14,450,868 Shares of Common
Stock
and Warrants to Purchase up to
10,838,151 Shares of Common Stock
CAPSTONE TURBINE CORPORATION
Common Stock (par value $0.001)
PLACEMENT AGENT
AGREEMENT
LAZARD CAPITAL
MARKETS LLC
30 Rockefeller Plaza
New York, New York 10020
1.
Introduction .
Capstone Turbine Corporation, a Delaware corporation (the “
Company ”), proposes to issue and sell to the
purchasers, pursuant to the terms and conditions of this Placement
Agent Agreement (this “ Agreement ”) and the
Subscription Agreements in the form of Exhibit A
attached hereto (the “ Subscription Agreements
”) entered into with the purchasers identified therein (each
a “ Purchaser ” and, collectively, the “
Purchasers ”), up to an aggregate of 14,450,868 units
(the “ Units ”), with each Unit consisting of
(i) one share of common stock (a “ Share ”
and, collectively, the “ Shares ”), $0.001 par
value per share (the “ Common Stock ”) of the
Company and (ii) one warrant to purchase 0.75 a share of
Common Stock (the “ Warrants ”). Units will not
be issued or certificated. The Shares and Warrants are immediately
separable and will be issued separately. The terms and conditions
of the Warrants are set forth in the form of Exhibit B
attached hereto. The Shares issuable upon exercise of the Warrants
are referred to herein as the “ Warrant Shares ”
and, together with the Units, the Shares and the Warrants, are
referred to herein as the “ Securities .” The
Company hereby confirms that Lazard Capital Markets LLC (the
“ Placement Agent ”) acted as the Placement
Agent in accordance with the terms and conditions
hereof.
2.
Agreement to Act as
Placement Agent; Placement of Units . On the basis of
the representations, warranties and agreements of the Company
herein contained, and subject to all the terms and conditions of
this Agreement:
2.1 The Company
has authorized and hereby acknowledges that the Placement Agent has
acted as its exclusive agent to solicit offers for the purchase of
all or part of the Units from the Company in connection with the
proposed offering of the Units (the “ Offering
”). Until the earlier of the termination of this Agreement or
the Closing Date (as defined in Section 4 hereof), the
Company shall not, without the prior written consent of the
Placement Agent, solicit or accept offers to purchase Units
otherwise than through the Placement Agent. The Placement Agent may
utilize the expertise of Lazard Frères & Co. LLC in
connection with its placement agent activities.
2.2 The Company
hereby acknowledges that the Placement Agent, as agent of the
Company, used its reasonable best efforts to solicit offers to
purchase the Units from the Company on the terms and subject to the
conditions set forth in the Prospectus (as defined below). The
Placement Agent shall use commercially reasonable efforts to assist
the Company in obtaining performance by each Purchaser whose offer
to purchase Units was solicited by the Placement Agent and accepted
by the Company, but the Placement Agent shall not, except as
otherwise provided in this Agreement, be obligated to disclose the
identity of any potential purchaser or have any liability to the
Company in the event any such purchase is not consummated for any
reason. Under no circumstances will the Placement Agent be
obligated to underwrite or purchase any Units for its own account
and, in soliciting purchases of Units, the Placement Agent acted
solely as the Company’s agent and not as principal.
Notwithstanding the foregoing and except as otherwise provided in
Section 2.3 , it is understood and agreed that the
Placement Agent (or its affiliates) may, solely at its discretion
and without any obligation to do so, purchase Units from the
Company as principal.
2.3 Subject to the
provisions of this Section 2 , offers for the purchase
of Units were solicited by the Placement Agent as agent for the
Company at such times and in such amounts as the Placement Agent
deemed advisable. The Placement Agent communicated to the Company,
orally or in writing, each reasonable offer to purchase Units
received by it as agent of the Company. The Company shall have the
sole right to accept offers to purchase the Units and may reject
any such offer, in whole or in part. The Placement Agent has the
right, in its discretion reasonably exercised, without notice to
the Company, to reject any offer to purchase Units received by it,
in whole or in part, and any such rejection shall not be deemed a
breach of this Agreement.
2.4 The Units are
being sold to the Purchasers at a price of $0.865 per Unit. The
purchases of the Units by the Purchasers shall be evidenced by the
execution of the Subscription Agreements by each of the Purchasers
and the Company.
2.5 As
compensation for services rendered, on the Closing Date (as defined
in Section 4 hereof), the Company shall pay to the
Placement Agent, by wire transfer of immediately available funds to
an account or accounts designated by the Placement Agent, an
aggregate amount (the “ Placement Fee ”) equal
to seven percent (7.0%) of the gross proceeds received by the
Company from the sale of the Units on such Closing Date. For the
avoidance of doubt, the Placement Agent shall not receive any
compensation with respect to any proceeds from the exercise of any
Warrants.
2.6 No Units which
the Company has agreed to sell pursuant to this Agreement and the
Subscription Agreements shall be deemed to have been purchased and
paid for, or sold by the Company, until such Units shall have been
delivered to the Purchaser thereof against payment by such
Purchaser. If the Company shall default in its obligations to
deliver the Shares and Warrants to a Purchaser with whom it has
entered into a binding Subscription Agreement, the Company shall
indemnify and hold the Placement Agent harmless against any loss,
claim, damage or expense arising from or as a result of such
default by the Company in accordance with the procedures set forth
in Section 8(c) herein.
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3.
Representations and
Warranties of the Company . The Company represents and
warrants to, and agrees with, the Placement Agent and the
Purchasers that:
(a) The Company
has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the “ Securities
Act ”), and published rules and regulations thereunder
(the “ Rules and Regulations ”) adopted by the
Securities and Exchange Commission (the “ Commission
”) a “shelf” Registration Statement (as
hereinafter defined) on Form S-3 (File No. 333-156459), which
became effective as of February 4, 2009 (the “
Effective Date ”), including a base prospectus
relating to the Shares and Warrants (the “ Base
Prospectus ”), and such amendments and supplements
thereto as may have been required to the date of this Agreement.
The term “ Registration Statement ” as used in
this Agreement means the registration statement (including all
exhibits, financial schedules and all documents and information
deemed to be a part of the Registration Statement pursuant to
Rule 430A of the Rules and Regulations), as amended and/or
supplemented to the date of this Agreement, including the Base
Prospectus. The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the
effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus has been issued by the
Commission and no proceedings for that purpose have been instituted
or, to the knowledge of the Company, are threatened by the
Commission. The Company, if required by the Rules and Regulations
of the Commission, will file the Prospectus (as defined below),
with the Commission pursuant to Rule 424(b) of the Rules and
Regulations. The term “ Prospectus ” as used in
this Agreement means the prospectus, in the form in which it is to
be filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations, or, if the prospectus is not to be filed with the
Commission pursuant to Rule 424(b), the prospectus in the form
included as part of the Registration Statement as of the Effective
Date, except that if any revised prospectus or prospectus
supplement shall be provided to the Placement Agent by the Company
for use in connection with the offering and sale of the Units which
differs from the Prospectus (whether or not such revised prospectus
or prospectus supplement is required to be filed by the Company
pursuant to Rule 424(b) of the Rules and Regulations), the term
“ Prospectus ” shall refer to such revised
prospectus or prospectus supplement, as the case may be, from and
after the time it is first provided to the Placement Agent for such
use. Any preliminary prospectus or prospectus subject to completion
included in the Registration Statement or filed with the Commission
pursuant to Rule 424 of the Rules and Regulations is hereafter
called a “ Preliminary Prospectus. ” Any
reference herein to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 which were filed under the Securities
Exchange Act of 1934, as amended (the “ Exchange Act
”), on or before the last to occur of the Effective Date, the
date of the Preliminary Prospectus, or the date of the Prospectus,
and any reference herein to the terms “amend,”
“amendment,” or “supplement” with respect
to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include (i) the
filing of any document under the Exchange Act after the Effective
Date, the date of such Preliminary Prospectus or the date of the
Prospectus, as the case may be, which is incorporated by reference
and (ii) any such document so filed.
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(b) The conditions
to the use of Form S-3 in connection with the offering and sale of
the Securities as contemplated hereby have been satisfied. The
Registration Statement meets, and the offering and sale of the
Securities as contemplated hereby complies with, the requirements
of Rule 415 under the Securities Act (including, without
limitation, Rule 415(a)(4) and (a)(5) of the Rules and
Regulations).
(c) As of the
Applicable Time (as defined below) and as of the Closing Date,
neither (i) any General Use Free Writing Prospectus (as defined
below) issued at or prior to the Applicable Time, and the Pricing
Prospectus (as defined below) and the information included on
Schedule A hereto, all considered together
(collectively, the “ General Disclosure Package
”), (ii) any individual Limited Use Free Writing
Prospectus (as defined below) nor (iii) the bona fide
electronic road show (as defined in Rule 433(h)(5) of the
Rules and Regulations), if any, that has been made available
without restriction to any person, when considered together with
the General Disclosure Package, included or will include, any
untrue statement of a material fact or omitted or as of the Closing
Date will omit, to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however ,
that the Company makes no representations or warranties as to
information contained in or omitted from any Issuer Free Writing
Prospectus, in reliance upon, and in conformity with, written
information furnished to the Company by the Placement Agent
specifically for inclusion therein, which information the parties
hereto agree is limited to the Placement Agent’s Information
(as defined in Section 17 ). As used in this
paragraph (b) and elsewhere in this Agreement:
“
Applicable Time ” means 8:00 A.M., New York
time, on the date of this Agreement.
“
General Use Free Writing Prospectus ” means any
Issuer Free Writing Prospectus that is identified on
Schedule A to this Agreement.
“
Issuer Free Writing Prospectus ” means any
“ issuer free writing prospectus, ” as defined
in Rule 433 of the Rules and Regulations relating to the Units
in the form filed or required to be filed with the Commission or,
if not required to be filed, in the form retained in the
Company’s records pursuant to Rule 433(g) of the Rules and
Regulations.
“
Limited Use Free Writing Prospectuses ” means
any Issuer Free Writing Prospectus that is not a General Use Free
Writing Prospectus.
“
Pricing Prospectus ” means the Preliminary
Prospectus, if any, and the Base Prospectus, each as amended and
supplemented immediately prior to the Applicable Time, including
any document incorporated by reference therein and any prospectus
supplement deemed to be a part thereof.
(d) No order
preventing or suspending the use of any Preliminary Prospectus, any
Issuer Free Writing Prospectus or the Prospectus relating to the
Offering has been issued by the Commission, and no proceeding for
that purpose or pursuant to Section 8A of the Securities Act
has been instituted or, to the knowledge of the Company, threatened
by the Commission, and each Preliminary Prospectus (if any), at the
time of filing
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thereof,
conformed in all material respects to the requirements of the
Securities Act and the Rules and Regulations, and 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; provided, however , that the
Company makes no representations or warranties as to information
contained in or omitted from any Preliminary Prospectus, in
reliance upon, and in conformity with, written information
furnished to the Company by the Placement Agent specifically for
inclusion therein, which information the parties hereto agree is
limited to the Placement Agent’s Information (as defined in
Section 17 ).
(e) At the time
the Registration Statement became effective, at the date of this
Agreement and at the Closing Date, the Registration Statement
conformed and will conform in all material respects to the
requirements of the Securities Act and the Rules and Regulations
and did not and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
the Prospectus, at the time the Prospectus was issued and at the
Closing Date, conformed and will conform in all material respects
to the requirements of the Securities Act and the Rules and
Regulations and did not and will not contain an untrue statement of
a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however ,
that the foregoing representations and warranties in this
paragraph (e) shall not apply to information contained in or
omitted from the Registration Statement or the Prospectus in
reliance upon, and in conformity with, written information
furnished to the Company by the Placement Agent specifically for
inclusion therein, which information the parties hereto agree is
limited to the Placement Agent’s Information (as defined in
Section 17 ).
(f) Each Issuer
Free Writing Prospectus, if any, as of its issue date and at all
subsequent times through the completion of the Offering or until
any earlier date that the Company notified or notifies the
Placement Agent as described in Section 5(e) , did not,
does not and will not include any information that conflicted,
conflicts or will conflict with the information contained in the
Registration Statement, Pricing Prospectus or the Prospectus,
including any document incorporated by reference therein and any
prospectus supplement deemed to be a part thereof that has not been
superseded or modified, or includes an untrue statement of a
material fact or omitted or would omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. The foregoing sentence does not
apply to statements in or omissions from any Issuer Free Writing
Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Placement Agent
specifically for inclusion therein, which information the parties
hereto agree is limited to the Placement Agent’s Information
(as defined in Section 17 ).
(g) The documents
incorporated by reference in the Prospectus, 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 the rules
and regulations of the Commission thereunder and none of
such
5
documents
contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading; and any further documents so
filed and incorporated by reference in the Prospectus, when such
documents become effective or are filed with the Commission, as the
case may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission
thereunder and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not
misleading.
(h) The Company
has not, directly or indirectly, distributed and will not
distribute any offering material in connection with the Offering
other than any Preliminary Prospectus, the Prospectus and other
materials, if any, permitted under the Securities Act and
consistent with Section 5(b) below. The Company is not
an “ineligible issuer” in connection with the offering
pursuant to Rules 164, 405 and 433 under the Securities Act.
The Company will file with the Commission all Issuer Free Writing
Prospectuses (other than a “road show,” as described in
Rule 433(d)(8) of the Rules and Regulations), if any, in the
time and manner required under Rules 163(b)(2) and 433(d) of
the Rules and Regulations.
(i) The Company
and each of its subsidiaries (as defined in Section 15
) have been duly organized and are validly existing as corporations
in good standing (or the foreign equivalent thereof) under the laws
of their respective jurisdictions of organization. The Company and
each of its subsidiaries are duly qualified to do business and are
in good standing as foreign corporations in each jurisdiction in
which their respective ownership or lease of property or the
conduct of their respective businesses requires such qualification
and have all corporate power and authority necessary to own or hold
their respective properties and to conduct the businesses in which
they are engaged, except where the failure to so qualify or have
such power or authority would not (i) have, singularly or in
the aggregate, a material adverse effect on the condition
(financial or otherwise), results of operations, assets, business
or prospects of the Company and its subsidiaries taken as a whole,
or (ii) impair in any material respect the ability of the
Company to perform its obligations under this Agreement or to
consummate any transactions contemplated by this Agreement, the
General Disclosure Package or the Prospectus (any such effect as
described in clauses (i) or (ii), a “ Material
Adverse Effect ”). The Company owns or controls, directly
or indirectly, only the following corporations, partnerships,
limited liability partnerships, limited liability companies,
associations or other entities: Capstone Turbine International,
Inc., a Delaware corporation.
(j) The Company
has the full right, power and authority to enter into this
Agreement and each of the Subscription Agreements, and to perform
and to discharge its obligations hereunder and thereunder; and each
of this Agreement and each of the Subscription Agreements has been
duly authorized, executed and delivered by the Company, and , once
executed by the counterparties thereto, will constitute a valid and
binding obligation of the Company enforceable in accordance with
its terms, except as
6
such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to the enforcement of
creditors’ rights generally, and general equitable principles
relating to the availability of remedies, and except as rights of
indemnity or contribution may be limited by federal or state
securities laws and the public policy underlying such
laws.
(k) The Shares and
the Warrants to be issued and sold by the Company to the Purchasers
hereunder and under the Subscription Agreements have been duly and
validly authorized and, when issued and delivered against payment
therefor as provided herein and in the Subscription Agreements, and
the Warrant Shares, when issued and delivered against payment
therefor as provided in the Warrants, will be duly and validly
issued, fully paid and non-assessable and free of any preemptive or
similar rights and will conform to the description thereof
contained in the General Disclosure Package and the
Prospectus.
(l) The Company
has an authorized capitalization as set forth in the Pricing
Prospectus, and all of the issued and outstanding shares of capital
stock of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable, have been issued in
compliance with federal and state securities laws, and conform to
the description thereof contained in the General Disclosure Package
and the Prospectus. As of April 30, 2009, there were
174,100,629 shares of Common Stock issued and outstanding and no
shares of Preferred Stock, par value $0.001 of the Company issued
and outstanding and 32,455,560 shares of Common Stock were issuable
upon the exercise of all options, warrants and convertible
securities outstanding as of such date. Since such date, the
Company has not issued any securities, other than Common Stock of
the Company issued pursuant to the exercise of stock options
previously outstanding under the Company’s stock option plans
or the issuance of Common Stock pursuant to employee stock purchase
plans. All of the Company’s options, warrants and other
rights to purchase or exchange any securities for shares of the
Company’s capital stock have been duly authorized and validly
issued and were issued in compliance with US federal and state
securities laws. None of the outstanding shares of Common Stock was
issued in violation of any preemptive rights, rights of first
refusal or other similar rights to subscribe for or purchase
securities of the Company, except for such rights as may have been
fully satisfied or waived. There are no authorized or outstanding
shares of capital stock, options, warrants, preemptive rights,
rights of first refusal or other rights to purchase, or equity or
debt securities convertible into or exchangeable or exercisable
for, any capital stock of the Company or any of its subsidiaries
other than those described above or accurately described in the
General Disclosure Package. The description of the Company’s
stock option, stock bonus and other stock plans or arrangements,
and the options or other rights granted thereunder, as described in
the General Disclosure Package and the Prospectus, accurately and
fairly present the information required to be shown with respect to
such plans, arrangements, options and rights. The Rights Agreement
dated as of July 7, 2005 and Amendment No. 1 thereto
dated as of July 3, 2008, each between the Company and Mellon
Investor Services LLC (collectively the “ Rights
Agreement ”) have been duly authorized, executed and
delivered by, and are valid and binding agreements of, the Company,
enforceable in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency,
7
reorganization,
moratorium or similar laws affecting the rights and remedies of
creditors generally and by general principles of equity; one
“ Right ” (as such term is defined in the Rights
Agreement) has been issued in respect of each outstanding share of
Common Stock and is evidenced by the certificate for that share of
Common Stock; one Right will be issued in respect of each share of
Common Stock issued by the Company and will be evidenced by the
certificate for that share of Common Stock; and one Right will be
issued in respect of each Warrant Share issued by the Company and
will be evidenced by the certificate for that Warrant
Share.
(m) All the
outstanding shares of capital stock of each subsidiary of the
Company have been duly authorized and validly issued, are fully
paid and nonassessable and, except to the extent set forth in the
General Disclosure Package or the Prospectus, are owned by the
Company directly or indirectly through one or more wholly-owned
subsidiaries, free and clear of any claim, lien, encumbrance,
security interest, restriction upon voting or transfer or any other
claim of any third party.
(n) The execution,
delivery and performance of this Agreement and the Subscription
Agreements by the Company, the issuance and sale of the Units by
the Company and the consummation of the transactions contemplated
hereby and thereby will not (with or without notice or lapse of
time or both) conflict with or result in a breach or violation of
any of the terms or provisions of, constitute a default or Debt
Repayment Triggering Event (as defined below) under, give rise to
any right of termination or other right or the cancellation or
acceleration of any right or obligation or loss of a benefit under,
or give rise to the creation or imposition of any lien,
encumbrance, security interest, claim or charge upon any property
or assets of the Company or any subsidiary pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, except, to such
extent as, individually or in the aggregate, does not have a
Material Adverse Effect, nor will such actions result in any
violation of the provisions of the charter or by-laws (or analogous
governing instruments, as applicable) of the Company or any of its
subsidiaries or any law, statute, rule, regulation, judgment, order
or decree of any court or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets, except where any
such conflict, breach, violation, default or right could not
reasonably be expected to have a Material Adverse Effect. A
“Debt Repayment Triggering Event” means any event or
condition that gives, or with the giving of notice or lapse of time
would give the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder’s behalf)
the right to require the repurchase, redemption or repayment of all
or a portion of such indebtedness by the Company or any of its
subsidiaries.
(o) Except for the
registration of the Units under the Securities Act and such
consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state or foreign securities laws, the Financial Industry
Regulatory Authority (“ FINRA ”) and the Nasdaq
Global Market in connection with the offering and sale of the Units
by the Company, no consent, approval,
8
authorization
or order of, or filing, qualification or registration with, any
court or governmental agency or body, foreign or domestic, which
has not been made, obtained or taken and is not in full force and
effect, is required for the execution, delivery and performance of
this Agreement and the Subscription Agreements by the Company, the
offer or sale of the Units or the consummation of the transactions
contemplated hereby or thereby.
(p) Deloitte &
Touche LLP, who have certified certain financial statements and
related schedules included or incorporated by reference in the
Registration Statement, the General Disclosure Package and the
Prospectus, and has audited the Company’s internal control
over financial reporting and management’s assessment thereof,
is an independent registered public accounting firm as required by
the Securities Act and the Rules and Regulations and the Public
Company Accounting Oversight Board (United States) (the “
PCAOB ”). Except as pre-approved in accordance with
the requirements set forth in Section 10A of the Exchange Act,
Deloitte & Touche LLP has not been engaged by the Company to
perform any “prohibited activities” (as defined in
Section 10A of the Exchange Act).
(q) The financial
statements, together with the related notes and schedules, included
or incorporated by reference in the General Disclosure Package, the
Prospectus and in the Registration Statement fairly present the
financial position and the results of operations and changes in
financial position of the Company and its consolidated subsidiaries
and other consolidated entities at the respective dates or for the
respective periods therein specified. Such statements and related
notes and schedules have been prepared in accordance with the
generally accepted accounting principles in the United States
(“ GAAP ”) applied on a consistent basis
throughout the periods involved except as may be set forth in the
related notes included or incorporated by reference in the General
Disclosure Package. The financial statements, together with the
related notes and schedules, included or incorporated by reference
in the General Disclosure Package and the Prospectus comply in all
material respects with the Securities Act, the Exchange Act, and
the Rules and Regulations and the rules and regulations under the
Exchange Act. No other financial statements or supporting schedules
or exhibits are required by the Securities Act or the Rules and
Regulations to be described, or included or incorporated by
reference in the Registration Statement, the General Disclosure
Package or the Prospectus. There is no pro forma or as adjusted
financial information which is required to be included in the
Registration Statement, the General Disclosure Package, or and the
Prospectus or a document incorporated by reference therein in
accordance with the Securities Act and the Rules and Regulations
which has not been included or incorporated as so
required.
(r) Neither the
Company nor any of its subsidiaries has sustained, since the date
of the latest audited financial statements included or incorporated
by reference in the General Disclosure Package, any material loss
or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the General
Disclosure Package; and, since such date, there has not been any
change in the capital stock (other than as a result of the issuance
of Common
9
Stock issued
pursuant to the exercise of stock options under the Company’s
stock plans, the issuance of Common Stock under the Company’s
stock plans, and the issuance of Common Stock pursuant to employee
stock purchase plans, in each case, in the ordinary course of
business) or long-term debt of the Company or any of its
subsidiaries, or any Material Adverse Effect, otherwise than as set
forth or contemplated in the General Disclosure Package.
(s) Except as set
forth in the General Disclosure Package, there is no legal or
governmental action, suit, claim or proceeding pending to which the
Company or any of its subsidiaries is a party or of which any
property or assets of the Company or any of its subsidiaries is the
subject which is required to be described in the Registration
Statement, the General Disclosure Package or the Prospectus or a
document incorporated by reference therein and is not described
therein, or which, singularly or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, could
reasonably be expected to have a Material Adverse Effect or prevent
or adversely affect the ability of the Company to perform its
obligations under this Agreement or the consummation of the
transactions contemplated hereby; and to the best of the
Company’s knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others.
(t) Neither the
Company nor any of its subsidiaries is in (i) violation of its
charter or by-laws (or analogous governing instrument, as
applicable), (ii) default in any respect, and no event has
occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of
any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement
or instrument to which it is a party or by which it is bound or to
which any of its property or assets is subject or
(iii) violation in any respect of any statute, law, ordinance,
governmental rule, regulation or court order, decree or judgment to
which it or its property or assets may be subject except, in the
case of clauses (ii) and (iii) of this paragraph (t), for
any violations or defaults which, singularly or in the aggregate,
could not reasonably be expected to have a Material Adverse
Effect.
(u) The Company
and each of its subsidiaries possesses all licenses, certificates,
authorizations and permits issued by, and have made all
declarations and filings with, the appropriate local, state,
federal or foreign regulatory agencies or bodies which are
necessary or desirable for the ownership of their respective
properties or the conduct of their respective businesses as
described in the General Disclosure Package and the Prospectus
(collectively, the “ Governmental Permits ”)
except where any failures to possess or make the same, singularly
or in the aggregate, would not have a Material Adverse Effect. The
Company and its subsidiaries are in material compliance with all
such Governmental Permits; all such Governmental Permits are valid
and in full force and effect, except where the validity or failure
to be in full force and effect could not, singularly or in the
aggregate, reasonably be expected to have a Material Adverse
Effect. All such Governmental Permits are free and clear of any
restriction or condition that are in addition to, or materially
different from those normally applicable to similar licenses,
certificates, authorizations and permits. Neither the Company nor
any subsidiary has received notification of any revocation or
modification (or proceedings related thereto) of
10
any such
Governmental Permit and the Company has no knowledge that any such
Governmental Permit will not be renewed.
(v) Neither the
Company nor any of its subsidiaries is or, after giving effect to
the offering and sale of the Securities, including the issuance,
offering and sale of the Warrant Shares, and the application of the
proceeds thereof as described in the General Disclosure Package and
the Prospectus, will become an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission
thereunder.
(w) The Company is
not and, after giving effect to the offering and sale of the
Securities, will not be a “holding company,” or a
“subsidiary company” of a “holding
company,” or an “affiliate” of a “holding
company” or of a “subsidiary company,” as such
terms are defined in the Public Utility Holding Company Act of
1935, as amended.
(x) Neither the
Company, its subsidiaries nor, to the Company’s knowledge,
any of the Company’s or its subsidiaries’ officers,
directors or affiliates has taken or will take, directly or
indirectly, any action designed or intended to stabilize or
manipulate the price of any security of the Company, or which
caused or resulted in, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of
the price of any security of the Company.
(y) Except as
disclosed in, or incorporated by reference into, the Registration
Statement or the Prospectus, the Company and its subsidiaries owns
or possesses the right to use all patents, trademarks, trademark
registrations, service marks, service mark registrations, trade
names, copyrights, licenses, inventions, software, databases,
know-how, Internet domain names, trade secrets and other unpatented
and/or unpatentable proprietary or confidential information,
systems or procedures, and other intellectual property
(collectively, “ Intellectual Property ”)
necessary to carry on their respective businesses as currently
conducted, and as proposed to be conducted and described in the
General Disclosure Package and the Prospectus, and the Company has
no knowledge of any claim to the contrary or any challenge by any
other person to the rights of the Company and its subsidiaries with
respect to the foregoing except for those that could not reasonably
be expected to have a Material Adverse Effect. The Intellectual
Property licenses described in the General Disclosure Package and
the Prospectus are valid, binding upon, and enforceable by or
against the Company, and, to the Company’s knowledge, the
other parties thereto in accordance to its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors rights generally and subject to general
principles of equity. The Company and each of its subsidiaries has
complied in all material respects with, and are not in breach and
have not received any asserted or threatened claim of breach of,
any Intellectual Property license, and the Company has no knowledge
of any breach or anticipated breach by any other person to any
Intellectual Property license. The Company’s and each of its
subsidiaries’ businesses as now conducted and as proposed to
be conducted does not and will not infringe or conflict with any
patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses or other Intellectual Property of any person. No
claim has been made against the Company
11
or any of its
subsidiaries alleging the infringement by the Company or any of its
subsidiaries of any patent, trademark, service mark, trade name,
copyright, trade secret, license in or other intellectual property
right or franchise right of any person. The Company and each of its
subsidiaries has taken all reasonable steps to protect, maintain
and safeguard its rights in all Intellectual Property, including
the execution of appropriate nondisclosure and confidentiality
agreements. The consummation of the transactions contemplated by
this Agreement will not result in the loss or impairment of or
payment of any additional amounts with respect to, nor require the
consent of any other person in respect of, the Company’s or
any of its subsidiaries’ right to own, use, or hold for use
any of the Intellectual Property as owned, used or held for use in
the conduct of the businesses as currently conducted. Except as
would not cause a Material Adverse Effect, with respect to the use
of the software in the Company’s or any of its
subsidiaries’ businesses as they are currently conducted, the
Company nor any of its subsidiaries has experienced any material
defects in such software including any material error or omission
in the processing of any transactions other than defects which have
been corrected, and to the knowledge of the Company, no such
software contains any device or feature designed to disrupt,
disable, or otherwise impair the functioning of any software or is
subject to the terms of any “open source” or other
similar license that provides for the source code of the software
to be publicly distributed or dedicated to the public. The Company
and each of its subsidiaries has at all times complied in all
material respects with all applicable laws relating to privacy,
data protection, and the collection and use of personal information
collected, used, or held for use by the Company and any of its
subsidiaries in the conduct of the Company’s and its
subsidiaries businesses. No claims have been asserted or, to the
knowledge of the Company, threatened against the Company or any of
its subsidiaries alleging a violation of any person’s privacy
or personal information or data rights and the consummation of the
transactions contemplated hereby will not breach or otherwise cause
any violation of any law related to privacy, data protection, or
the collection and use of personal information collected, used, or
held for use by the Company or any of its subsidiaries in the
conduct of the Company’s or any of its subsidiaries’
businesses. The Company and each of its subsidiaries takes
reasonable measures to ensure that such information is protected
against unauthorized access, use, modification, or other
misuse.
(z) Neither the
Company nor its subsidiaries own any real property. The Company and
each of its subsidiaries have good and marketable title in fee
simple to, or have valid rights to lease or otherwise use, all
items of real or personal property, which are material to the
business of the Company and its subsidiaries taken as a whole, in
each case free and clear of all liens, encumbrances, security
interests, claims and defects that do not, singularly or in the
aggregate, materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of
such property by the Company or any of its subsidiaries; and all of
the leases and subleases material to the business of the Company
and its subsidiaries, considered as one enterprise, and under which
the Company or any of its subsidiaries holds properties described
in the General Disclosure Package and the Prospectus, are in full
force and effect, and neither the Company nor any subsidiary has
received any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any
subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the
12
rights of the
Company or such subsidiary to the continued possession of the
leased or subleased premises under any such lease or
sublease.
(aa) No labor
disturbance by the employees of the Company or any of its
subsidiaries exists or, to the best of the Company’s
knowledge, is threatened or imminent, and the Company does not have
knowledge of any existing or imminent labor disturbance by the
employees of any of its or its subsidiaries’ principal
suppliers, manufacturers, customers or contractors, that could
reasonably be expected, singularly or in the aggregate, to have a
Material Adverse Effect. To the Company’s knowledge, no key
employee or significant group of employees of the Company or any
subsidiary plans to terminate employment with the Company or any
such subsidiary.
(bb) No
“prohibited transaction” (as defined in
Section 406 of the Employee Retirement Income Security Act of
1974, as amended, including the regulations and published
interpretations thereunder (“ ERISA ”), or
Section 4975 of the Internal Revenue Code of 1986, as amended
from time to time (the “ Code ”)) or
“accumulated funding deficiency” (as defined in
Section 302 of ERISA) or any of the events set forth in
Section 4043(b) of ERISA (other than events with respect to which
the thirty (30)-day notice requirement under Section 4043 of
ERISA has been waived) has occurred or could reasonably be expected
to occur with respect to any employee benefit plan of the Company
or any of its subsidiaries which could, singularly or in the
aggregate, have a Material Adverse Effect. Each employee benefit
plan of the Company or any of its subsidiaries is in compliance in
all material respects with applicable law, including ERISA and the
Code. The Company and its subsidiaries have not incurred and could
not reasonably be expected to incur liability under Title IV of
ERISA with respect to the termination of, or withdrawal from, any
pension plan (as defined in ERISA). Each pension plan for which the
Company or any of its subsidiaries would have any liability that is
intended to be qualified under Section 401(a) of the Code is so
qualified, and nothing has occurred, whether by action or by
failure to act, which could, singularly or in the aggregate, cause
the loss of such qualification.
(cc) The Company
and its subsidiaries are in compliance with all foreign, federal,
state and local rules, laws and regulations relating to the use,
treatment, storage and disposal of hazardous or toxic substances or
waste and protection of health and safety or the environment which
are applicable to their businesses (“ Environmental
Laws ”), except where the failure to comply could not,
singularly or in the aggregate, reasonably be expected to have a
Material Adverse Effect. There has been no storage, generation,
transportation, handling, treatment, disposal, discharge, emission,
or other release of any kind of toxic or other wastes or other
hazardous substances by, due to, or caused by the Company or any of
its subsidiaries (or, to the Company’s knowledge, any other
entity for whose acts or omissions the Company or any of its
subsidiaries is or may otherwise be liable) upon any of the
property now or previously owned or leased by the Company or any of
its subsidiaries, or upon any other property, in violation of any
law, statute, ordinance, rule, regulation, order, judgment, decree
or permit or which would, under any law, statute, ordinance, rule
(including rule of common law), regulation, order, judgment, decree
or permit, give rise to any liability, except for any violation or
liability which would not have, singularly or in the aggregate with
all such violations and liabilities, a
13
Material
Adverse Effect; and there has been no disposal, discharge, emission
or other release of any kind onto such property or into the
environment surrounding such property of any toxic or other wastes
or other hazardous substances with respect to which the Company has
knowledge, except for any such disposal, discharge, emission, or
other release of any kind which would not have, singularly or in
the aggregate with all such discharges and other releases, a
Material Adverse Effect. In the ordinary course of business, the
Company and its subsidiaries conduct periodic reviews of the effect
of Environmental Laws on their business and assets, in the course
of which they identify and evaluate associated costs and
liabilities (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties
or compliance with Environmental Laws or Governmental Permits
issued thereunder, any related constraints on operating activities
and any potential liabilities to third parties). On the basis of
such reviews, the Company and its subsidiaries have reasonably
concluded that such associated costs and liabilities could not
reasonably be expected to have, singularly or in the aggregate, a
Material Adverse Effect.
(dd) The Company
and its subsidiaries, each (i) has timely filed all necessary
federal, state, local and foreign tax returns (or have received
such permissible extensions to file), and all such returns were
true, complete and correct in all material respects, (ii) has
paid all federal, state, local and foreign taxes, assessments,
governmental or other charges due and payable to a government
entity in the nature of a tax for which it is liable, including,
without limitation, all sales and use taxes and all taxes which the
Company or any of its subsidiaries is obligated to withhold from
amounts owing to employees, creditors and third parties, and
(iii) does not have any tax deficiency or claims outstanding
or assessed or, to the best of its knowledge, proposed against any
of them, except those, in each of the cases described in clauses
(i), (ii) and (iii) of this paragraph (dd) , that
would not, singularly or in the aggregate, have a Material Adverse
Effect. The Company and its subsidiaries, each has not engaged in
any transaction which is a corporate tax shelter or which could be
characterized as such by the Internal Revenue Service or any other
taxing authority. The accruals and reserves on the books and
records of the Company and its subsidiaries in respect of tax
liabilities for any taxable period not yet finally determined are
adequate to meet any assessments and related liabilities for any
such period, and since March 31, 2008, the Company and its
subsidiaries each has not incurred any liability for taxes other
than in the ordinary course.
(ee) The Company
and each of its subsidiaries carries, or is covered by, insurance
provided by licensed insurers with policies in such amounts and
covering such risks as is adequate for the conduct of their
respective businesses and the value of their respective properties
and as is customary for companies engaged in similar businesses in
similar industries. The Company has no reason to believe that it or
any subsidiary will not be able (i) to renew its existing
insurance coverage as and when such policies expire or (ii) to
obtain comparable coverage from similar institutions as may be
necessary or appropriate to conduct its business as now conducted
and at a cost that would not result in a Material Adverse
Effect.
(ff) The Company
maintains a system of internal control over financial reporting (as
such term is defined in Rule 13a-15 of the rules and
regulations under the
14
Exchange Act)
that complies with the requirements of the Exchange Act and that
has been designed by the Company’s principal executive
officer and principal financial officer, or under their supervision
to provide reasonable assurances that (i) transactions are
executed in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP
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 described in the General Disclosure
Package, since the end of the Company’s most recent audited
fiscal year, there has been (A) no material weakness in the
Company’s internal control over financial reporting (whether
or not remediated) and (B) no change in the Company’s
internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the
Company’s internal control over financial
reporting.
(gg) The Company
has received no written comments from the Commission staff
regarding its periodic or current reports under the Exchange Act
that remain unresolved.
(hh) The minute
books of the Company and each of its subsidiaries that would be a
“significant subsidiary” within the meaning of
Rule 1-02(w) of Regulation S-X under the Exchange Act
(such a significant subsidiary of the Company, a “
Significant Subsidiary ”) have been made available to
the Placement Agent and counsel for the Placement Agent, and such
books (i) contain a complete summary of all meetings and
actions of the board of directors (including each board committee)
and shareholders of the Company (or analogous governing bodies and
in
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