8.0% Convertible Senior Notes due
2014
J.P. Morgan
Securities Inc.
Morgan Keegan & Company, Inc.
As Initial Purchasers
c/o J.P. Morgan Securities Inc.
383 Madison Avenue
New York, New York 10179
Penson Worldwide,
Inc., a Delaware corporation (the “Company”), proposes
to issue and sell to J.P. Morgan Securities Inc. and Morgan Keegan
& Company, Inc. (the “Initial Purchasers”), as
listed in Schedule 1 hereto, $50,000,000 principal amount of
its 8.0% Convertible Senior Notes due 2014 (the “Firm
Securities”). The Firm Securities will be issued pursuant to
an Indenture to be dated as of June 3, 2009 (the
“Indenture”) among the Company and U.S. Bank National
Association, as trustee (the “Trustee”). The Company
also proposes to issue and sell to the Initial Purchasers not more
than an additional $10,000,000 principal amount of its 8.0%
Convertible Senior Notes due 2014 (the “Additional
Securities”) if and to the extent that the Initial Purchaser
shall have determined to exercise the right to purchase such
Additional Securities granted to the Initial Purchasers in
Section 1 hereof. The Firm Securities and the Additional
Securities are hereinafter collectively referred to as the
“Securities.” The Securities will be convertible into
shares (the “Underlying Securities”) of common stock of
the Company, par value $0.01 per share (the “Common
Stock”).
The Securities
will be sold to the Initial Purchasers without being registered
under the Securities Act of 1933, as amended (the “Securities
Act”), in reliance upon an exemption therefrom. The Company
has prepared a preliminary offering memorandum dated May 27,
2009 (the “Preliminary Offering Memorandum”) and will
prepare an offering memorandum dated the date hereof (the
“Offering Memorandum”) setting forth information
concerning the Company and the Securities. Copies of the
Preliminary Offering Memorandum have been, and copies of the
Offering Memorandum will be, delivered by the Company to the
Initial Purchasers pursuant to the terms of this Agreement. The
Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum, the other Time of Sale Information
(as defined below) and the Offering Memorandum in connection with
the offering and resale of the Securities by the
Initial
Purchasers in the manner contemplated by this Agreement.
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum. References
herein to the Preliminary Offering Memorandum, the Time of Sale
Information and the Offering Memorandum shall be deemed to refer to
and include any document incorporated by reference
therein.
At or prior to the
time when sales of the Securities were first made (the “Time
of Sale”), the following information shall have been
prepared: the Preliminary Offering Memorandum, as supplemented and
amended by the written communications listed on Annex A hereto
(collectively, the “Time of Sale
Information”).
The offering and
sale of the Securities being issued hereby and the payment of
transaction costs are referred to herein collectively, as the
“Transactions.”
The Company hereby
confirms its agreement with the several Initial Purchasers
concerning the purchase and resale of the Securities, as
follows:
1.
Purchase and Resale of the Securities .
(a) The
Company agrees to issue and sell the Securities to the several
Initial Purchasers as provided in this Agreement, and each Initial
Purchaser, on the basis of the representations, warranties and
agreements set forth herein and subject to the conditions set forth
herein, agrees, severally and not jointly, to purchase from the
Company the respective principal amount of Firm Securities set
forth opposite such Initial Purchaser’s name in
Schedule 1 hereto at a price equal to 95.25% of the principal
amount thereof (the “Purchase Price”) plus accrued
interest, if any, from June 3, 2009 to the Closing
Date.
On the basis of
the representations and warranties contained in this Agreement, and
subject to its terms and conditions, the Company agrees to sell to
the Initial Purchasers the Additional Securities, and the Initial
Purchasers shall have the right to purchase, in the same proportion
as the Securities are purchased as set forth in Schedule 1, in
whole, or from time to time in part, up to $10,000,000 principal
amount of Additional Securities, solely to cover over-allotments,
at the Purchase Price plus accrued interest, if any, from the
Closing Date (as defined below) to the date of payment and
delivery.
If J.P. Morgan
Securities Inc., on behalf of the Initial Purchasers, exercises
such option, J.P. Morgan Securities Inc. shall so notify the
Company in writing, which notice shall specify the principal amount
of Additional Securities to be purchased by the Initial Purchasers
and the date on which such Additional Securities are to be
purchased. Such date on which Additional Securities are to be
purchased must be within a 12-day period from, and including, the
Closing Date.
The Company will
not be obligated to deliver any of the Securities except upon
payment for all the Securities to be purchased as provided
herein.
(b) The
Company understands that the Initial Purchasers intend to offer the
Securities for resale on the terms set forth in the Time of Sale
Information. Each Initial Purchaser, severally and not jointly,
represents, warrants and agrees that:
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(i) it is a
qualified institutional buyer within the meaning of Rule 144A
under the Securities Act (a “QIB”) and an accredited
investor within the meaning of Rule 501(a) under the Securities
Act;
(ii) it has not
solicited offers for, or offered or sold, and will not solicit
offers for, or offer or sell, the Securities by means of any form
of general solicitation or general advertising within the meaning
of Rule 502(c) of Regulation D under the Securities Act
(“Regulation D”) or in any manner involving a
public offering within the meaning of Section 4(2) of the
Securities Act; and
(iii) it has not
solicited offers for, or offered or sold, and will not solicit
offers for, or offer or sell, the Securities as part of their
initial offering except within the United States to persons whom it
reasonably believes to be QIBs in transactions pursuant to
Rule 144A under the Securities Act
(“Rule 144A”) and in connection with each such
sale, it has taken or will take reasonable steps to ensure that the
purchaser of the Securities is aware that such sale is being made
in reliance on Rule 144A.
(c) Each
Initial Purchaser acknowledges and agrees that the Company and, for
purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Sections 6(f) and 6(g), Morgan & Lewis Bockius LLP
and Cahill Gordon & Reindel LLP, respectively, may rely upon
the accuracy of the representations and warranties of the Initial
Purchasers, and compliance by the Initial Purchasers with their
agreements, contained in paragraph (b) above, and each Initial
Purchaser hereby consents to such reliance.
(d) The
Company acknowledges and agrees that the Initial Purchasers may
offer and sell Securities to or through any affiliate of an Initial
Purchaser and that any such affiliate may offer and sell Securities
purchased by it to or through any Initial Purchaser so long as
(i) such offers and sales are consistent with Section 1(b) and
(ii) the Initial Purchaser remain liable for the actions or
omissions of any such authorized affiliate to the same extent as if
such actions or omissions were performed by the Initial
Purchaser.
(e) The
Company acknowledges and agrees that the Initial Purchasers are
acting solely in the capacity of an arm’s length contractual
counterparty to the Company with respect to the offering of
Securities contemplated hereby (including in connection with
determining the terms of the offering) and not as financial
advisors or fiduciaries to, or agents of, the Company or any other
person. Additionally, no Initial Purchaser is advising the Company
or any other person as to any legal, tax, investment, accounting or
regulatory matters in any jurisdiction. The Company shall consult
with its own advisors concerning such matters and shall be
responsible for making its own independent investigation and
appraisal of the transactions contemplated hereby, and the Initial
Purchasers shall not, either jointly or severally, have any
responsibility or liability to the Company with respect thereto.
Any review by any Initial Purchaser of the Company and the
transactions contemplated hereby or other matters relating to such
transactions will be performed solely for the benefit of such
Initial Purchaser, and shall not be on behalf of the Company or any
other person.
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2.
Payment and Delivery .
(a) Payment
for and delivery of the Firm Securities will be made at the offices
of Cahill Gordon & Reindel llp , 80 Pine Street, New York,
New York 10005 at 10:00 A.M., New York City time, on
June 3, 2009, or at such other time or place on the same or
such other date, not later than the fifth business day thereafter,
as the Initial Purchasers and the Company may agree upon in
writing. The time and date of such payment and delivery is referred
to herein as the “Closing Date”.
Payment for and
delivery of the Additional Securities will be made at the offices
of Cahill Gordon & Reindel LLP at 10:00 A.M., New York
City time, on the date specified in the notice described in
Section 1 or at such other time or place on the same or such
other date, not later than June 15, 2009, as the Initial
Purchasers and the Company may agree upon in writing. The time and
date of such payment and delivery is referred to herein as the
“Optional Closing Date.”
(b) Payment
for the Firm Securities and Additional Securities shall be made by
wire transfer in immediately available funds to the account(s)
specified by the Company to the Initial Purchasers against delivery
to the nominee of The Depository Trust Company (“DTC”),
for the account of the Initial Purchasers, of one or more global
notes representing the Firm Securities and Additional Securities
(collectively, the “Global Note”), with any transfer
taxes payable in connection with the sale of the Securities duly
paid by the Company. The Global Note will be made available for
inspection by the Initial Purchasers not later than 1:00 P.M., New
York City time, on the business day prior to the Closing Date or
the Optional Closing Date, as the case may be .
3.
Representations and Warranties of the Company . The Company
represents and warrants to each Initial Purchaser that:
(a) Preliminary
Offering Memorandum, Time of Sale Information and Offering
Memorandum . The Preliminary Offering Memorandum, as of its
date, did not, the Time of Sale Information, at the Time of Sale,
did not, and at the Closing Date, will not, and the Offering
Memorandum, in the form first used by the Initial Purchasers to
confirm sales of the Securities and as of the Closing Date, will
not, contain any untrue statement of a material fact or 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 that the Company makes no
representation or warranty with respect to any statements or
omissions made in reliance upon and in conformity with information
relating to any Initial Purchaser furnished to the Company in
writing by such Initial Purchaser expressly for use in the
Preliminary Offering Memorandum, the Time of Sale Information or
the Offering Memorandum.
(b) Additional
Written Communications . The Company (including its agents and
representatives, other than the Initial Purchasers in their
capacity as such) has not prepared, made, used, authorized,
approved or referred to and will not prepare, make, use, authorize,
approve or refer to any written communication that constitutes an
offer to sell or solicitation of an offer to buy the Securities
(each such communication by the
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Company or its
agents and representatives (other than a communication referred to
in clauses (i), (ii) and (iii) below) an “Issuer
Written Communication”) other than (i) the Preliminary
Offering Memorandum, (ii) the Offering Memorandum,
(iii) the documents listed on Annex A hereto, including a term
sheet substantially in the form of Annex B hereto, which constitute
part of the Time of Sale Information, and (iv) any electronic
road show or other written communications, in each case used in
accordance with Section 4(c). Each such Issuer Written
Communication, when taken together with the Time of Sale
Information, did not, and at the Closing Date will not, contain any
untrue statement of a material fact or 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 that the Company makes no
representation and warranty with respect to any statements or
omissions made in each such Issuer Written Communication in
reliance upon and in conformity with information relating to any
Initial Purchaser furnished to the Company in writing by such
Initial Purchaser expressly for use in any Issuer Written
Communication.
(c)
Incorporated Documents . The documents incorporated by
reference in each of the Time of Sale Information and the Offering
Memorandum, when filed with the Commission, conformed or will
conform, as the case may be, in all material respects to the
requirements of the Exchange Act and the rules and regulations of
the Commission thereunder.
(d) Financial
Statements . The financial statements, including the related
notes thereto included or incorporated by reference in each of the
Time of Sale Information and the Offering Memorandum, present
fairly in all material respects the consolidated financial position
of the Company and its subsidiaries as of the dates indicated and
the consolidated results of their operations and the changes in
their consolidated cash flows for the periods specified; such
financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent
basis throughout the periods covered thereby; and the other
financial information included or incorporated by reference in each
of the Time of Sale Information and the Offering Memorandum has
been fairly and accurately presented in all material respects and
prepared on a basis consistent with such financial statements and
the books and records of the Company .
(e) No Material
Adverse Change . Except as disclosed in the Time of Sale
Information and the Offering Memorandum, since the date of the most
recent financial statements of the Company included or incorporated
by reference in each of the Time of Sale Information and the
Offering Memorandum (i) there has not been any material change
in the capital stock, increase in long-term debt or any decreases
in consolidated net current assets or stockholders’ equity of
the Company or any of its subsidiaries, or any dividend or
distribution of any kind declared, set aside for payment, paid or
made by the Company on any class of capital stock, or any material
adverse change, or any development involving an anticipated
prospective material adverse change, in or affecting the business,
properties, management, financial position, results of operations
of the Company and its subsidiaries taken as a whole;
(ii) neither the Company nor any of its subsidiaries has
entered into any transaction or agreement that is material to the
q
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Company and its
subsidiaries taken as a whole or incurred any liability or
obligation, direct or contingent, that is material to the Company
and its subsidiaries taken as a whole; and (iii) neither the
Company nor any of its subsidiaries has sustained 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 disturbance or dispute or any action, order or decree of any
court or arbitrator or governmental or regulatory authority, except
in each case as otherwise disclosed, or incorporated by reference,
in the Time of Sale Information and the Offering
Memorandum.
(f)
Organization and Good Standing . The Company and each of its
Significant Subsidiaries (as defined below) have been duly
organized and are validly existing and in good standing under the
laws of their respective jurisdictions of organization, are duly
qualified to do business and are in good standing 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 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
be so qualified, in good standing or have such power or authority
would not, individually or in the aggregate, have a material
adverse effect on the business, properties, management, financial
position or results of operations of the Company and its
subsidiaries taken as a whole or on the performance by the Company
of its obligations under the Securities (a “Material Adverse
Effect”). The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than
the subsidiaries listed on Schedule 2 to this Agreement. The
subsidiaries designated as “significant” in
Schedule 2 to this Agreement include any subsidiary that, on a
consolidated basis with its subsidiaries, accounted for more than
(x) 10% of the Company’s consolidated revenues for the
twelve months ended March 31, 2009 or (y) 10% of the
Company’s consolidated total assets as of March 31, 2009
(the “Significant Subsidiaries”).
(g)
Capitalization . The Company has an authorized
capitalization as set forth in each of the Time of Sale Information
and the Offering Memorandum under the heading
“Capitalization”; such authorized capital stock of the
Company conforms as to legal matters in all material respects to
the description thereof set forth in the Time of Sale Information
and the Offering Memorandum; there are no outstanding options to
purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or
commitments to issue or sell, any shares of Common Stock, any
shares of capital stock of any subsidiary, or any such warrants,
convertible securities or obligations, except as set forth in the
Time of Sale Information and the Offering Memorandum and except for
options granted under, or contracts or commitments pursuant to, the
Company’s previous or currently existing stock option and
other similar officer, director or employee benefit plans described
in the Time of Sale Information and the Offering Memorandum; except
for this Agreement, or stock purchase plans, there are no
contracts, commitments, agreements, arrangements, understandings or
undertakings of any kind to which the Company is a party, or by
which it is bound, granting to any person the right to require
either the Company to file a registration statement under the
Securities Act with respect to any securities of the Company or
requiring the Company to include such securities with the
Securities registered pursuant
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to any
registration statement; the shares of Common Stock outstanding on
the date hereof have been duly authorized and are validly issued,
fully paid and non-assessable; and all the outstanding shares of
capital stock or other equity interests of each subsidiary of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and, except for shares of “joint back
office” preferred stock issued in the ordinary course of
business and except as set forth in the Time of Sale Information
and the Offering Memorandum, are owned directly or indirectly by
the Company free and clear of any lien, charge, encumbrance,
security interest, restriction on voting or transfer or any other
claim of any third party.
(h) Due
Authorization . The Company has the corporate right, power and
authority to execute and deliver this Agreement, the Securities and
the Indenture (collectively, the “Transaction
Documents”) and to perform its obligations hereunder and
thereunder; and all action required to be taken for the due and
proper authorization, execution and delivery of each of the
Transaction Documents and the consummation of the transactions
contemplated thereby has been duly and validly taken.
(i) The
Indenture . The Indenture has been duly authorized by the
Company and, when duly executed and delivered in accordance with
its terms, will constitute a valid and legally binding agreement of
the Company enforceable against the Company in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally or by equitable principles
relating to enforceability (collectively, the “Enforceability
Exceptions”); and on the Closing Date, the Indenture will
conform in all material respects to the requirements of the Trust
Indenture Act of 1939, as amended (the “Trust Indenture
Act”), and the rules and regulations of the Commission
applicable to an indenture that is qualified thereunder.
(j) The
Securities . On the Closing Date, the Securities will have been
duly authorized by the Company and, when duly executed,
authenticated, issued and delivered as provided in the Indenture
and paid for as provided herein, will be duly and validly issued
and outstanding and will constitute valid and legally binding
obligations of the Company enforceable against the Company in
accordance with their terms, subject to the Enforceability
Exceptions, and will be entitled to the benefits of the
Indenture.
(k) Underlying
Securities . Upon issuance and delivery of the Securities in
accordance with the Agreement and the Indenture, the Securities
will be convertible at the option of the holder thereof into of the
Underlying Securities, to the extent set forth in the terms of the
Securities; the Underlying Securities reserved for issuance upon
conversion of the Securities have been duly authorized and reserved
and, when and if issued upon conversion of the Securities in
accordance with the terms of the Securities, will be validly
issued, fully paid and non-assessable, and the issuance of any
Underlying Securities will not be subject to any preemptive or
similar rights.
(l) Purchase
Agreement . This Agreement has been duly authorized, executed
and delivered by the Company; and, when duly executed and delivered
in accordance with its terms by each of the other parties thereto,
will constitute a valid and legally
-7-
binding
agreement of the Company enforceable against the Company in
accordance with its terms, subject to the Enforceability
Exceptions, and except that rights to indemnity and contribution
thereunder may be limited by applicable law and public
policy.
(m)
Descriptions of the Transaction Documents . Each Transaction
Document conforms in all material respects to the description
thereof contained in each of the Time of Sale Information and the
Offering Memorandum.
(n) No
Violation or Default . Neither the Company nor any of its
Significant Subsidiaries is (i) in violation of its charter or
by-laws or similar organizational documents; (ii) in default,
and no event has occurred that, with notice or lapse of time or
both, would constitute such a default by the Company or any of its
Significant Subsidiaries, in the due performance or observance of
any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its Significant
Subsidiaries is a party or by which the Company or any of its
Significant Subsidiaries is bound or to which any of the property
or assets of the Company or any of its Significant Subsidiaries is
subject; or (iii) in violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory authority, except, in the case of
clauses (ii) and (iii) above, for any such default or
violation that would not, individually or in the aggregate, have a
Material Adverse Effect.
(o) No
Conflicts . The execution, delivery and performance by the
Company of each of the Transaction Documents to which it is a
party, the issuance and sale of the Securities (including the
issuance of any Underlying Securities upon conversion thereof) and
compliance by the Company with the terms thereof and the
consummation of the transactions contemplated by the Transaction
Documents will not (i) 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 Significant Subsidiaries pursuant to, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its Significant
Subsidiaries is a party or by which the Company or any of its
Significant Subsidiaries is bound or to which any of the property
or assets of the Company or any of its Significant Subsidiaries is
subject, (ii) result in any violation of the provisions of the
charter or by-laws or similar organizational documents of the
Company or any of its Significant Subsidiaries or (iii) result
in the violation of any law or statute or any judgment, order, rule
or regulation of any court or arbitrator or governmental or
regulatory authority, except, in the case of clauses (i) and
(iii) above, for any such conflict, breach, violation or
default that would not, individually or in the aggregate, have a
Material Adverse Effect.
(p) No Consents
Required . No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or
governmental or regulatory authority is required for the execution,
delivery and performance by the Company of each of the Transaction
Documents, the issuance and sale of the Securities (including the
issuance of any Underlying Securities upon conversion thereof ) and
compliance by the Company with the terms thereof and the
consummation of the
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transactions
contemplated by the Transaction Documents, except for such
consents, approvals, authorizations, orders and registrations or
qualifications as may be required (i) under applicable state
securities laws in connection with the purchase and resale of the
Securities by the Initial Purchasers and (ii) where the
failure to obtain any such consent, approval, authorization, order,
registration or qualification would not reasonably be expected to
have a Material Adverse Effect or impair the issuance and sale of
the Securities as contemplated by the Time of Sale Information and
the Offering Memorandum.
(q) Legal
Proceedings . Except as described in each of the Time of Sale
Information and the Offering Memorandum, there are no legal,
governmental or regulatory investigations, actions, suits or
proceedings pending to which the Company or any of it subsidiaries
is or may be a party or to which any property of the Company or any
of its subsidiaries is or may be the subject that, individually or
in the aggregate, if determined adversely to the Company or any of
its subsidiaries, would reasonably be expected to have a Material
Adverse Effect; and, to the knowledge of the Company, no such
investigations, actions, suits or proceedings are threatened or,
contemplated by any governmental or regulatory authority or by
others.
(r) Independent
Accountants . BDO Seidman, LLP, who has certified certain
financial statements of the Company and its subsidiaries, is an
independent registered public accounting firm with respect to the
Company and its subsidiaries within the applicable rules and
regulations adopted by the Commission and the Public Company
Accounting Oversight Board (United States) and as required by the
Securities Act.
(s) Title to
Real and Personal Property . The Company and its Significant
Subsidiaries have good and marketable title in fee simple to, or
have valid rights to lease or otherwise use, all items of real and
personal property that are material to the business of the Company
and its Significant Subsidiaries, taken together, in each case free
and clear of all liens, encumbrances, claims and defects and
imperfections of title except those that (i) do not materially
interfere with the use made and proposed to be made of such
property by the Company and its Significant Subsidiaries or
(ii) would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(t) Title to
Intellectual Property . The Company and its Significant
Subsidiaries own or possess adequate rights to use all patents,
patent applications, trademarks, service marks, trade names,
trademark registrations, service mark registrations, copyrights,
licenses and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information,
systems or procedures) that are material to the conduct of the
business of the Company and its Significant Subsidiaries, taken
together; and the conduct of their respective businesses will not
conflict in any material respect with any such rights of others,
and the Company and its Significant Subsidiaries have not received
any notice of any claim of infringement of or conflict with any
such rights of others, except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect.
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(u) No
Undisclosed Relationships . No relationship, direct or
indirect, exists between or among the Company or any of its
subsidiaries, on the one hand, and the directors, officers,
stockholders or other affiliates of the Company or any of its
subsidiaries, on the other, that would be required by the
Securities Act to be described in a registration statement to be
filed with the Commission and that is not so described, or
incorporated by reference, in each of the Time of Sale Information
and the Offering Memorandum.
(v) Investment
Company Act . Neither the Company nor any of its subsidiaries
is, and after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described
in each of the Time of Sale Information and the Offering Memorandum
none of them will be, an “investment company” or an
entity “controlled” by an “investment
company” within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission
thereunder (collectively, the “Investment Company
Act”).
(w) Taxes .
Except as otherwise disclosed in the Time of Sale Information and
the Offering Memorandum or except as would not have a Material
Adverse Effect (i) the Company and its subsidiaries have filed
all returns with respect to federal, state, local and foreign taxes
required to be filed through the date hereof, (ii) paid all
taxes shown by such returns to be required to be paid through the
date hereof, to the extent such taxes have become due and are not
being contested in good faith and for which the Company has taken
appropriate reserves as required by generally accepted accounting
principles in the United States, and (iii) there is no tax
deficiency that has been, or would reasonably be expected to be,
asserted against the Company or any of its subsidiaries or any of
their respective properties or assets.
(x) Licenses
and Permits . The Company and its Significant Subsidiaries
possess all licenses, certificates, permits and other
authorizations issued by, and have made all declarations and
filings with, the appropriate federal, state, local or foreign
governmental or regulatory authorities that are necessary for the
ownership or lease of their respective properties or the conduct of
the business of the Company and its Significant Subsidiaries as
described in each of the Time of Sale Information and the Offering
Memorandum, except where the failure to possess or make the same
would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect; and except as described in each
of the Time of Sale Information and the Offering Memorandum,
neither the Company nor any of its Significant Subsidiaries has
received notice of any revocation or adverse modification of any
such license, certificate, permit or authorization or has any
reason to believe that any such license, certificate, permit or
authorization will not be renewed in the ordinary course, except as
would not be reasonably expected to have a Material Adverse
Effect.
(y) No Labor
Disputes . No labor disturbance by or dispute with employees of
the Company or any of its Significant Subsidiaries exists or, to
the knowledge of the Company, is contemplated or threatened, except
as would not be reasonably expected to have a Material Adverse
Effect.
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(z) Compliance
with Environmental Laws . The Company and its subsidiaries
(i) are in compliance with any and all applicable federal,
state, local and foreign laws, rules, regulations, decisions and
orders relating to the protection of human health or safety, the
environment, hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, “Environmental Laws”),
(ii) have received and are in compliance with all permits,
licenses, or other authorizations or approvals required of them
under applicable Environmental Laws to conduct their respective
businesses, (iii) have not received notice of any actual or
potential liability under or relating to any Environmental Laws,
including for the investigation or remediation of any disposal or
release of hazardous or toxic substances or wastes, pollutants or
contaminants and have no knowledge of any event or condition that
would reasonably be expected to result in any such notice, except
in any such case, for any such failure to comply, or failure to
receive required permits, licenses or approvals, or liability as
would not, individually or in the aggregate, be reasonably expected
to have a Material Adverse Effect and (iv) except as described
in each of the Time of Sale Information and the Offering
Memorandum, none of the Company and its subsidiaries anticipates
material capital expenditures relating to any Environmental
Laws.
(aa) Compliance
with ERISA . (i) Each employee benefit plan, within the
meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), for which
the Company or any member of its “Controlled Group”
(defined as any organization which is a member of a controlled
group of corporations within the meaning of Section 414 of the
Internal Revenue Code of 1986, as amended (the “Code”))
would have any liability (each, a “Plan”) has been
maintained in compliance with its terms and the requirements of any
applicable statutes, orders, rules and regulations, including but
not limited to ERISA and the Code; (ii) no prohibited
transaction, within the meaning of Section 406 of ERISA or
Section 4975 of the Code, has occurred with respect to any
Plan excluding transactions effected pursuant to a statutory or
administrative exemption; (iii) for each Plan that is subject
to the funding rules of Section 412 of the Code or
Section 302 of ERISA, no “accumulated funding
deficiency” as defined in Section 412 of the Code,
whether or not waived, has occurred or is reasonably expected to
occur; (iv) the fair market value of the assets of each Plan
exceeds the present value of all benefits accrued under such Plan
(determined based on those assumptions used to fund such Plan);
(v) no “reportable event” (within the meaning of
Section 4043(c) of ERISA) has occurred or is reasonably expected to
occur; and (vi) neither the Company nor any member of the
Controlled Group has incurred, nor reasonably expects to incur, any
liability under Title IV of ERISA (other than contributions to the
Plan or premiums to the PBGC, in the ordinary course and without
default) in respect of a Plan (including a “multiemployer
plan”, within the meaning of Section 4001(a)(3) of
ERISA), except in the case of each of (i) through
(vi) which would not reasonably be expected to have a Material
Adverse Effect).
(bb) Disclosure
Controls . The Company maintains an effective system of
“disclosure controls and procedures” (as defined in
Rule 13a-15(e) of the Exchange Act) that is designed to ensure
that information required to be disclosed by the Company in reports
that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified in the Commission’s rules and
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forms,
including controls and procedures designed to ensure that such
information is accumulated and communicated to the Company’s
management as reasonably appropriate to allow timely decisions
regarding required disclosure. The Company has carried out
evaluations of the effectiveness of its disclosure controls and
procedures as required by Rule 13a-15 of the Exchange
Act.
(cc) Accounting
Controls . The Company maintains a systems of “internal
control over financial reporting” (as defined in
Rule 13a-15(f) of the Exchange Act) that complies with the
requirements of the Exchange Act and has been designed by, or under
the supervision of, the principal executive and principal financial
officers, or persons performing similar functions, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles. The Company and its subsidiaries maintain internal
accounting controls sufficient to provide reasonable assurance 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 generally accepted accounting principles and to
maintain asset accountability; (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 the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences. Except as disclosed, or incorporated by reference, in
each of the Time of Sale Information and the Offering Memorandum,
there are no material weaknesses or significant deficiencies in the
Company’s internal control over financial
reporting.
(dd)
Insurance . The Company and its Significant Subsidiaries
have insurance covering their respective properties, operations,
personnel and businesses, including business interruption
insurance, which insurance is in amounts and insures against such
losses and risks as the Company has determined are adequate in all
material respects to protect the Company and its subsidiaries and
their businesses, taken as a whole; and neither the Company nor any
of its Significant Subsidiaries has (i) received notice from
any insurer or agent of such insurer that capital improvements or
other expenditures are required or necessary to be made in order to
continue such insurance or (ii) any 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 at
reasonable cost from similar insurers as may be necessary to
continue its business, except as would not reasonably be expected
to result in a Material Adverse Effect.
(ee) No
Unlawful Payments . Neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any director,
officer, agent, employee or other person acting on behalf of the
Company or any of its subsidiaries has during the last five years
(i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political
activity; (ii) made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977, as amended;
or (iv) made any bribe, rebate, payoff, influence
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payment,
kickback or other unlawful payment except as would not reasonably
be expected to have a Material Adverse Effect.
(ff) Compliance
with Anti-Money Laundering Laws . The operations of the Company
and its subsidiaries are and have been conducted at all times in
compliance in all material respects with applicable financial
recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the
anti-money laundering statutes of all jurisdictions to which the
Company and its subsidiaries are subject, the rules and regulations
thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental
agency having authority over the Company and its subsidiaries
(collectively, the “Anti-Money Laundering Laws”) and no
action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company
or any of its subsidiaries with respect to the Anti-Money
Laundering Laws is pending or, to the knowledge of the Company,
threatened except as would not reasonably be expected to have a
Material Adverse Effect.
(gg) Compliance
with OFAC . None of the Company, any of its subsidiaries or, to
the knowledge of the Company, any director, officer, agent,
employee or affiliate of the Company or any of its subsidiaries is
currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Department of the Treasury
(“OFAC”); and the Company will not directly or
indirectly use the proceeds of the offering of the Securities
hereunder, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other person
or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC
except as would not reasonably be expected to have a Material
Adverse Effect.
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