prospectus and any amendment thereof or supplement
thereto, (iii) all reasonable filing fees and reasonable fees and
disbursements of the Underwriter’s counsel incurred in
connection with the qualification of the Shares for offering and
sale by the Underwriter or by dealers under the securities or blue
sky laws of the states and other jurisdictions that the Underwriter
shall designate, (iv) the fees and expenses of any transfer agent
or registrar, (v) listing fees, if any, and (vi) all other costs
and expenses incident to the performance of the Company’s
obligations hereunder that are not otherwise specifically provided
for herein.
(j)
The
Company hereby agrees that, without the prior written consent of
the Underwriter, it will not, during the period ending ninety (90)
days after the date hereof (“
Lock-Up
Period
”), (i) offer,
pledge, issue, sell, contract to sell, purchase, contract to
purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock;
or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise; or
(iii) file any registration statement (other than registration
statements on Form S-8 relating to the issuance of stock options or
other equity awards to employees of the Company or its
subsidiaries) with the Commission relating to the offering of any
shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock. The restrictions
contained in the preceding sentence shall not apply to (1) the
Shares to be sold hereunder, (2) the issuance of Common Stock upon
the exercise of options or warrants or the conversion of
outstanding preferred stock or other outstanding convertible
securities disclosed as outstanding in the Registration Statement
(excluding exhibits thereto), the Time of Sale Disclosure Package,
and the Final Prospectus, or (3) the issuance of employee stock
options not exercisable during the Lock-Up Period and the grant of
restricted stock awards or restricted stock units or shares of
Common Stock pursuant to equity incentive plans described in the
Registration Statement (excluding exhibits thereto), the Time of
Sale Disclosure Package, and the Final
Prospectus.
(k)
The
Company intends to apply the net proceeds from the sale of the
Shares to be sold by it hereunder for the purposes set forth in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus under the heading “Use of
Proceeds”.
(l)
The
Company hereby agrees, during a period of three years from the
effective date of the Registration Statement, to furnish to the
Underwriter copies of all reports or other communications
(financial or other) furnished to shareholders, and to deliver to
the Underwriter as soon as reasonably practicable upon
availability, copies of any reports and financial statements
furnished to or filed with the Commission or any national
securities exchange on which any class of securities of the Company
is listed; provided, that any information or documents available on
the Commission’s Electronic Data Gathering, Analysis and
Retrieval system shall be considered furnished to the Underwriter
for purposes of this Section 5(l).
6.
Conditions
of the Underwriter’s Obligations
. The respective obligations of the Underwriter
hereunder to purchase the Shares are subject to the accuracy,
as of the date hereof and at the applicable Closing Date (as if
made on the Closing Date), of and compliance with all
representations, warranties and agreements of the Company contained
herein, the performance by the Company of its obligations hereunder
and the following additional conditions:
(a)
If
filing of the Prospectus, or any amendment or supplement thereto,
or any Issuer Free Writing Prospectus, is required under the
Securities Act or the Rules and Regulations, the Company shall have
filed the Prospectus (or such amendment or supplement) or such
Issuer Free Writing Prospectus with the Commission in the manner
and within the time period so required (without reliance on Rule
424(b)(8) or Rule 164(b) under the Rules and Regulations); the
Registration Statement shall remain effective; no stop order
suspending the effectiveness of the Registration Statement or any
part thereof, any Rule 462 Registration Statement, or any amendment
thereof, nor suspending or preventing the use of the Time of Sale
Disclosure Package or the Prospectus shall have been issued; no
proceedings for the issuance of such an order shall have been
initiated or threatened by the Commission; any request of the
Commission or the Underwriter for additional information (to be
included in the Registration Statement, the Time of Sale Disclosure
Package, the Prospectus, or otherwise) shall have been complied
with to the Underwriter’s satisfaction.
(b)
The
Underwriter shall not have
reasonably determined and
advised the Company
that the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus, or any amendment thereof or
supplement thereto, contains an untrue statement of fact
which
, in the
Underwriter’s reasonable opinion,
is material, or omits to state a fact
which
, in the
Underwriter’s reasonable opinion,
is material and is required to be stated therein
or necessary to make the statements therein not
misleading.
(c)
On
the applicable Closing Date, there shall have been furnished to the
Underwriter the opinion (including a negative assurance statement)
of counsel for the Company, dated the Closing Date and addressed to
the Underwriter, in form and substance reasonably satisfactory to
the Underwriter.
(d)
On
the date hereof, the Underwriter shall have received a letter from
Briggs & Veselka Co., dated the date hereof, addressed to the
Underwriter, confirming that they are an independent public
accounting firm within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualifications of accountants under Rule 2-01 of Regulation S-X of
the Commission, and confirming, as of the date of each such letter
(or, with respect to matters involving changes or developments
since the respective dates as of which specified financial
information is given in the Time of Sale Disclosure Package, as of
a date not more than five days prior to the date of such letter),
the conclusions and findings of said firms with respect to the
financial information, including any financial information
contained in any Exchange Act filing filed by the Company, and
other matters required by the Underwriter.
(e)
On
each Closing Date, the Underwriter shall have received a letter (a
“
Bring-down
Letter
”) from Briggs
& Veselka Co., addressed to the Underwriter and dated the
applicable Closing Date, confirming, as of the date of such
Bring-down Letters (or, with respect to matters involving changes
or developments since the respective dates as of which specified
financial information is given in the Time of Sale Disclosure
Package, as of a date not more than five days prior to the date of
such Bring-down Letters), the conclusions and findings of said
firms, of the type ordinarily included in accountants’
“comfort letters” to underwriters, with respect to the
financial information, and other matters covered by its respective
letter delivered to the Underwriter concurrently with the execution
of this Agreement pursuant to paragraph (e) of this Section
6.
(f)
On
each Closing Date, the Reserve Engineer shall have furnished to the
Underwriter, letters, dated the respective dates of delivery
thereof and addressed to the Underwriter, in form and substance
reasonably satisfactory to the Underwriter, containing statements
and information of the type customarily included in reserve
engineers’ “confirmation letters” to underwriters
with respect to the reserve reports, estimates of proved reserves
and other reserve information included in the Registration
Statement, the Time of Sale Disclosure Package and the
Prospectus.
(g)
On
the Closing Date, there shall have been furnished to the
Underwriter a certificate, dated the applicable Closing Date and
addressed to the Underwriter, signed by the chief executive officer
and the chief financial officer of the Company, in their capacity
as officers of the Company, to the effect that:
(i)
The
representations and warranties of the Company in this Agreement are
true and correct, in all material respects, as if made at and as of
the Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing
Date;
(ii)
No
stop order or other order (a) suspending the effectiveness of the
Registration Statement or any part thereof or any amendment
thereof, (b) suspending the qualification of the Shares for
offering or sale, or (c) suspending or preventing the use of the
Time of Sale Disclosure Package or the Prospectus has been issued,
and no proceeding for that purpose has been instituted or, to their
knowledge, is contemplated by the Commission or any state or
regulatory body
;
and
(iii)
There
has been no occurrence of any event resulting or reasonably likely
to result in a Material Adverse Effect during the period from and
after the date of this Agreement and prior to the applicable
Closing Date.
(h)
The
Common Stock shall be registered under the Exchange Act and shall
be listed on the Exchange, and the Company shall not have taken any
action designed to terminate, or likely to have the effect of
terminating, the registration of the Common Stock under the
Exchange Act or delisting or suspending from trading the Common
Stock from the Exchange, nor shall the Company have received any
information suggesting that the Commission is contemplating
terminating such registration or listing.
(i)
On
or before the date hereof, the Underwriter shall have received duly
executed lock-up agreements (each a “
Lock-Up
Agreement
”) in the form
set forth on Schedule III hereto, by and between the
Underwriter and each of the parties specified on Schedule II
hereto.
(j)
An
appropriate notification for the issuance of the Shares shall have
been furnished to the Exchange, and satisfactory evidence of such
actions shall have been provided to the Underwriter, which may
include oral confirmations from a representative of the
Exchange.
(k)
FINRA
shall not have raised any objection with respect to the fairness
and reasonableness of the underwriting terms and arrangements
relating to the issuance and sale of the Shares.
(l)
The
Company shall have furnished to the Underwriter and counsel for the
Underwriter such additional documents, certificates and evidence as
the Underwriter or counsel for the Underwriter may have reasonably
requested.
If
any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may
be terminated by the Underwriter by notice to the Company at any
time at or prior to the applicable Closing Date and such
termination shall be without liability of any party to any other
party, except that Section 5(i), Section 7 and Section 8 shall
survive any such termination and remain in full force and
effect.
7.
Indemnification
and Contribution
.
(a)
The
Company agrees to indemnify, defend and hold harmless the
Underwriter, its affiliates, directors and officers and employees,
and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any losses, claims, damages or
liabilities to which such party may become subject, under the
Securities Act or otherwise (including in settlement of any
litigation if such settlement is effected with the written consent
of the Company), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon (i) an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including
the information deemed to be a part of the Registration Statement
at the time of effectiveness and at any subsequent time pursuant to
Rules 430B and 430C of the Rules and Regulations,
or arise out of or are based upon the
omission from the Registration Statement, or alleged omission to
state therein, a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) an
untrue statement or alleged untrue statement of a material fact
contained in the Time of Sale Disclosure Package, the Prospectus,
or any amendment or supplement thereto (including any documents
filed under the Exchange Act and deemed to be incorporated by
reference into the Registration Statement or the Prospectus), or
any Issuer Free Writing Prospectus or in any materials or
information provided to investors by, or with the written approval
of, the Company in connection with the marketing of the Offering of
the Shares, including any roadshow or investor presentations
(whether in person or electronically) (“
Marketing
Materials
”), or arise out
of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading, (iii) in whole or in part,
any inaccuracy in the representations and warranties of the Company
contained herein, or (iv) in whole or in part, any failure of the
Company to perform its obligations hereunder or under law, and will
reimburse such party for any legal or other expenses reasonably
incurred by it in connection with evaluating, investigating or
defending against such loss, claim, damage, liability or
action;
provided
,
however
, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in
the Registration Statement, the Time of Sale Disclosure Package,
the Prospectus, or any amendment or supplement thereto, any Issuer
Free Writing Prospectus or any Marketing Materials, in reliance
upon and in conformity with written information furnished to the
Company by the related Underwriter specifically for use in the
preparation thereof.
(b)
The
Underwriter will indemnify, defend and hold harmless the Company,
its affiliates, directors, officers and employees, and each person,
if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, from and
against any losses, claims, damages or liabilities to which such
party may become subject, under the Securities Act or otherwise
(including in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter), insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, the Time of Sale Disclosure Package, the
Prospectus, or any amendment or supplement thereto, any Issuer Free
Writing Prospectus or any Marketing Materials, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the
Registration Statement, the Time of Sale Disclosure Package, the
Prospectus, or any amendment or supplement thereto, any Issuer Free
Writing Prospectus or any Marketing Materials, in reliance upon and
in conformity with written information furnished to the Company by
such Underwriter specifically for use in the preparation thereof,
and will reimburse such party for any legal or other expenses
reasonably incurred by such party in connection with defending
against any such loss, claim, damage, liability or
action.
The
obligation of the Underwriter to indemnify the Company (including
any controlling person, director or officer thereof) shall be
limited to the amount of the underwriting discount applicable
to
the Shares to be
purchased
by such Underwriter
hereunder actually received by such
Underwriter.
(c)
Promptly
after receipt by an indemnified party under subsection (a) or (b),
above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the
failure to notify the indemnifying party shall not relieve the
indemnifying party from any liability that it may have to any
indemnified party except to the extent such indemnifying party has
been materially prejudiced by such failure. In case any such action
shall be brought against any indemnified party, and it shall notify
the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the
extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of the
indemnifying party’s election so to assume the defense
thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof;
provided
,
however
, that if (i) the indemnified party has reasonably
concluded (based on advice of counsel) that there may be legal
defenses available to it or other indemnified parties that are
different from or in addition to those available to the
indemnifying party, (ii) a conflict or potential conflict exists
(based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of
such action on behalf of the indemnified party), or (iii) the
indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such
action within a reasonable time after receiving notice of the
commencement of the action, the indemnified party shall have the
right to employ a single counsel to represent it in any claim in
respect of which indemnity may be sought under subsection (a) or
(b) of this Section 7, in which event the reasonable fees and
expenses of such separate counsel shall be borne by the
indemnifying party or parties and reimbursed to the indemnified
party as incurred.
(d)
The
indemnifying party under this Section 7 shall not be liable for any
settlement of any proceeding effected without its written consent,
but if settled with such consent or if there is a final judgment
for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or
expense by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of
judgment in any pending or threatened action, suit or proceeding in
respect of which any indemnified party is a party or could be named
and indemnity was or would be sought hereunder by such indemnified
party, unless such settlement, compromise or consent (a) includes
an unconditional release of such indemnified party from all
liability for claims that are the subject matter of such action,
suit or proceeding and (b) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf
of any indemnified party.
(e)
If
the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under
subsection (a) or (b), above, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party
as a result of the losses, claims, damages or liabilities referred
to in subsection (a) or (b) above, (i) in such proportion as is
appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Underwriter, on the other hand,
from the offering and sale of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of the Company, on the one hand, and the Underwriter, on the
other hand, in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The relative benefits
received by the Company, on the one hand, and the Underwriter, on
the other hand, shall be deemed to be in the same proportion as the
total net proceeds from the offering and sale of the Shares (before
deducting expenses) received by the Company, and the total
underwriter fees received by the Underwriter, in each case as set
forth on the cover page of the Prospectus, bear to the aggregate
offering price of the Shares set forth on such cover. The relative
fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriter
and the parties’ relevant intent, knowledge, access to
information and opportunity to correct or prevent such untrue
statement or omission. The Company and the Underwriter agree that
it would not be just and equitable if contributions pursuant to
this subsection (e) were to be determined by pro rata allocation or
by any other method of allocation that does not take account of the
equitable considerations referred to in the first sentence of this
subsection (e). The amount paid by an indemnified party as a result
of the losses, claims, damages or liabilities referred to in the
first sentence of this subsection (e) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending against any
action or claim that is the subject of this subsection (e).
Notwithstanding the provisions of this subsection (e), no
Underwriter shall be required to contribute any amount in excess of
the amount of the underwriting discount applicable to the Shares to
be purchased by such Underwriter hereunder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent
misrepresentation.
(f)
The
obligations of the Company under this Section 7 shall be in
addition to any liability that the Company may otherwise have and
the benefits of such obligations shall extend, upon the same terms
and conditions, to each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act; and the obligations of the
Underwriter under this Section 7 shall be in addition to any
liability that the Underwriter may otherwise have and the benefits
of such obligations shall extend, upon the same terms and
conditions, to the Company, and its officers, directors and each
person who controls the Company within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act.
(g)
For
purposes of this Agreement, the Underwriter confirms, and the
Company acknowledges, that there is no information concerning such
Underwriter furnished in writing to the Company by such Underwriter
specifically for preparation of or inclusion in the Registration
Statement, the Time of Sale Disclosure Package or the Prospectus,
other than the statements regarding the Underwriter set forth in
the “Underwriting” section of the Prospectus and Time
of Sale Disclosure Package, only insofar as such statement relate
to the amount of selling concession and re-allowance, if any, and
to over-allotment, stabilization and related activities that may be
undertaken by such Underwriter.
8.
Representations
and Agreements to Survive Delivery
. All representations, warranties, and agreements
of the Company contained herein or in certificates delivered
pursuant hereto including, but not limited to, the agreements of
the Underwriter and the Company contained in Section 5(i) and
Section 7 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the
Underwriter or any controlling person thereof, or the Company or
any of its officers, directors, or controlling persons, and shall
survive delivery of, and payment for, the Shares to and by the
Underwriter hereunder.
9.
Termination
of this Agreement
.
(a)
The
Underwriter shall have the right to terminate this Agreement by
giving notice to the Company as hereinafter specified at any time
at or prior to the Closing Date, if in the reasonable discretion of
the Underwriter, (i)
there has
occurred any material adverse change in the securities markets or
any event, act or occurrence that has materially disrupted, or in
the opinion of the Underwriter, will in the future materially
disrupt, the securities markets or there shall be such a material
adverse change in general financial, political or economic
conditions or the effect of international conditions on the
financial markets in the United States is such as to make it, in
the reasonable judgment of the Underwriter, inadvisable or
impracticable to market the Shares or enforce contracts for the
sale of the Shares, (ii) trading in the Company’s Common
Stock shall have been suspended by the Commission or Exchange or
trading in securities generally on NYSE American, the New York
Stock Exchange or the Nasdaq Stock Market LLC shall have been
suspended, (iii) minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have
been required, on the NYSE American, the New York Stock Exchange or
the Nasdaq Stock Market LLC, by such exchange or by order of the
Commission or any other governmental authority having jurisdiction,
(iv) a banking moratorium shall have been declared by federal, New
York or California state authorities, (v) there shall have occurred
any attack on, outbreak or escalation of hostilities or act of
terrorism involving the United States, any declaration by the
United States of a national emergency or war, any substantial
change in financial markets, any substantial change or development
involving a prospective substantial change in United States or
international political, financial or economic conditions or any
other calamity or crisis, (vi) in the judgment of the Underwriter,
there has been, since the time of execution of this Agreement or
since the respective dates as of which information is given in the
Registration Statement, the Time of Sale Disclosure Package or the
Prospectus, any material adverse change in the assets, properties,
condition, financial or otherwise, or in the results of operations,
business affairs or business prospects of the Company and its
subsidiaries considered as a whole, whether or not arising in the
ordinary course of business, or (vii) the Company suffers any loss
by strike, fire, flood, earthquake, accident or other calamity,
whether or not covered by insurance, in the Underwriter’s
reasonable judgment is material and adverse and makes it
impractical or inadvisable to proceed with the completion of the
sale of and payment for the Shares. If this Agreement is terminated
pursuant to this Section 9 or the purchase of the Shares pursuant
to the terms of this Agreement is not consummated for any reason,
the Company will reimburse the Underwriter for all reasonable
documented out-of-pocket expenses up to a maximum of $90,000
(including reasonable fees and disbursements of counsel) incurred
by them in connection with the offering of the Shares, except as
set forth in Sections 7, and 9 hereof, and the Underwriter will
have no further obligation or liability hereunder except as set
forth in Section 7 hereof.
(b)
If
the Underwriter elects to terminate this Agreement as provided in
this Section, the Company shall be notified promptly by the
Underwriter by telephone, confirmed by letter.
10.
Notices
.
Except as otherwise provided herein, all communications hereunder
shall be in writing and, if to the Underwriter, shall be mailed,
delivered or faxed to Roth Capital Partners, LLC, 888 San Clemente
Drive, Newport Beach, California 92660 facsimile number: (949)
720-5700, Attention: Alexander Montano; with a copy to Michael A.
Hedge, K&L Gates LLP, 1 Park Plaza, Twelfth Floor, Irvine,
California 92614 and if to the Company, shall be mailed, delivered
or faxed to it at 5700 W Plano Pkwy, No. 3600, Plano, Texas 75093;
with a copy to Axelrod & Smith P.C., 5300 Memorial Drive, Suite
1000, Houston, Texas 77007, Attention: Robert D. Axelrod, or in
each case to such other address as the person to be notified may
have requested in writing. Any party to this Agreement may change
such address for notices by sending to the parties to this
Agreement written notice of a new address for such
purpose.
11.
Right
of First Refusal
.
The Underwriter shall have an
irrevocable
right of first
refusal (the “
Right of First
Refusal
”), for a period
of twelve (12) months after the date the offer and sale of the
Shares pursuant to this Agreement is completed, to act as sole and
exclusive book-runner for each and every future public offering of
Common Stock (each, a “
Subject
Transaction
”), during
such twelve (12) month period, of the Company, or any successor to
or subsidiary of the Company, on terms and conditions customary to
the Underwriter for such Subject Transactions. For the avoidance of
any doubt, the Company shall not retain, engage or solicit any
additional book-runner in a Subject Transaction without the express
written consent of the Underwriter. The Underwriter shall have the
sole right to determine whether or not any other broker dealer
shall have the right to participate in any such Subject Transaction
and the economic terms of any such participation. The Company shall
notify the Underwriter of its intention to pursue a Subject
Transaction, including the material terms thereof, by providing
written notice thereof by registered mail or overnight courier
service addressed to the Underwriter. If the Underwriter fails to
exercise its
Right of
First Refusal with respect to any Subject Transaction within
ten (10) business days after the mailing of such written notice,
then the Underwriter shall have no further claim or right with
respect to the Subject Transaction or any other Subject
Transaction. The Underwriter may elect, in its sole and absolute
discretion, not to exercise its
Right of First Refusal with respect to a
Subject Transaction; provided that any such election by the
Underwriter shall terminate the
Underwriter’s
Right
of First Refusal with respect to any other Subject Transaction
hereunder. In the event the Company fails to comply with this
provision, damages shall be computed as the maximum allowable
amount under applicable FINRA rules and
regulations.
12.
Persons
Entitled to Benefit of Agreement
. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors
and assigns and the controlling persons, officers and directors
referred to in Section 7. Nothing in this Agreement is intended or
shall be construed to give to any other person, firm or corporation
any legal or equitable remedy or claim under or in respect of this
Agreement or any provision herein contained. The term
“successors and assigns” as herein used shall not
include any purchaser, as such purchaser, of any of the
Shares.
13.
Absence
of Fiduciary Relationship
. The
Company acknowledges and agrees that: (a) the Underwriter has been
retained solely to act as an underwriter in connection with the
sale of the Shares and that no fiduciary, advisory or agency
relationship between the Company and the Underwriter has been
created in respect of any of the transactions contemplated by this
Agreement, irrespective of whether the Underwriter has advised or
is advising the Company on other matters; (b) the price and other
terms of the Shares set forth in this Agreement were established by
the Underwriter following discussions and arms-length negotiations
and the Company is capable of evaluating and understanding and
understands and accepts the terms, risks and conditions of the
transactions contemplated by this Agreement; (c) it has been
advised that the Underwriter and its affiliates are engaged in a
broad range of transactions that may involve interests that differ
from those of the Company and that the Underwriter has no
obligation to disclose such interest and transactions to the
Company by virtue of any fiduciary, advisory or agency
relationship; and (d) it has been advised that the Underwriter is
acting, in respect of the transactions contemplated by this
Agreement, solely for the benefit of the Underwriter, and not on
behalf of the Company.
14.
No
Limitations
. Nothing in this
Agreement shall be construed to limit the ability of the
Underwriter or its affiliates to (a) trade in the Company’s
or any other company’s securities or publish research on the
Company or any other company, subject to applicable law, or (b)
pursue or engage in investment banking, financial advisory or other
business relationships with entities that may be engaged in or
contemplate engaging in, or acquiring or disposing of, businesses
that are similar to or competitive with the business of the
Company.
15.
Amendments
and Waivers
. No supplement,
modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. The failure
of a party to exercise any right or remedy shall not be deemed or
constitute a waiver of such right or remedy in the future. No
waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provision hereof
(regardless of whether similar), nor shall any such waiver be
deemed or constitute a continuing waiver unless otherwise expressly
provided.
16.
Partial
Unenforceability
. The
invalidity or unenforceability of any section, paragraph, clause or
provision of this Agreement shall not affect the validity or
enforceability of any other section, paragraph, clause or
provision.
17.
Governing
Law
. This Agreement shall be
governed by and construed in accordance with the laws of the State
of New York.
18.
Submission
to Jurisdiction
. The Company
irrevocably (a) submits to the jurisdiction of any court of the
State of New York for the purpose of any suit, action, or other
proceeding arising out of this Agreement, or any of the agreements
or transactions contemplated by this Agreement, the Registration
Statement and the Prospectus (each a “
Proceeding
”),
(b) agrees that all claims in respect of any Proceeding may be
heard and determined in any such court, (c) waives, to the fullest
extent permitted by law, any immunity from jurisdiction of any such
court or from any legal process therein, (d) agrees not to commence
any Proceeding other than in such courts, and (e) waives, to the
fullest extent permitted by law, any claim that such Proceeding is
brought in an inconvenient forum. THE COMPANY (ON BEHALF OF ITSELF
AND, TO THE FULLEST EXTENT PERMITTED BY LAW, ON BEHALF OF ITS
RESPECTIVE EQUITY HOLDERS AND CREDITORS) HEREBY WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON,
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION
STATEMENT, THE TIME OF SALE DISCLOSURE PACKAGE AND THE
PROSPECTUS.
19.
Counterparts
.
This Agreement may be executed and delivered (including by
facsimile transmission and electronic mail attaching a portable
document file (.pdf)) in one or more counterparts and, if executed
and delivered in more than one counterpart, the executed
counterparts shall each be deemed to be an original and all such
counterparts shall together constitute one and the same
instrument.
Please
sign and return to the Company the enclosed duplicates of this
Agreement whereupon this Agreement will become a binding agreement
between the Company and the Underwriter in accordance with its
terms.
|
|
Very truly yours,
TORCHLIGHT ENERGY RESOURCES, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ John A. Brda
|
|
|
|
Name:
|
John A. Brda
|
|
|
|
Title:
|
Chief Executive Officer, President
and Secretary
|
|
Confirmed
as of the date first above-
mentioned
by the Underwriter.
ROTH CAPITAL PARTNERS, LLC
|
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By:
|
/s/
Aaron M.
Gurewitz
|
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Name:
|
Aaron M.
Gurewitz
|
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Title:
|
Head
of Equity Capital Markets
|
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SCHEDULE I
Free Writing Prospectus
None.
SCHEDULE II
List of officers and directors executing lock-up
agreements
John
Brda
Roger
N. Wurtele
Gregory
McCabe, Sr.
Alexandre
Zyngier
R.
David Newton
E.
Scott Kimbrough
Michael
Graves
SCHEDULE III
Form of Lock-Up Agreement
