11,250,000 Shares1 Fusion Telecommunications International, Inc. Common Stock, par value $0.01 per share UNDERWRITING AGREEMENT
Exhibit 1.1
EXECUTION COPY
11,250,000 Shares1
Fusion Telecommunications International, Inc.
Common Stock, par value $0.01
per share
January
31, 2018
▇▇▇▇▇-▇▇▇▇▇▇
CAPITAL GROUP LLC
As
Representative of the several
Underwriters named
in Schedule I hereto
c/o
▇▇▇▇▇-▇▇▇▇▇▇ Capital Group LLC
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
Fusion
Telecommunications International, Inc., a Delaware corporation (the
“Company”),
proposes, subject to the terms and conditions stated herein, to
sell to the several underwriters named in Schedule I hereto (the
“Underwriters”)
an aggregate of 11,250,000 shares (the “Firm
Shares”) of common stock, par value $0.01 per share
(the “Common
Stock”), of the Company. The Firm Shares consist of
authorized but unissued shares of Common Stock to be issued and
sold by the Company. The Company also proposes to grant to the
Underwriters an option to purchase up to 1,687,500 additional
shares of Common Stock on the terms and for the purposes set forth
in Section 3 hereof (the “Option
Shares”). The Firm Shares and any Option Shares
purchased pursuant to this Underwriting Agreement are herein
collectively called the “Securities.”
The
Company and the several Underwriters hereby confirm their agreement
with respect to the sale of the Securities by the Company to the
several Underwriters, for whom ▇▇▇▇▇-▇▇▇▇▇▇ Capital Group LLC is
acting as the representative (“you”
or the “Representative”),
as follows:
1.
Registration Statement and
Prospectus. The Company has prepared and filed with the
Securities and Exchange Commission (the “Commission”)
a registration statement on Form S-3 (File No. 333-222127) under
the Securities Act of 1933, as amended (the “Securities
Act” or the “Act”),
and the rules and regulations (the “Rules and
Regulations”) of the Commission thereunder, and such
amendments to such registration statement as may have been required
to the date of this Agreement. Such registration statement, as
amended, has been declared effective by the Commission. Each part of such registration
statement, including the amendments, exhibits and any schedules
thereto, the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act and the documents
and information otherwise deemed to be a part thereof or included
therein by Rule 430B under the Securities Act (the “Rule 430B
Information”) or otherwise pursuant to the Rules and
Regulations, as of the time the Registration Statement became
effective, is herein called the “Registration
Statement.” Any registration statement filed by the
Company pursuant to Rule 462(b) under the Securities Act is called
the “Rule
462(b) Registration Statement” and, from and after the
date and time of filing of the Rule 462(b) Registration Statement,
the term “Registration Statement” shall include the
Rule 462(b) Registration Statement.
Plus an option to purchase up to
1,687,500
additional shares to cover
over-allotments.
The
prospectus in the form in which it has most recently been filed
with the Commission on or prior to the date of this Agreement is
herein called the “Base
Prospectus.” Each preliminary prospectus supplement to
the Base Prospectus (including the Base Prospectus as so
supplemented), that describes the Securities and the offering
thereof, that omitted the Rule 430B Information and that was used
prior to the filing of the final prospectus supplement referred to
in the following sentence is herein called a “Preliminary
Prospectus.” Promptly after execution and delivery of
this Agreement, the Company will prepare and file with the
Commission a final prospectus supplement to the Base Prospectus
relating to the Securities and the offering thereof in accordance
with the provisions of Rule 430B and Rule 424(b) of the Rules and
Regulations. Such final supplemental form of prospectus (including
the Base Prospectus as so supplemented), in the form filed with the
Commission pursuant to Rule 424(b), is herein called the
“Prospectus.”
Any reference herein to the Base Prospectus, any Preliminary
Prospectus or the Prospectus shall be deemed to include the
documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the Securities Act as of the date of such
prospectus.
For
purposes of this Agreement, all references to the Registration
Statement, the Rule 462(b) Registration Statement, the Base
Prospectus, any 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 or any
successor system thereto (“▇▇▇▇▇”).
All references in this Agreement to financial statements and
schedules and other information which is “described,”
“contained,” “included” or
“stated” in the Registration Statement, the Base
Prospectus, any Preliminary Prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all
such financial statements and schedules and other information which
is incorporated by reference in or otherwise deemed by the Rules
and Regulations to be a part of or included in the Registration
Statement, the Base Prospectus, any Preliminary Prospectus or the
Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration
Statement, the Base Prospectus, any 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”), and which is deemed to be incorporated by
reference therein or otherwise deemed by the Rules and Regulations
to be a part thereof.
2.
Representations
and Warranties of the Company.
(a) Representations
and Warranties of the Company. The Company represents and
warrants to, and agrees with, the several Underwriters as
follows:
- 2 -
(i) Registration
Statement and Prospectuses. No order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus
(or any supplement thereto) has been issued by the Commission and
no proceeding for that purpose has been initiated or is pending or,
to the knowledge of the Company, threatened by the Commission. As
of the time each part of the Registration Statement (or any
post-effective amendment thereto) became or becomes effective
(including each deemed effective date with respect to the
Underwriters pursuant to Rule 430B or otherwise under the
Securities Act), such part conformed or will conform in all
material respects to the requirements of the Act and the Rules and
Regulations. Upon the filing or first use within the meaning of the
Rules and Regulations, each Preliminary Prospectus and the
Prospectus (or any supplement to either) conformed or will conform
in all material respects to the requirements of the Act and the
Rules and Regulations. The Registration Statement and any
post-effective amendment thereto has become effective under the
Securities Act. The Company has complied to the Commission’s
satisfaction with all requests of the Commission for additional or
supplemental information. No stop order suspending the
effectiveness of the Registration Statement, any post-effective
amendment or any part thereof is in effect and no proceedings for
such purpose have been instituted or are pending or, to the
knowledge of the Company, are threatened by the
Commission.
(ii) Accurate
Disclosure. Each Preliminary Prospectus, at the time of
filing thereof or the time of first use within the meaning of the
Rules and Regulations, did not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. Neither the Registration Statement nor any amendment
thereto, at the effective time of each part thereof, at the First
Closing Date (as defined below) or at the Second Closing Date (as
defined below), contained, contains or will contain an untrue
statement of a material fact or omitted, omits or will omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading. As of the Time of Sale
(as defined below), neither (A) the Time of Sale Disclosure Package
(as defined below) nor (B) any issuer free writing prospectus (as
defined below), when considered together with the Time of Sale
Disclosure Package, included an untrue statement of a material fact
or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. Neither the Prospectus nor any
supplement thereto, as of its issue date, at the time of any filing
with the Commission pursuant to Rule 424(b) of the Rules and
Regulations, at the First Closing Date or at the Second Closing,
included, includes or will include an untrue statement of a
material fact or omitted, omits or will omit to state a material
fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
representations and warranties in this Section 2(a)(ii) shall
not apply to statements in or omissions from any Preliminary
Prospectus, the Registration Statement (or any amendment thereto),
the Time of Sale Disclosure Package or the Prospectus (or any
supplement thereto) made in reliance upon, and in conformity with,
written information furnished to the Company by you, or by any
Underwriter through you, specifically for use in the preparation of
such document, it being understood and agreed that the only such
information furnished by any Underwriter consists of the
information described as such in Section 6(e).
Each
reference to an “issuer free writing
prospectus” herein means an issuer free writing
prospectus as defined in Rule 433 of the Rules and
Regulations.
- 3 -
“Time of Sale
Disclosure Package” means the Preliminary Prospectus
dated January 29, 2018, any free writing prospectus set forth
on Schedule II and the information on Schedule III, all considered
together.
Each
reference to a “free writing
prospectus” herein means a free writing prospectus as
defined in Rule 405 of the Rules and Regulations.
“Time of
Sale” means 5:45 p.m. (Eastern time) on the date of
this Agreement.
(iii) Issuer
Free Writing Prospectuses.
(A)
Each issuer free writing prospectus, if any, does not include any
information that conflicts with the information contained in the
Registration Statement, any Preliminary Prospectus or the
Prospectus. The foregoing sentence does not apply to statements in
or omissions from any issuer free writing prospectus based upon and
in conformity with written information furnished to the Company by
you or by any Underwriter through you specifically for use therein,
it being understood and agreed that the only such information
furnished by any Underwriter consists of the information described
as such in Section 6(e).
(B) (1)
At the earliest time after the filing of the Registration Statement
that the Company or another offering participant made a
bona fide offer (within the
meaning of Rule 164(h)(2) under the Securities Act) of the
Securities and (2) at the date hereof, the Company was not and is
not an “ineligible issuer,” as defined in Rule 405
under the Securities Act, including the Company or any subsidiary
in the preceding three years not having been convicted of a felony
or misdemeanor or having been made the subject of a judicial or
administrative decree or order as described in Rule 405 of the
Rules and Regulations (without taking account of any determination
by the Commission pursuant to Rule 405 of the Rules and Regulations
that it is not necessary that the Company be considered an
ineligible issuer), nor an “excluded issuer” as defined
in Rule 164 under the Securities Act.
(C) Each
issuer free writing prospectus satisfied, as of its issue date and
at all subsequent times to the Time of Sale, all other conditions
to use thereof as set forth in Rules 164 and 433 under the
Securities Act.
- 4 -
(iv)
No
Other Offering Materials. The Company has not distributed
and will not distribute any prospectus or other offering material
in connection with the offering and sale of the Securities other
than any Preliminary Prospectus, the Time of Sale Disclosure
Package or the Prospectus or other materials permitted by the Act
to be distributed by the Company; provided, however, that, except as set
forth on Schedule II, the Company has not made and will not make
any offer relating to the Securities that would constitute a free
writing prospectus, except in accordance with the provisions of
Section 4(a)(xv) of this Agreement.
(v)
Financial
Statements. The financial statements of the Company,
together with the related notes and schedules, set forth 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 operations and changes in cash flows for the
periods therein specified in conformity with generally accepted
accounting principles in the United States consistently applied
throughout the periods involved; the supporting schedules relating
to the Company included or incorporated by reference into the
Registration Statement present fairly the information required to
be stated therein; all non-GAAP financial information relating to
the Company included in the Registration Statement, the Time of
Sale Disclosure Package and the Prospectus complies in all material
respects with the requirements of Regulation G and Item 10 of
Regulation S-K under the Act; except as disclosed in the Time of
Sale Disclosure Package and the Prospectus, there are no material
off-balance sheet arrangements (as defined in Regulation S-K under
the Act, Item 303(a)(4)(ii)) or any other relationships with
unconsolidated entities or other persons, that may have a material
current or, to the Company’s knowledge, material future
effect on the Company’s financial condition, results of
operations, liquidity, capital expenditures, capital resources or
significant components of revenue or expenses; and the pro forma financial
information and the related notes and schedules thereto included or
incorporated by reference in the Registration Statement, the Time
of Sale Disclosure Package and the Prospectus comply as to form in
all material respects with the applicable accounting requirements
of Regulation S-X under the Securities Act, and the assumptions
used in the preparation of such pro forma financial statements and
other pro forma financial
information (including the notes thereto) are reasonable and the
adjustments used therein are appropriate to present fairly,
accurately and completely the consolidated financial position of
the Company following the acquisition (the “Merger”)
of Birch Communications Holdings, Inc., a Georgia corporation
(“Birch”),
and give effect to the transactions or circumstances referred to
therein. No other financial statements or schedules are required to
be included in the Registration Statement, the Time of Sale
Disclosure Package or the Prospectus. To the Company’s
knowledge, EisnerAmper LLP, which has expressed its opinion with
respect to the financial statements and schedules of the Company
filed as a part of the Registration Statement and included in the
Registration Statement, the Time of Sale Disclosure Package and the
Prospectus, is (x) an independent
public accounting firm within the meaning of the Act and the Rules
and Regulations, (y) a registered public accounting firm (as
defined in Section 2(a)(12) of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002 (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”)) and (z) not in
violation of the auditor independence requirements of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
- 5 -
(vi) Organization
and Good Standing. Each of the Company and its
subsidiaries has been duly organized and is validly existing as a
corporation or limited liability company, as applicable, and is in
good standing under the laws of its jurisdiction of incorporation
or organization, except for where the failure to be in good
standing would not have a material adverse effect upon the
business, prospects, management, properties, operations, condition
(financial or otherwise) or results of operations of the Company
and its subsidiaries, taken as a whole (“Material Adverse
Effect”). Each of the Company and its subsidiaries has
full corporate or company power and authority to own its properties
and conduct its business as currently being carried on and as
described in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus, and is duly qualified to do
business as a foreign corporation in good standing in each
jurisdiction in which it owns or leases real property or in which
the conduct of its business makes such qualification necessary,
except where the failure to so qualify would not have a Material
Adverse Effect.
(vii) Absence
of Certain
Events. Except as contemplated in the Time of Sale
Disclosure Package and in the Prospectus, subsequent to the
respective dates as of which information is given in the Time of
Sale Disclosure Package and the Prospectus, neither the Company nor
any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock; and
there has not been any change in the capital stock (other than a
change in the number of outstanding shares of Common Stock due to
the issuance of shares upon the exercise of outstanding options or
warrants or conversion of convertible securities and except in
connection with the acquisition of IQMax, Inc. on January 24,
2018), or any material change in the short-term or long-term debt
(other than as a result of the conversion of convertible
securities), or any issuance of warrants, convertible securities or
other rights to purchase the capital stock of the Company or any of
its subsidiaries (other than options), or any material adverse
change in the general affairs, condition (financial or otherwise),
business, prospects, management, properties, operations or results
of operations of the Company and its subsidiaries, taken as a whole
(“Material Adverse
Change”) or any development which could reasonably be
expected to result in any Material Adverse Change.
(viii)
Absence
of Proceedings.
Except as set forth in the Time of Sale Disclosure Package and in
the Prospectus, there is not pending or, to the knowledge of the
Company, threatened or contemplated, any action, suit or proceeding
(a) to which the Company or any of its subsidiaries is a party or
(b) which has as the subject thereof any officer or director of the
Company or any subsidiary, any employee benefit plan sponsored by
the Company or any subsidiary or any property or assets owned or
leased by the Company or any subsidiary before or by any court or
Governmental Authority (as defined below), or any arbitrator,
which, individually or in the aggregate, would result in any
Material Adverse Change, or would materially and adversely affect
the ability of the Company to perform its obligations under this
Agreement or which are otherwise material in the context of the
sale of the Securities. Other than approvals and other proceedings
required in connection with the Merger, there are no current or, to
the knowledge of the Company, pending, legal, governmental or
regulatory actions, suits or proceedings (x) to which the Company
or any of its subsidiaries is subject or (y) which has as the
subject thereof any officer or director of the Company or any
subsidiary, any employee plan sponsored by the Company or any
subsidiary or any property or assets owned or leased by the Company
or any subsidiary, that are required to be described in the
Registration Statement, Time of Sale Disclosure Package and
Prospectus by the Act or by the Rules and Regulations and that have
not been so described.
- 6 -
(ix)
Disclosure of
Legal Matters. To the knowledge of the Company, there are no
statutes, regulations, contracts or documents that are required to
be described in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus or required to be filed as
exhibits to the Registration Statement by the Securities Act or by
the Rules and Regulations that have not been so described or
filed.
(x) Authorization;
No Conflicts; Authority. This Agreement has been duly
authorized, executed and delivered by the Company, and constitutes
a valid, legal and binding obligation of the Company, enforceable
in accordance with its terms, except as rights to indemnity
hereunder may be limited by federal or state securities laws and
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity.
The execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated will not (A)
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its subsidiaries
pursuant to any indenture, mortgage, deed of trust, loan agreement
or other material agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, (B)
result in any violation of the provisions of the Company’s
charter or by-laws or (C) result in the violation of any law or
statute or any judgment, order, rule, regulation or decree of any
court or arbitrator or federal, state, local or foreign
governmental agency or regulatory authority having jurisdiction
over the Company or any of its subsidiaries or any of their
properties or assets (each, a “Governmental
Authority”), except in the case of clauses (A) and (C)
as would not result in a Material Adverse Effect. Assuming the
accuracy of the information regarding the proposed purchasers of
Securities furnished by the Underwriters to the Company, and the
sale of the Securities in conformance therewith, no consent,
approval, authorization or order of, or registration or filing with
any Governmental Authority is required for the execution, delivery
and performance of this Agreement or for the consummation of the
transactions contemplated hereby, including the issuance or sale of
the Securities by the Company, except such as may be required under
the Act, the rules of the Financial Industry Regulatory Authority
(“FINRA”),
the Nasdaq Stock Market Rules or state securities or blue sky laws;
and the Company has full power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby,
including the authorization, issuance and sale of the Securities as
contemplated by this Agreement.
- 7 -
(xi) Capitalization;
the Securities; Registration Rights. All of the issued and
outstanding shares of capital stock of the Company, including the
outstanding shares of Common Stock, are duly authorized and validly
issued, fully paid and nonassessable, have been issued in
compliance with all federal and state 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 Underwriters), and the holders thereof are not subject to
personal liability by reason of being such holders; the Securities
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 holders thereof will
not be subject to personal liability by reason of being such
holders; and the capital stock of the Company, including the Common
Stock and the Securities to be purchased pursuant to this
Underwriting Agreement, conforms to the description thereof in the
Registration Statement (including in any agreements filed as
exhibits to the Registration Statement), in the Time of Sale
Disclosure Package and in the Prospectus. Except as otherwise
stated in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus, (A) there are no
preemptive rights or other rights to subscribe for or to purchase,
or any restriction upon the voting or transfer of, any shares of
Common Stock pursuant to the Company’s charter, by-laws or
any agreement or other instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound; (B) neither the filing of the
Registration Statement nor the offering or sale of the Securities
as contemplated by this Agreement gives rise to any material rights
for or relating to the registration of any shares of Common Stock
or other securities of the Company (collectively “Registration
Rights”) and (C) any person to whom the Company
has granted Registration Rights has agreed not to exercise such
rights until after expiration of the Lock-Up Period (as defined
below). All of the issued and outstanding shares of capital stock
of each of the Company’s subsidiaries have been duly and
validly authorized and issued and are fully paid and nonassessable,
and, except as otherwise described in the Registration Statement,
in the Time of Sale Disclosure Package and in the Prospectus, or
otherwise in connection with the Company’s Credit Agreement, dated as of November 14, 2016,
by and between the Company, East West Bank, as administrative
agent, and the other lenders from time to time party thereto
(the “Credit
Agreement”), or the Fifth
Amended and Restated Securities Purchase Agreement and Security
Agreement, dated as of November 14, 2016, by and between Praesidian
Capital Opportunity Fund III, L.P., Praesidian Capital Opportunity
Fund III-A, LP and United Insurance Company of America (the
“Praesidian
Facility”), the
Company owns of record and beneficially, free and clear of any
security interests, claims, liens, proxies, equities or other
encumbrances, all of the issued and outstanding shares of such
stock. The Company has an authorized and outstanding capitalization
as set forth in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus.
(xii) Instruments
to Acquire Shares. Except as described in the Registration
Statement, in the Time of Sale Disclosure Package and in the
Prospectus, there are no options, warrants, agreements, contracts
or other rights in existence to purchase or acquire from the
Company or any subsidiary of the Company any shares of the capital
stock of the Company or any subsidiary of the Company. The
description of the Company’s stock option, stock bonus and
other stock plans or arrangements (the “Company Stock
Plans”), and the options or other rights granted
thereunder (collectively, the “Awards”),
set forth in the Time of Sale Disclosure Package and the Prospectus
accurately and fairly presents in all material respects the
information required to be shown with respect to such plans,
arrangements and Awards. Each grant of an Award (A) was duly
authorized no later than the date on which the grant of such Award
was by its terms to be effective by all necessary corporate action,
including, as applicable, approval by the board of directors of the
Company (or a duly constituted and authorized committee thereof)
and any required stockholder approval by the necessary number of
votes or written consents, and (B) was made in accordance with
the terms of the applicable Company Stock Plan, and all applicable
state and federal securities laws.
- 8 -
(xiii)
Compliance with
Laws. Except as would not have a Material Adverse Effect,
the Company and each of its subsidiaries holds, and is operating in
compliance with, all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders of any
Governmental Authority or self-regulatory body required for the
conduct of its business and all such franchises, grants,
authorizations, licenses, permits, easements, consents,
certifications and orders are valid and in full force and effect;
and neither the Company nor any of its subsidiaries has received
notice of any revocation or modification of any franchise, grant,
authorization, license, permit, easement, consent, certification or
order or has reason to believe that any such franchise, grant,
authorization, license, permit, easement, consent, certification or
order will not be renewed in the ordinary course; and the Company
and each of its subsidiaries is in compliance in all respects with
all applicable federal, state, local and foreign laws, regulations,
orders and decrees.
(xiv)
Ownership of
Assets. The Company and its subsidiaries have good and
marketable title to, or have valid rights to lease or otherwise
use, all property (whether real or personal) described in the
Registration Statement, in the Time of Sale Disclosure Package and
in the Prospectus as being owned, leased or used by them, in each
case free and clear of all liens, claims, security interests, other
encumbrances or defects except such as are described in the
Registration Statement, in the Time of Sale Disclosure Package and
in the Prospectus or otherwise in connection with the Credit
Agreement or the Praesidian Facility. 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.
(xv) Intellectual
Property.
(A) The
Company and each of its subsidiaries owns or has the right to use
pursuant to a valid and enforceable written license or other
legally enforceable right, all Intellectual Property (as defined
below) necessary for the conduct of the Company’s and its
subsidiaries’ businesses as now conducted or as described in
the Registration Statement, the Time of Sale Disclosure Package and
the Prospectus to be conducted (the “Company
IP”), except where such failure would not have a
Material Adverse Effect. “Intellectual
Property” means all patents, patent applications,
trade and service marks, trade and service ▇▇▇▇ registrations,
trade names, copyrights, licenses, inventions, trade secrets,
domain names, technology, know-how and other intellectual
property.
- 9 -
(B) To
the knowledge of the Company, there is no infringement,
misappropriation or violation by third parties of any Company IP.
There is no pending or, to the knowledge of the Company,
threatened, action, suit, proceeding or claim by others challenging
the Company’s or its subsidiaries’ rights in or to any
Company IP, and the Company is unaware of any facts which would
form a reasonable basis for any such claim. The Intellectual
Property owned by the Company and its subsidiaries, and to the
knowledge of the Company, the Intellectual Property licensed to the
Company and its subsidiaries, has not been adjudged invalid or
unenforceable, in whole or in part, and there is no pending or, to
the knowledge of the Company, threatened action, suit, proceeding
or claim by others challenging the validity or scope of any Company
IP, and the Company is unaware of any facts which would form a
reasonable basis for any such claim. There is no pending or, to the
knowledge of the Company, threatened action, suit, proceeding or
claim by others that the Company or its subsidiaries infringe,
misappropriate or otherwise violate any Intellectual Property or
other proprietary rights of others, and neither the Company nor any
of its subsidiaries has received any written notice of such claim
and the Company is unaware of any other fact which would form a
reasonable basis for any such claim.
(C) The
Company and its subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all
of their material Intellectual Property.
(D)
All patent applications owned by the Company or its subsidiaries
and filed with the U.S. Patent and Trademark Office (the
“PTO”)
or any foreign or international patent authority that have resulted
in patents or currently pending applications that describe
inventions necessary to conduct the business of the Company or its
subsidiaries as now conducted or as described in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus
to be conducted (collectively, the “Company Patent
Applications”) have been or were duly and properly
filed.
(xvi)
No
Violations or Defaults. Neither the Company nor any of its
subsidiaries is in violation of its respective charter, by-laws or
other organizational documents, or in breach of or otherwise in
default, and no event has occurred which, with notice or lapse of
time or both, would constitute such a default in the performance of
any obligation, agreement or condition contained in any bond,
debenture, note, indenture, loan agreement or any other contract,
lease or other instrument to which it is subject or by which any of
them may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject, except as would not
have a Material Adverse Effect.
- 10 -
(xvii)
Taxes. The
Company and its subsidiaries have timely filed all federal, state,
local and foreign income and franchise tax returns required to be
filed and are not in default in the payment of any taxes which were
payable pursuant to said returns or any assessments with respect
thereto, other than any which the Company or any of its
subsidiaries is contesting in good faith. There is no pending
dispute with any taxing authority relating to any of such returns,
and the Company has no knowledge of any proposed liability for any
tax to be imposed upon the properties or assets of the Company for
which there is not an adequate reserve reflected in the
Company’s financial statements included in the Registration
Statement, the Time of Sale Disclosure Package and the
Prospectus.
(xviii)
Exchange Listing
and Exchange Act Registration. The Common Stock is
registered pursuant to Section 12(b) of the Exchange Act and
is included or approved for listing on The Nasdaq Capital Market
and the Company has not taken any 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
Nasdaq Capital Market, and the Company has not received any
notification that the Commission or The Nasdaq Capital Market is
contemplating terminating such registration or listing, other than
the new listing application required in connection with the Merger.
The Company has complied in all material respects with the
applicable requirements of The Nasdaq Capital Market for
maintenance of inclusion of the Common Stock thereon, other than
the fact that the Company did not hold its 2017 Annual Meeting of
Stockholders in a timely manner, of which the Company notified The
Nasdaq Capital Market. The Company has filed an application to
include the Securities on The Nasdaq Capital Market. Except as
previously disclosed to counsel for the Underwriters or as set
forth in the Time of Sale Disclosure Package and the Prospectus, to
the knowledge of the Company, no beneficial owners of the
Company’s capital stock who, together with their associated
persons and affiliates, hold in the aggregate 10% or more of such
capital stock, have any direct or indirect association or affiliate
with a FINRA member.
(xix)
Ownership of Other
Entities. Other than as described in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus,
the Company, directly or indirectly, owns no capital stock or other
equity or ownership or proprietary interest in any corporation,
partnership, association, trust or other entity.
- 11 -
(xx) Internal
Controls. The Company and its subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance
with management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles in the United States and to maintain
accountability for assets; (iii) access to assets is permitted
only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets
is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. Except
as disclosed in the Registration Statement, in the Time of Sale
Disclosure Package and in the Prospectus, the Company’s
internal control over financial reporting is effective and none of
the Company, its board of directors and audit committee is aware of
any “significant deficiencies” or “material
weaknesses” (each as defined by the Public Company Accounting
Oversight Board) in its internal control over financial reporting,
or any fraud, whether or not material, that involves management or
other employees of the Company and its subsidiaries who have a
significant role in the Company’s internal controls; and
since the end of the latest audited fiscal year, there has been no
change in the Company’s internal control over financial
reporting (whether or not remediated) that has materially affected,
or is reasonably likely to materially affect, the Company’s
internal control over financial reporting. The Company’s
board of directors has, subject to the exceptions, cure periods and
the phase in periods specified in the applicable stock exchange
rules (“Exchange
Rules”), validly appointed an audit committee to
oversee internal accounting controls whose composition satisfies
the applicable requirements of the Exchange Rules and the
Company’s board of directors and/or the audit committee has
adopted a charter that satisfies the requirements of the Exchange
Rules.
(xxi)
No
Brokers or Finders. Other than as contemplated by this
Agreement, the Company has not incurred any liability for any
finder’s or broker’s fee or agent’s commission in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(xxii)
Insurance.
The Company and each of its subsidiaries carries, or is covered by,
insurance from reputable insurers in such amounts and covering such
risks as is adequate for the conduct of its business and the value
of its properties and the properties of its subsidiaries and as is
customary for companies engaged in similar businesses in similar
industries; all policies of insurance and any fidelity or surety
bonds insuring the Company or any of its subsidiaries or its
business, assets, employees, officers and directors are in full
force and effect; the Company and its subsidiaries are in
compliance with the terms of such policies and instruments in all
material respects; there are no claims by the Company or any of its
subsidiaries under any such policy or instrument as to which any
insurance company is denying liability or defending under a
reservation of rights clause; neither the Company nor any of its
subsidiaries has been refused any insurance coverage sought or
applied for; and neither the Company nor any of its subsidiaries
has reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material
Adverse Effect.
(xxiii)
Investment Company
Act. The Company is not and, after giving effect to the
offering and sale of the Securities, will not be an
“investment company,” as such term is defined in the
Investment Company Act of 1940, as amended.
(xxiv)
Eligibility to Use
Form S-3. The conditions for use of Form S-3, in
connection with the offer and sale of the Securities, as set forth
in the General Instructions thereto, have been
satisfied.
- 12 -
(xxv)
Incorporated
Documents. The documents incorporated by reference in the
Time of Sale Disclosure Package and in the Prospectus, other than
Amendment No. 2 to the Form 8-K filed by the Company with the SEC
on January 27, 2017, when they became effective or were filed with
the Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and were filed on a timely basis with the
Commission 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 Time of Sale Disclosure Package or in the
Prospectus, when such documents are filed with the Commission, will
conform 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.
(xxvi)
▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act. The Company is in compliance with all applicable
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and regulations
of the Commission thereunder.
(xxvii)
Disclosure
Controls. The Company has established and maintains
disclosure controls and procedures (as defined in Rules 13a-14 and
15d-14 under the Exchange Act) and such controls and procedures are
effective in ensuring that material information relating to the
Company, including its subsidiaries, is made known to the principal
executive officer and the principal financial officer. The Company
has utilized such controls and procedures in preparing and
evaluating the disclosures in the Registration Statement, in the
Time of Sale Disclosure Package and in the Prospectus.
(xxviii)
Anti-Bribery and
Anti-Money Laundering Laws. Each of the Company and its
subsidiaries, and, to the Company’s knowledge, its affiliates
and any of their respective officers, directors, supervisors,
managers, agents or employees has not violated, its participation
in the offering will not violate and the Company and each of its
subsidiaries has instituted and maintains policies and procedures
designed to ensure continued compliance with, each of the following
laws: anti-bribery laws, including but not limited to, any
applicable law, rule, or regulation of any locality, including but
not limited to any law, rule, or regulation promulgated to
implement the OECD Convention on Combating Bribery of Foreign
Public Officials in International Business Transactions, signed
December 17, 1997, including the U.S. Foreign Corrupt
Practices Act of 1977, as amended, the U.K. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, or
any other law, rule or regulation of similar purposes and scope, or
anti-money laundering laws, including but not limited to,
applicable federal, state, international, foreign or other laws,
regulations or government guidance regarding anti-money laundering,
including, without limitation, Title 18 U.S. Code Section 1956 and
1957, the Patriot Act, the Bank Secrecy Act, and international
anti-money laundering principles or procedures by an
intergovernmental group or organization, such as the Financial
Action Task Force on Money Laundering, of which the United States
is a member and with which designation the United States
representative to the group or organization continues to concur,
all as amended, and any executive order, directive, or regulation
pursuant to the authority of any of the foregoing, or any orders or
licenses issued thereunder.
(xxix)
OFAC.
- 13 -
(A) Neither
the Company nor any of its subsidiaries, nor, to the
Company’s knowledge, any of their directors, officers,
employees, agents, affiliates or representatives, is an individual
or entity that is, or is owned or controlled by an individual or
entity that is:
(1) the
subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control,
the United Nations Security Council, the European Union, Her
Majesty’s Treasury, or other relevant sanctions authority
(collectively, “Sanctions”),
nor
(2) located,
organized or resident in a country or territory that is the subject
of Sanctions (including, without limitation, the Crimea Region of
the Ukraine, Cuba, Iran, North Korea, Sudan and
Syria).
(B) Neither
the Company nor any of its subsidiaries will, directly or
indirectly, use the proceeds of the offering, or lend, contribute
or otherwise make available such proceeds to any subsidiary, joint
venture partner or other individual or entity:
(1) to
fund or facilitate any activities or business of or with any
individual or entity or in any country or territory that, at the
time of such funding or facilitation, is the subject of Sanctions;
or
(2) in
any other manner that will result in a violation of Sanctions by
any individual or entity (including any individual or entity
participating in the offering, whether as underwriter, advisor,
investor or otherwise).
(C) For
the past five years, neither the Company nor any of its
subsidiaries has knowingly engaged in, and is not now knowingly
engaged in, any dealings or transactions with any individual or
entity, or in any country or territory, that at the time of the
dealing or transaction is or was the subject of
Sanctions.
(xxx)
Compliance with
Environmental Laws. Except as disclosed in the Time of
Disclosure Package and the Prospectus, neither the Company nor any
of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any Governmental Authority or any
court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, “Environmental
Laws”), owns or operates any real property
contaminated with any substance that is subject to any
Environmental Laws, is liable for any off-site disposal or
contamination pursuant to any Environmental Laws, or is subject to
any claim relating to any Environmental Laws, which violation,
contamination, liability or claim would, individually or in the
aggregate, have a Material Adverse Effect; and the Company is not
aware of any pending investigation which might lead to such a
claim. Neither the Company nor any of its subsidiaries anticipates
incurring any material capital expenditures relating to compliance
with Environmental Laws.
(xxxi)
Compliance with
Occupational Laws. The Company and each of its subsidiaries
(A) is in compliance, in all material respects, with any and all
applicable foreign, federal, state and local laws, rules,
regulations, treaties, statutes and codes promulgated by any and
all Governmental Authorities (including pursuant to the
Occupational Health and Safety Act) relating to the protection of
human health and safety in the workplace (“Occupational
Laws”); (B) has received all material permits,
licenses or other approvals required of it under applicable
Occupational Laws to conduct its business as currently conducted;
and (C) is in compliance, in all material respects, with all terms
and conditions of any such permits, licenses or approvals. No
action, proceeding, revocation proceeding, writ, injunction or
claim is pending or, to the Company’s knowledge, threatened
against the Company or any of its subsidiaries relating to
Occupational Laws, and the Company does not have knowledge of any
facts, circumstances or developments relating to its operations or
cost accounting practices that could reasonably be expected to form
the basis for or give rise to such actions, suits, investigations
or proceedings.
- 14 -
(xxxii)
ERISA
and Employee Benefits Matters. (A) To the knowledge of the
Company, no “prohibited transaction” as defined under
Section 406 of ERISA (as defined below) or Section 4975 of the Code
(as defined below) and not exempt under ERISA Section 408 and the
regulations and published interpretations thereunder has occurred
with respect to any Employee Benefit Plan (as defined below). At no
time has the Company or any ERISA Affiliate (as defined below)
maintained, sponsored, participated in, contributed to or has or
had any liability or obligation in respect of any Employee Benefit
Plan subject to Part 3 of Subtitle B of Title I of ERISA, Title IV
of ERISA, or Section 412 of the Code or any “multiemployer
plan” as defined in Section 3(37) of ERISA or any multiple
employer plan for which the Company or any ERISA Affiliate has
incurred or could incur liability under Section 4063 or 4064 of
ERISA. No Employee Benefit Plan provides or promises, or at any
time provided or promised, retiree health, life insurance, or other
retiree welfare benefits except as may be required by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
or similar state law. Each Employee Benefit Plan is and has been
operated in material compliance with its terms and all applicable
laws, including but not limited to ERISA and the Code and, to the
knowledge of the Company, no event has occurred (including a
“reportable event” as such term is defined in Section
4043 of ERISA) and no condition exists that would subject the
Company or any ERISA Affiliate to any material tax, fine, lien,
penalty or liability imposed by ERISA, the Code or other applicable
law. Each Employee Benefit Plan
intended to be qualified under Code Section 401(a) is so qualified
and has a favorable determination or opinion letter from the IRS
upon which it can rely, and any such determination or opinion
letter remains in effect and has not been revoked; to the knowledge
of the Company, nothing has occurred since the date of any such
determination or opinion letter that is reasonably likely to
adversely affect such qualification; (B) with respect to
each Foreign Benefit Plan (as defined below), such Foreign Benefit
Plan (1) if intended to qualify for special tax treatment, meets,
in all material respects, the requirements for such treatment, and
(2) if required to be funded, is funded to the extent required by
applicable law, and with respect to all other Foreign Benefit
Plans, adequate reserves therefor have been established on the
accounting statements of the applicable Company or subsidiary; (C)
neither the Company nor any of its subsidiaries has any obligations
under any collective bargaining agreement with any union and no
organization efforts are underway with respect to employees of the
Company or any of its subsidiaries. As used in this Agreement,
“Code”
means the Internal Revenue Code of 1986, as amended; “Employee Benefit
Plan” means any “employee benefit plan”
within the meaning of Section 3(3) of ERISA, including, without
limitation, all stock purchase, stock option, stock-based
severance, employment, change-in-control, medical, disability,
fringe benefit, bonus, incentive, deferred compensation, employee
loan and all other employee benefit plans, agreements, programs,
policies or other arrangements, whether or not subject to ERISA,
under which (1) any current or former employee, director or
independent contractor of the Company or its subsidiaries has any
present or future right to benefits and which are contributed to,
sponsored by or maintained by the Company or any of its
subsidiaries or (2) the Company or any of its subsidiaries has
had or has any present or future obligation or liability;
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended; “ERISA
Affiliate” means any member of the Company’s
controlled group as defined in Code Section 414(b), (c), (m) or
(o); and “Foreign Benefit
Plan” means any Employee Benefit Plan established,
maintained or contributed to outside of the United States of
America or which covers any employee working or residing outside of
the United States.
(xxxiii)
Business
Arrangements. Except as disclosed in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus,
neither the Company nor any of its subsidiaries has granted
exclusive rights to develop, manufacture, produce, assemble,
distribute, license, market or sell its products to any other
person and is not bound by any agreement that affects the exclusive
right of the Company or such subsidiary to develop, manufacture,
produce, assemble, distribute, license, market or sell its
products.
(xxxiv)
Labor
Matters. No labor problem or dispute with the employees of
the Company or any of its subsidiaries exists or is threatened or
imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or its
subsidiaries’ principal suppliers, contractors or customers,
that could have a Material Adverse Effect.
(xxxv)
Restrictions on
Subsidiary Payments to the Company. No subsidiary of the
Company is currently prohibited, directly or indirectly, from
paying any dividends to the Company, from making any other
distribution on such subsidiary’s capital stock, from
repaying to the Company any loans or advances to such subsidiary
from the Company or from transferring any of such
subsidiary’s property or assets to the Company or any other
subsidiary of the Company, except as provided by applicable state
law or described in or contemplated by the Time of Sale Disclosure
Package and the Prospectus or in connection with the Credit
Agreement or Praesidian Facility.
- 15 -
(xxxvi)
Statistical
Information. Any third-party statistical and market-related
data included in the Registration Statement, the Time of Sale
Disclosure Package and the Prospectus are based on or derived from
sources that the Company believes to be reasonably current and
reliable and accurate in all material respects.
(xxxvii)
Forward-looking
Statements. No forward-looking
statement (within the meaning of Section 27A of the Act and
Section 21E of the Exchange Act) contained in the Registration
Statement, the Time of Sale Disclosure Package or the Prospectus
has been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith.
(b) Effect
of Certificates. Any certificate signed by any officer of
the Company and delivered to you or to counsel for the Underwriters
shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby.
3. Purchase,
Sale and Delivery of Securities.
(a) Firm
Shares. On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell
the Firm Shares to the several Underwriters, and each Underwriter
agrees, severally and not jointly, to purchase from the Company the
number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto. The purchase price for each Firm
Share shall be $2.992 per share. In making this Agreement, each
Underwriter is contracting severally and not jointly; except as
provided in paragraph (b) of this Section 3, the agreement of each
Underwriter is to purchase only the respective number of Firm
Shares specified in Schedule I.
The
Firm Shares will be delivered by the Company to you for the
accounts of the several Underwriters against payment of the
purchase price therefor by wire transfer of same day funds payable
to the order of the Company at the offices of ▇▇▇▇▇-▇▇▇▇▇▇ Capital
Group LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other location as may be mutually
acceptable, at 9:00 a.m. Central time on the second (or if the
Securities are priced, as contemplated by Rule 15c6-1(c) under the
Exchange Act, after 4:30 p.m. Eastern time, the third) full
business day following the date hereof, or at such other time and
date as you and the Company determine pursuant to Rule 15c6-1(a)
under the Exchange Act, such time and date of delivery being herein
referred to as the “First Closing
Date.”
- 16 -
(b) Option
Shares. On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants to the
several Underwriters an option to purchase all or any portion of
the Option Shares at the same purchase price as the Firm Shares,
for use solely in covering any over-allotments made by the
Underwriters in the sale and distribution of the Firm Shares. The
option granted hereunder may be exercised in whole or in part at
any time (but not more than once) within 45 days after the
effective date of this Agreement upon notice (confirmed in writing)
by the Underwriters to the Company setting forth the aggregate
number of Option Shares as to which the Underwriters are exercising
the option, the names and denominations in which the certificates
for the Option Shares are to be registered and the date and time,
as determined by you, when the Option Shares are to be delivered,
such time and date being herein referred to as the “Second
Closing” and “Second Closing
Date,” respectively; provided, however, that the
Second Closing Date shall not be earlier than the First Closing
Date nor earlier than the second business day after the date on
which the option shall have been exercised. Each Underwriter
agrees, severally and not jointly, to purchase the number of Option
Shares (subject to such adjustments to eliminate fractional shares
as you may determine) that bears the same proportion of the total
number of Option Shares to be purchased on such Second Closing Date
as the number of Firm Shares set forth in Schedule I hereto
opposite the name of such Underwriter bears to the total number of
Firm Shares. No Option Shares shall be sold and delivered unless
the Firm Shares previously have been, or simultaneously are, sold
and delivered.
The
Option Shares will be delivered by the Company to you for the
accounts of the several Underwriters against payment of the
purchase price therefor by wire transfer of same day funds payable
to the order of the Company at the offices of ▇▇▇▇▇-▇▇▇▇▇▇ Capital
Group LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other location as may be mutually
acceptable at 9:00 a.m., Central time, on the Second Closing
Date.
(c) Delivery.
If the Underwriters so elect, delivery of the Firm Shares or the
Option Shares may be made by credit through full fast transfer to
the accounts at The Depository Trust Company designated by the
Representative. Upon request, certificates representing the Firm
Shares and the Option Shares in definitive form and in such
denominations and registered in such names as you have set forth in
your notice of option exercise, or evidence of their issuance, will
be made available for checking at a reasonable time preceding the
First Closing Date or the Second Closing Date, as
applicable.
(d) Purchases
by Representative on Behalf of Underwriters. It is
understood that you, individually and not as Representative of the
several Underwriters, may (but shall not be obligated to) make
payment to the Company on behalf of any Underwriter for the
Securities to be purchased by such Underwriter. Any such payment by
you shall not relieve any such Underwriter of any of its
obligations hereunder. Nothing contained herein shall constitute
any of the Underwriters an unincorporated association or partner
with the Company.
4. Covenants.
(a) Covenants
of the Company. The Company covenants and agrees with the
several Underwriters as follows:
- 17 -
(i)
Required
Filings. During the period beginning on the date hereof and
ending on the later of the Second Closing Date or such date, as in
the opinion of counsel for the Underwriters, the Prospectus is no
longer required by law to be delivered (assuming the absence of
Rule 172 under the Securities Act), in connection with sales by an
Underwriter or a dealer (the “Prospectus Delivery
Period”), prior to amending or supplementing the
Registration Statement (including any Rule 462(b) Registration
Statement), the Time of Sale Disclosure Package or the Prospectus,
the Company shall furnish to the Underwriters for review a copy of
each such proposed amendment or supplement, and the Company shall
not file any such proposed amendment or supplement to which the
Underwriters or counsel to the Underwriters reasonably object.
Subject to this Section 4(a)(i), immediately following execution of
this Agreement, the Company will prepare the Prospectus containing
the Rule 430B Information and other selling terms of the
Securities, the plan of distribution thereof and such other
information as may be required by the Securities Act or the Rules
and Regulations or as the Underwriters and the Company may deem
appropriate, and if requested by the Underwriters, an issuer free
writing prospectus containing the selling terms of the Securities
and such other information as the Company and the Underwriters may
deem appropriate, and will file or transmit for filing with the
Commission, in accordance with Rule 424(b) or Rule 433, as the case
may be, copies of the Prospectus and each issuer free writing
prospectus.
(ii)
Notification of
Certain Commission Actions. After the date of this
Agreement, the Company shall promptly advise the Underwriters in
writing (A) of the receipt of any comments of, or requests for
additional or supplemental information from, the Commission, (B) of
the time and date of any filing of any post-effective amendment to
the Registration Statement or any amendment or supplement to any
Preliminary Prospectus, the Time of Sale Disclosure Package or the
Prospectus, (C) of the time and date that any post-effective
amendment to the Registration Statement becomes effective, (D) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective
amendment thereto or of any order preventing or suspending its use
or the use of any Preliminary Prospectus, the Time of Sale
Disclosure Package, the Prospectus or any issuer free writing
prospectus, or (E) 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, the Company will use
commercially 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) and 430B,
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), Rule 433 or Rule 462 were received in a timely manner by
the Commission (without reliance on Rule 424(b)(8) or Rule
164(b)).
- 18 -
(iii)
Continued
Compliance with Securities Laws. (A) During the Prospectus
Delivery Period, the Company will comply with all requirements
imposed upon it by the Securities Act, as now and hereafter
amended, and by the Rules and Regulations, as from time to time in
force, and by the Exchange Act so far as necessary to permit the
continuance of sales of or dealings in the Securities as
contemplated by the provisions hereof, the Time of Sale Disclosure
Package and the Prospectus. If during such period any event occurs
as a result of which the Prospectus (or if the Prospectus is not
yet available to prospective purchasers, the Time of Sale
Disclosure Package) would include an untrue statement of a material
fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances then
existing, not misleading, or if during such period it is necessary
or appropriate in the opinion of the Company or its counsel or the
Underwriters or counsel to the Underwriters to amend the
Registration Statement or supplement the Prospectus (or, if the
Prospectus is not yet available to prospective purchasers, the Time
of Sale Disclosure Package) to comply with the Securities Act or to
file under the Exchange Act any document which would be deemed to
be incorporated by reference in the Prospectus (or if the
Prospectus is not yet available to prospective purchasers, the Time
of Sale Disclosure Package) in order to comply with the Securities
Act or the Exchange Act, the Company promptly will (x) notify
you of such untrue statement or omission, (y) amend the
Registration Statement or supplement the Prospectus (or, if the
Prospectus is not yet available to prospective purchasers, the Time
of Sale Disclosure Package) or file such document (at the expense
of the Company) so as to correct such statement or omission or
effect such compliance, and (z) notify you when any amendment to
the Registration Statement is filed or becomes effective or when
any supplement to the Prospectus (or, if the Prospectus is not yet
available to prospective purchasers, the Time of Sale Disclosure
Package) is filed.
(B)
If at any time following issuance of an issuer free writing
prospectus there occurred or occurs an event or development as a
result of which such issuer free writing prospectus conflicted or
would conflict with the information contained in the Registration
Statement, the Preliminary Prospectus or the Prospectus or included
or would include 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
(x) has promptly notified or promptly will notify the
Underwriters of such conflict, untrue statement or omission,
(y) has promptly amended or will promptly amend or supplement,
at its own expense, such issuer free writing prospectus to
eliminate or correct such conflict, untrue statement or omission,
and (z) has notified or promptly will notify you when such
amendment or supplement was or is filed with the Commission where
so required to be filed.
(iv)
Blue
Sky Qualifications. The Company shall take or cause to be
taken all necessary action required by law to qualify the
Securities for sale under the securities laws of such jurisdictions
as you reasonably designate and to continue such qualifications in
effect so long as required for the distribution of the Securities,
except that the Company shall not be required in connection
therewith to qualify as a foreign corporation or to execute a
general consent to service of process in any state.
(v)
Provision of
Documents. The Company will furnish, at its own expense, to
the Underwriters and counsel for the Underwriters copies of the
Registration Statement, and to the Underwriters and any dealer each
Preliminary Prospectus, the Time of Sale Disclosure Package, the
Prospectus, any issuer free writing prospectus, and all amendments
and supplements to such documents, in each case as soon as
available and in such quantities as you may from time to time
reasonably request.
- 19 -
(vi)
Rule
158. The Company will make generally available to its
security holders as soon as practicable, but in no event later than
15 months after the end of the Company’s current fiscal
quarter, an earnings statement (which need not be audited) covering
a 12-month period that shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 of the
Rules and Regulations.
(vii)
Payment and
Reimbursement of Expenses. The Company, whether or not the
transactions contemplated hereunder are consummated or this
Agreement is terminated, will pay or cause to be paid (A) all
expenses (including transfer taxes allocated to the respective
transferees) incurred in connection with the delivery to the
Underwriters of the Securities, (B) all expenses and fees
(including, without limitation, fees and expenses of the
Company’s accountants and counsel) in connection with the
preparation, printing, filing, delivery, and shipping of the
Registration Statement (including the financial statements therein
and all amendments, schedules, and exhibits thereto), the
Securities, each Preliminary Prospectus, the Time of Sale
Disclosure Package, the Prospectus, any issuer free writing
prospectus and any amendment thereof or supplement thereto, and the
printing, delivery, and shipping of this Agreement and other
underwriting documents, including Blue Sky Memoranda (covering the
states and other applicable jurisdictions), (C) all filing fees
incurred in connection with the qualification of the Securities for
offering and sale by the Underwriters or by dealers under the
securities or blue sky laws of the states and other jurisdictions
which you shall reasonably designate, (D) the fees and expenses of
the transfer agent or registrar, (E) the filing fees incident to
any required review and approval by FINRA of the terms of the sale
of the Securities, (F) listing fees, if any, (G) the costs and
expenses of the Company relating to investor presentations or any
“roadshow” undertaken in connection with marketing of
the Securities, (H) all reasonable and documented out-of-pocket
expenses of the Underwriters (including, but not limited to,
reasonable fees and disbursements of the Underwriters’
counsel and the Underwriters’ reasonable travel, database,
printing, postage and telephone expenses) incurred in connection
with the Underwriters’ investigation of the Company,
preparing to market and marketing the Securities, sale of the
Securities or in contemplation of performing their obligations
hereunder, which amount shall not exceed $100,000 in the aggregate,
and (I) all other costs and expenses of the Company incident to the
performance of its obligations hereunder that are not otherwise
specifically provided for herein.
(viii)
Use of
Proceeds. The Company will apply the net proceeds from the
sale of the Securities to be sold by it hereunder for the purposes
set forth in the Time of Sale Disclosure Package and in the
Prospectus.
- 20 -
(ix)
Company Lock
Up. The Company will not, without the prior written consent
of the Representative, from the date of execution of this Agreement
and continuing to and including the date 90 days after the date of
the Prospectus (the “Lock-Up
Period”), (A) offer, pledge, announce the intention to
sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for
Common Stock or (B) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction
described in clause (A) or (B) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise,
except, in each case, for (w) the sale of the Securities as
contemplated by this Agreement, (x) issuances of shares of Common
Stock upon the exercise or conversion of options, warrants or
convertible securities disclosed as outstanding in the Registration
Statement, the Time of Sale Disclosure Package and the Prospectus,
(y) the issuance of employee stock options not exercisable during
the Lock-Up Period pursuant to the Company’s stock option,
stock bonus and other stock plans or arrangements, as in effect on
the date hereof in the ordinary course of business consistent with
past practices and (z) the issuance of shares of Common Stock or
other securities of the Company in connection with the Merger.
Other than in connection with the Merger, the Company agrees not to
accelerate the vesting of any option or warrant or the lapse of any
repurchase right prior to the expiration of the Lock-Up
Period.
(x)
Stockholder
Lock-Ups. The Company has caused to be delivered to you
prior to the date of this Agreement a letter, in the form of
Exhibit A hereto
(the “Lock-Up
Agreement”), from each individual or entity listed on
Schedule IV. The Company will enforce the terms of each Lock-Up
Agreement and issue stop-transfer instructions to the transfer
agent for the Common Stock with respect to any transaction or
contemplated transaction that would constitute a breach of or
default under the applicable Lock-Up Agreement.
(xi)
No
Market Stabilization or Manipulation. The Company has not
taken and will not take, directly or indirectly, any action
designed to or which might reasonably be expected to cause or
result in, or which has constituted, the stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
(xii)
SEC
Reports. During the Prospectus Delivery Period, the Company
will file on a timely basis with the Commission such periodic and
special reports as required by the Rules and
Regulations.
(xiii)
Internal
Controls. During the Prospectus Delivery Period, the Company
and its subsidiaries will maintain such controls and other
procedures, including without limitation those required by Sections
302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the applicable
regulations thereunder, that are designed to ensure that
information required to be disclosed by the Company in the 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
without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is accumulated and
communicated to the Company’s management, including its
principal executive officer and its principal financial officer, or
persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure, to ensure that
material information relating to Company, including its subsidiary,
is made known to them by others within those entities.
- 21 -
(xiv)
▇▇▇▇▇▇▇▇-▇▇▇▇▇.
During the Prospectus Delivery Period, the Company and its
subsidiaries will comply with all applicable provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(xv)
Free
Writing Prospectuses. The Company represents and agrees
that, unless it obtains the prior written consent of the
Representative, it has not made and will not make any offer
relating to the Securities that would constitute an issuer free
writing prospectus or that would otherwise constitute a free
writing prospectus required to be filed with the Commission;
provided that the prior written consent of the Representative shall
be deemed to have been given in respect of the free writing
prospectuses included in Schedule II. Any such free writing
prospectus consented to by the Representative is hereinafter
referred to as a “Permitted Free
Writing Prospectus.” The Company represents that it
has treated or agrees that it will treat each Permitted Free
Writing Prospectus as an issuer free writing prospectus and has
complied and will comply with the requirements of Rule 164 and Rule
433 applicable to any Permitted Free Writing
Prospectus.
5.
Conditions of
Underwriters’ Obligations. The obligations of the
several Underwriters hereunder are subject to the accuracy, as of
the date hereof and at each of the First Closing Date and the
Second Closing Date (as if made at such Closing Date), of and
compliance with all representations, warranties and agreements of
the Company contained herein, to the performance by the Company of
its obligations hereunder and to the following additional
conditions:
(a) Required
Filings; Absence of Certain Commission Actions. 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)); the Registration Statement shall remain effective; no stop
order suspending the effectiveness of the Registration Statement or
any part thereof, any Rule 462(b) Registration Statement, or any
amendment thereof, nor suspending or preventing the use of the Time
of Sale Disclosure Package, the Prospectus or any issuer free
writing prospectus shall have been issued; no proceedings for the
issuance of such an order shall have been initiated or threatened;
any request of the Commission for additional information (to be
included in the Registration Statement, the Time of Sale Disclosure
Package, the Prospectus, any issuer free writing prospectus or
otherwise) shall have been complied with to your
satisfaction.
(b) Continued
Compliance with Securities Laws. No Underwriter shall have
advised the Company that (i) the Registration Statement or any
amendment thereof or supplement thereto contains an untrue
statement of a material fact which, in your opinion, is material or
omits to state a material fact which, in your opinion, is required
to be stated therein or necessary to make the statements therein
not misleading, or (ii) the Time of Sale Disclosure Package or the
Prospectus, or any amendment thereof or supplement thereto, or any
issuer free writing prospectus contains an untrue statement of fact
which, in your opinion, is material, or omits to state a fact
which, in your opinion, is material and is required to be stated
therein, or necessary to make the statements therein, in light of
the circumstances under which they are made, not
misleading.
- 22 -
(c) Absence
of Certain Events. Except as contemplated in the Time of
Sale Disclosure Package and in the Prospectus, or otherwise in
connection with the Merger, subsequent to the respective dates as
of which information is given in the Time of Sale Disclosure
Package, neither the Company nor any of its subsidiaries shall have
incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions, or declared
or paid any dividends or made any distribution of any kind with
respect to its capital stock; and there shall not have been any
change in the capital stock (other than a change in the number of
outstanding shares of Common Stock due to the issuance of shares
upon the exercise of outstanding options or warrants or conversion
of convertible securities), or any material change in the
short-term or long-term debt of the Company (other than as a result
of the conversion of convertible securities), or any issuance of
options, warrants, convertible securities or other rights to
purchase the capital stock of the Company or any of its
subsidiaries, or any Material Adverse Change or any development
involving a prospective Material Adverse Change (whether or not
arising in the ordinary course of business), or any loss by strike,
fire, flood, earthquake, accident or other calamity, whether or not
covered by insurance, incurred by the Company or any subsidiary,
the effect of which, in any such case described above, in your
judgment, makes it impractical or inadvisable to offer or deliver
the Securities on the terms and in the manner contemplated in the
Time of Sale Disclosure Package and in the Prospectus.
(d) Opinion
of Company Counsel. On each Closing Date, there shall have
been furnished to you, as Representative of the several
Underwriters, the opinion and negative assurance statement, dated
as of the applicable Closing Date, of ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP,
counsel for the Company, addressed to you in form and substance
reasonably satisfactory to you; provided, that a negative assurance
for regulatory matters relating to Birch may be provided by ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, regulatory counsel to Birch, and the
negative assurance statement provided by ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇
LLP may omit such Birch regulatory matters to the extent such
regulatory matters are addressed by ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP’s negative assurance statement.
(e) Negative
Assurance Statement of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP. On
each Closing Date, there shall have been furnished to you, as
Representative of the several Underwriters, the negative assurance
statement, dated as of the applicable Closing Date, of ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, regulatory counsel for
Birch.
(f)
Opinion of
Underwriters’ Counsel. On each Closing Date, there
shall have been furnished to you, as Representative of the several
Underwriters, such opinion or opinions and negative assurance
statement from Faegre ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, counsel for the several
Underwriters, dated such Closing Date and addressed to you, with
respect to such matters as you reasonably may request, and such
counsel shall have received such papers and information as they
request to enable them to pass upon such matters.
(g) Comfort
Letter of EisnerAmper LLP. On the date hereof, on the
effective date of any post-effective amendment to the Registration
Statement filed after the date hereof and on each Closing Date,
you, as Representative of the several Underwriters, shall have
received an accountant’s “comfort” letter from
EisnerAmper LLP, dated such date and addressed to you, in form and
substance reasonably satisfactory to you.
- 23 -
(h)
Comfort
Letter of McNair, McLemore, ▇▇▇▇▇▇▇▇▇▇▇▇ & Co.,
LLC. On the date hereof, on
the effective date of any post-effective amendment to the
Registration Statement filed after the date hereof and on each
Closing Date, you, as Representative of the several Underwriters,
shall have received an accountant’s “comfort”
letter from McNair, McLemore, ▇▇▇▇▇▇▇▇▇▇▇▇ & Co., LLC, dated
such date and addressed to you, in form and substance reasonably
satisfactory to you.
(i) Officers’
Certificate. On each Closing Date, there shall have been
furnished to you, as Representative of the several Underwriters, a
certificate, dated such Closing Date and addressed to you, signed
by the President and Chief Operating Officer and by the Executive
Vice President and General Counsel of the Company, to the effect
that:
(i) The
representations and warranties of the Company in this Agreement are
true and correct as if made at and as of such Closing Date, and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to
such Closing Date;
(ii) No
stop order or other order suspending the effectiveness of the
Registration Statement or any part thereof or any amendment thereof
or the qualification of the Securities for offering or sale nor
suspending or preventing the use of the Time of Sale Disclosure
Package, the Prospectus or any issuer free writing prospectus, has
been issued, and no proceeding for that purpose has been instituted
or, to the best of their knowledge, is contemplated by the
Commission or any state or regulatory body; and
(iii) Affirms
the accuracy of the matters set forth in subsection (c) of this
Section 5.
(j)
Lock-Up
Agreement. The Representative
shall have received all of the Lock-Up Agreements referenced in
Section 4 and the Lock-Up Agreements shall remain in full force and
effect.
(k)
FINRA
No Objections. FINRA shall have raised no objection to the
fairness and reasonableness of the underwriting terms and
arrangements.
(l)
Other
Documents. The Company shall have furnished to you, as
Representative of the several Underwriters, and counsel for the
Underwriters such additional documents, certificates and evidence
as you or they may have reasonably requested.
(m)
Exchange
Listing. The Securities to be delivered on such Closing Date
have been approved for listing on The Nasdaq Capital Market,
subject to official notice of issuance.
(n)
Company CFO
Certificate. On the date hereof and on each Closing Date,
the Company shall have furnished to you, as Representative of the
several Underwriters, a certificate, dated as of such date, signed
on behalf of the Company by its chief financial officer, regarding
certain financial information relating to the Company in or
incorporated by reference in the Preliminary Prospectus and the
Prospectus, respectively, in form and substance reasonably
satisfactory to you.
- 24 -
(o)
Birch CFO
Certificate. On the date hereof and on each Closing Date,
Birch shall have furnished to you, as Representative of the several
Underwriters, a certificate, dated as of such date, signed on
behalf of Birch by its chief financial officer, regarding certain
financial information relating to Birch in or incorporated by
reference in the Preliminary Prospectus and the Prospectus,
respectively, in form and substance reasonably satisfactory to
you.
All
such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and counsel for the
Underwriters.
6. Indemnification
and Contribution.
(a) Indemnification
by the Company. The Company agrees to indemnify and hold
harmless each Underwriter, its affiliates, directors and officers
and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise (including in settlement of any
litigation if such settlement is effected with the written consent
of the Company), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) (i) arise out of or are
based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including
the 430B Information and any other information deemed to be a part
of the Registration Statement at the time of effectiveness and at
any subsequent time pursuant to the Rules and Regulations, if
applicable, any Preliminary Prospectus, the Time of Sale Disclosure
Package, the Prospectus, or any amendment or supplement thereto,
any issuer free writing prospectus, or any issuer information that
the Company has filed or is required to file pursuant to Rule
433(d) of the Rules and Regulations, 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, (ii) or arise out of or are
based upon any rights for or relating to the registration of any
shares of Common Stock or other securities of the Company as a
result of the filing of the Registration Statement or the offering
or sale of the Securities as contemplated by this Underwriting
Agreement, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by it in connection with
investigating or defending against such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the Company
will not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with
written information furnished to the Company by you, or by any
Underwriter through you, specifically for use in the preparation
thereof; it being understood and agreed that the only information
furnished by an Underwriter consists of the information described
as such in Section 6(e).
(b) Indemnification
by the Underwriters. Each Underwriter will, severally and
not jointly, indemnify and hold harmless the Company, its
affiliates, directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the
Act and Section 20 of the Exchange Act, from and against any
losses, claims, damages or liabilities, joint or several, to which
the Company may become subject, under the Act or otherwise
(including in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter), insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, including the 430B Information and any
other information deemed to be a part of the Registration Statement
at the time of effectiveness and at any subsequent time pursuant to
the Rules and Regulations, if applicable, any Preliminary
Prospectus, the Time of Sale Disclosure Package, the Prospectus, or
any amendment or supplement thereto, or any issuer free writing
prospectus, or any issuer information that the Company has filed or
is required to file pursuant to Rule 433(d) of the Rules and
Regulations, 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 reliance upon and in conformity
with written information furnished to the Company by you, or by
such Underwriter through you, specifically for use in the
preparation thereof (it being understood and agreed that the only
information furnished by an Underwriter consists of the information
described as such in Section 6(e)), and will reimburse the Company
for any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending against any such
loss, claim, damage, liability or action as such expenses are
incurred.
- 25 -
(c) Notice
and Procedures. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of notice of the
commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify
the indemnifying party shall not relieve the indemnifying party
from any liability that it may have to any indemnified party except
to the extent such indemnifying party has been materially
prejudiced by such failure (through the forfeiture of substantive
rights or defenses). In case any such action shall be brought
against any indemnified party, and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to
such indemnified party of the indemnifying party’s election
so to assume the defense thereof, the indemnifying party shall not
be liable to such indemnified party under such subsection for any
legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that if, in the reasonable
judgment of the Representative (upon written advice received from
its outside counsel), it is advisable for the Underwriters to be
represented by separate counsel, the Representative shall have the
right to employ a single counsel (in addition to local counsel) to
represent the Representative and all Underwriters who may be
subject to liability arising from any claim in respect of which
indemnity may be sought by the Underwriters under subsection (a) of
this Section 6, in which event the reasonable fees and expenses of
such separate counsel shall be borne by the indemnifying party or
parties and reimbursed to the Underwriters as incurred. An
indemnifying party shall not be obligated under any settlement
agreement, consent to judgment or other compromise relating to any
action under this Section 6 to which it has not agreed in writing.
In addition, no indemnifying party shall, without the prior written
consent of the indemnified party (which consent shall not be
unreasonably withheld or delayed), effect any settlement of any
pending or threatened proceeding unless such settlement includes an
unconditional release of such indemnified party for all liability
on claims that are the subject matter of such proceeding and does
not include a statement as to, or an admission of, fault,
culpability or a failure to act by or on behalf of an indemnified
party. Notwithstanding the foregoing, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel pursuant to this
Section 6(c), such indemnifying party agrees that it shall be
liable for any settlement effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such
settlement.
(d) Contribution;
Limitations on Liability; Non-Exclusive Remedy. If the
indemnification provided for in this Section 6 is unavailable
or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified
party as a result of the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above, (i) in such
proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the
other from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear
to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the Company or the Underwriters and the parties’ relevant
intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were to be
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the first sentence of this
subsection (d). The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending
against any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total underwriting
discounts and commissions received by such Underwriter with respect
to the Securities purchased by it hereunder exceeds the amount of
any damages that such Underwriter has otherwise been required to
pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The
Underwriters’ obligations in this subsection (d) to
contribute are several in proportion to their respective
underwriting obligations and not joint. The remedies provided for
in this Section 6 are not exclusive and shall not limit any rights
or remedies that might otherwise be available to any indemnified
party at law or in equity.
- 26 -
(e) Information
Provided by the Underwriters. The Underwriters severally
confirm and the Company acknowledges that the statements with
respect to the public offering of the Securities by the
Underwriters set forth in the second paragraph under the caption
“Underwriting” in the Time of Sale Disclosure Package
and in the Prospectus are correct and constitute the only
information concerning such Underwriter furnished in writing to the
Company by or on behalf of the Underwriters specifically for
inclusion in the Registration Statement, any Preliminary
Prospectus, the Time of Sale Disclosure Package, the Prospectus or
any issuer free writing prospectus.
7.
Representations
and Agreements to Survive Delivery. All representations, warranties, and agreements
of the Company and the several Underwriters herein or in
certificates delivered pursuant hereto, including but not limited
to the agreement of the Company and the several Underwriters
contained in Section 6 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on
behalf of any Underwriter or any controlling person thereof, or the
Company or any of its officers, directors, or controlling persons,
and shall survive delivery of, and payment for, the Securities to
and by the Underwriters hereunder and any termination of this
Agreement.
8.
Termination of
this Agreement.
(a) Right
to Terminate. You, as Representative of the several
Underwriters, 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 First Closing Date, and the option referred to
in Section 3(b), if exercised, may be cancelled at any time
prior to the Second Closing Date, if (i) the Company shall
have failed, refused or been unable, at or prior to such Closing
Date, to perform any agreement on its part to be performed
hereunder, (ii) any condition of the Underwriters’
obligations hereunder is not fulfilled, (iii) trading in the
Company’s Common Stock shall have been suspended by the
Commission or The Nasdaq Capital Market or trading in
securities generally on the NYSE MKT, Nasdaq Stock Market or New
York Stock Exchange shall have been suspended, (iv) minimum or
maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required, on the NYSE
MKT, NASDAQ Stock Market or New York Stock Exchange, by such
Exchange or by order of the Commission or any other Governmental
Authority having jurisdiction, (v) a banking moratorium shall
have been declared by federal or New York state authorities or a
material disruption in commercial banking or securities settlement
or clearance services in the United States, or (vi) 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 material adverse 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 that, in your judgment,
is material and adverse and makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the
Securities.
- 27 -
(b) Notice
of Termination. If you elect to terminate this Agreement as
provided in this Section, the Company shall be notified promptly by
you by telephone, confirmed by letter.
(c) Effect
of Termination. No party shall be relieved of any liability
under this Agreement arising from any breach of its obligations
hereunder occurring prior to termination of this Agreement as a
result of the termination of this Agreement.
9.
Notices.
Except as otherwise provided herein, all communications hereunder
shall be in writing and, if to the Underwriters, shall be mailed
via overnight delivery service or hand delivered via courier to the
Representative, c/o ▇▇▇▇▇-▇▇▇▇▇▇ Capital Group LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General
Counsel; and if to the Company, shall be mailed via overnight
delivery service or hand delivered to it at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: General Counsel;
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 other parties to
this Agreement written notice of a new address for such
purpose.
10.
Persons
Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their
respective successors and assigns and the controlling persons,
officers and directors referred to in Section 6. Nothing in this
Agreement is intended or shall be construed to give to any other
person, firm or corporation any legal or equitable remedy or claim
under or in respect of this Agreement or any provision herein
contained. The term “successors and assigns” as herein
used shall not include any purchaser, as such purchaser, of any of
the Securities from any of the several Underwriters.
11.
Absence of
Fiduciary Relationship. The Company acknowledges and agrees
that: (a) the Underwriters have been retained solely to act as
underwriters in connection with the sale of the Securities and that
no fiduciary, advisory or agency relationship between the Company
and the Underwriters has been created in respect of any of the
transactions contemplated by this Agreement, irrespective of
whether the Underwriters have advised or are advising the Company
on other matters; (b) the price and other terms of the Securities
set forth in this Agreement were established by the Company
following discussions and arms-length negotiations with the
Underwriters and the Company is capable of evaluating and
understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated by this Agreement; (c)
it has been advised that the Underwriters and their affiliates are
engaged in a broad range of transactions which may involve
interests that differ from those of the Company and that the
Underwriters have no obligation to disclose such interest and
transactions to the Company by virtue of any fiduciary, advisory or
agency relationship; (d) it has been advised that the Underwriters
are acting, in respect of the transactions contemplated by this
Agreement, solely for the benefit of the Underwriters, and not on
behalf of the Company; and (e) it waives to the fullest extent
permitted by law, any claims it may have against the Underwriters
for breach of fiduciary duty or alleged breach of fiduciary duty in
respect of any of the transactions contemplated by this Agreement
and agrees that the Underwriters shall have no liability (whether
direct or indirect) to the Company in respect of such a fiduciary
duty claim on behalf of or in right of the Company, including
stockholders, employees or creditors of the Company.
- 28 -
12.
Governing Law;
Waiver of Jury Trial. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State
of New York without giving effect to any choice or conflict of law
provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of laws of any other
jurisdiction. The Company and each of the Underwriters hereby
irrevocably waive, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions
contemplated hereby.
13.
Counterparts. This
Agreement may be executed and delivered (including by electronic
mail attaching a portable document file (.pdf)) in one or more
counterparts and, if executed in more than one counterpart, the
executed counterparts shall each be deemed to be an original and
all such counterparts shall together constitute one and the same
instrument.
14.
General
Provisions. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written
or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof, including
that certain engagement letter (other than Sections 5, 10, 15 and
16 thereof), dated January 8, 2018, by and between the Company and
the Representative. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition
herein (express or implied) may be waived unless waived in writing
by each party whom the condition is meant to benefit. The Section
headings herein are for the convenience of the parties only and
shall not affect the construction or interpretation of this
Agreement. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes
(and only such minor changes) as are necessary to make it valid and
enforceable.
[Signature
Page Follows]
- 29 -
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 several Underwriters in accordance with
its terms.
Very
truly yours,
Fusion Telecommunications International, Inc.
By:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
Name:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
Its:
President and Chief Operating Officer
Confirmed
as of the date first
above
mentioned, on behalf of
itself
and the several Underwriters
named
in Schedule I hereto.
▇▇▇▇▇-▇▇▇▇▇▇ Capital Group LLC
By:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Name:
▇▇▇▇ ▇▇▇▇▇▇▇▇
Its:
Managing Partner
SCHEDULE I
Underwriters
|
Underwriter
|
Number of Firm
Shares(1)
|
|
|
|
|
▇▇▇▇▇-▇▇▇▇▇▇
Capital Group LLC
|
6,750,000
|
|
|
|
|
▇. ▇▇▇▇▇ FBR,
Inc.
|
4,500,000
|
|
|
|
|
Total
|
11,250,000
|
(1) The
Underwriters may purchase up to an additional 1,687,500 Option
Shares, to the extent the option described in Section 3(b) of the
Agreement is exercised, in the proportions and in the manner
described in the Agreement.
SCHEDULE II
Certain Permitted Free Writing Prospectuses
None
SCHEDULE III
Pricing Information
Firm
Shares: 11,250,000 shares
Option
Shares: 1,687,500 shares
Price
to the public: $3.20 per share
Price
to the Underwriters: $2.992 per share
SCHEDULE IV
List of Individuals and Entities Executing Lock-Up
Agreements
▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇. ▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇
▇. Del ▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇
▇▇▇▇ ▇.
▇’▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
EXHIBIT A
Form of Common Stock Lock-Up Agreement
Ladies
and Gentlemen:
As an
inducement to ▇▇▇▇▇-▇▇▇▇▇▇ Capital Group LLC to execute an
underwriting agreement (the “Underwriting
Agreement”) in
the capacity as representative for the several underwriters named
in Schedule I thereto (the “Representative”)
providing for a public offering (the “Offering”) of common stock, par value
$0.01 per share (the “Common
Stock”), or
other securities, of Fusion Telecommunications International, Inc.,
a Delaware corporation, and any successor (by merger or otherwise)
thereto (the “Company”), the undersigned hereby agrees
that without, in each case, the prior written consent of the
Representative during the period specified in the second succeeding
paragraph (the “Lock-Up
Period”), the
undersigned will not: (1) offer, pledge, announce the intention to
sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, make any short sale or
otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into,
exercisable or exchangeable for or that represent the right to
receive Common Stock (including without limitation, Common Stock
which may be deemed to be beneficially owned by the undersigned in
accordance with the rules and regulations of the U.S. Securities
and Exchange Commission (the “SEC”) and
securities which may be issued upon exercise of a stock option or
warrant) whether now owned or hereafter acquired (the “Undersigned’s
Securities”);
(2) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences of ownership of the
Undersigned’s Securities, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise; (3)
make any demand for or exercise any right with respect to, the
registration of any Common Stock or any security convertible into
or exercisable or exchangeable for Common Stock; or (4) publicly
disclose the intention to do any of the foregoing.
The
undersigned agrees that the foregoing restrictions preclude the
undersigned from engaging in any hedging or other transaction which
is designed to or which reasonably could be expected to lead to or
result in a sale or disposition of the Undersigned’s
Securities even if such securities would be disposed of by someone
other than the undersigned. Such prohibited hedging or other
transactions would include without limitation any short sale or any
purchase, sale or grant of any right (including without limitation
any put or call option) with respect to any of the
Undersigned’s Securities or with respect to any security that
includes, relates to or derives any significant part of its value
from such securities.
The
Lock-Up Period will commence on the date of this Lock-Up Agreement
and continue and include the date ninety (90) days after the date
of the final prospectus supplement used to sell the Common Stock
(or other securities) in the Offering pursuant to the Underwriting
Agreement.
Notwithstanding the
foregoing, the undersigned may transfer the Undersigned’s
Securities (i) as a bona
fide gift or gifts, (ii) to any trust for the direct or
indirect benefit of the undersigned or the immediate family of the
undersigned, (iii) if the undersigned is a corporation,
partnership, limited liability company, trust or other business
entity (1) to another corporation, partnership, limited liability
company, trust or other business entity that is a direct or
indirect affiliate (as defined in Rule 405 promulgated under the
Securities Act of 1933, as amended) of the undersigned or (2) as
distributions of shares of Common Stock or any security convertible
into or exercisable for Common Stock to limited partners, limited
liability company members or stockholders of the undersigned, (iv)
if the undersigned is a trust, transfers to the beneficiary of such
trust, (v) by testate succession or intestate succession or (vi)
pursuant to the Underwriting Agreement; provided, in the case of clauses (i)
through (v), that (x) such transfer shall not involve a disposition
for value, (y) the transferee agrees in writing with the
Representative to be bound by the terms of this Lock-Up Agreement
and (z) no filing by any party under Section 16(a) of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), shall
be required or shall be made voluntarily in connection with such
transfer. For purposes of this Lock-Up Agreement, “immediate
family” shall mean any relationship by blood, marriage or
adoption, nor more remote than first cousin.
In
addition, the foregoing restrictions shall not apply to
(i) the exercise of stock options granted pursuant to the
Company’s equity incentive plans or the conversion of
preferred stock into common stock; provided that such restrictions shall
apply to any of the Undersigned’s Securities issued upon such
exercise or conversion, or (ii) the establishment of any
contract, instruction or plan (a “Plan”) that satisfies all of the
requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act;
provided that no sales of
the Undersigned’s Securities shall be made pursuant to such a
Plan prior to the expiration of the Lock-Up Period, and such a Plan
may only be established if no public announcement of the
establishment or existence thereof and no filing with the SEC or
other regulatory authority in respect thereof or transactions
thereunder or contemplated thereby, by the undersigned, the Company
or any other person, shall be required, and no such announcement or
filing is made voluntarily by the undersigned, the Company or any
other person, prior to the expiration of the Lock-Up
Period.
In
furtherance of the foregoing, the Company and its transfer agent
and registrar are hereby authorized to decline to make any transfer
of shares of Common Stock if such transfer would constitute a
violation or breach of this Lock-Up Agreement.
The
undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Agreement and
that upon request, the undersigned will execute any additional
documents necessary to ensure the validity or enforcement of this
Lock-Up Agreement. All authority herein conferred or agreed to be
conferred and any obligations of the undersigned shall be binding
upon the successors, assigns, heirs or personal representatives of
the undersigned.
The
undersigned understands that the undersigned shall be released from
all obligations under this Lock-Up Agreement if (i) the
Company notifies the Representative that it does not intend to
proceed with the Offering, (ii) the Underwriting Agreement
does not become effective, or if the Underwriting Agreement (other
than the provisions thereof which survive termination) shall
terminate or be terminated prior to payment for and delivery of the
Common Stock (or other securities) to be sold thereunder or
(iii) the Offering is not completed by June 30,
2018.
The
undersigned understands that the Representative is entering into
the Underwriting Agreement and proceeding with the Offering in
reliance upon this Lock-Up Agreement.
This
Lock-Up Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
[The
remainder of this page has intentionally been left
blank]