Exhibit 1.1
NEOMAGIC CORPORATION
2,500,000 Shares
Warrants to Purchase 1,250,000
Shares
Common Stock
($0.001 Par Value)
PLACEMENT AGENCY
AGREEMENT
November 30, 2006
A.G. Edwards & Sons,
Inc.
One North Jefferson Avenue
St. Louis, Missouri 63103
The undersigned, NeoMagic
Corporation, a Delaware corporation (the “ Company
”), hereby addresses you (the “ Placement Agent
”) and confirms its agreement with you as follows:
1. Description of Securities
. The Company proposes, subject to the terms and conditions stated
herein, to issue and sell up to an aggregate of (i) 2,500,000
shares (the “ Shares ”) of the Company’s
common stock, $0.001 par value per share (the “ Common
Stock ”), and (ii) 1,250,000 warrants to purchase
Common Stock (the “ Warrants ”, and together
with the Shares, the “ Securities ”), to certain
investors (each an “ Investor ” and,
collectively, the “ Investors ”), in a public
offering under its Registration Statement on Form S-3 (Registration
No. 333-133088). The Shares of Common Stock issuable upon
exercise of the Warrants are hereinafter referred to as the Warrant
Shares. The Company desires to engage the Placement Agent as its
placement agent in connection with such issuance and sale. The
Securities are more fully described in the Prospectus hereinafter
defined.
2. Agreement to Act as Placement
Agent; Delivery and Payment . On the basis of the
representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Placement
Agent agrees to act as the Company’s exclusive placement
agent to assist the Company, on a best efforts basis, in connection
with the proposed issuance and sale by the Company of the
Securities to the Investors. The Company expressly acknowledges and
agrees that this Agreement does not in any way constitute a
commitment by the Placement Agent to purchase any of the Securities
and does not ensure successful placement of the Securities or any
portion thereof. The Company shall pay to the Placement Agent
concurrently with the Closing (as defined below) 6.0% of the gross
purchase price of the Securities, excluding any consideration that
may be paid in the future upon exercise of the Warrants (the
“ Placement Fee ”).
Upon satisfaction of the conditions
set forth in Section 5 hereof, the closing of the sale and
issuance of the Securities (the “ Closing ”)
shall occur at the offices of Wilson Sonsini Goodrich &
Rosati, 650 Page Mill Road, Palo Alto, California, or at such other
place as may be agreed upon between the Placement Agent and the
Company (the “ Place of Closing ”), at 10:00
a.m., Eastern Standard Time, on December 6, 2006, or at such
other time and date as the Placement Agent and the Company may
agree, such time and date of payment and delivery being herein
called the “ Closing Date .”
Concurrently with the execution and
delivery of this Agreement, the Company, the Placement Agent and
Lowenstein Sandler PC, as escrow agent (the “ Escrow
Agent ”), shall enter into an escrow agreement (the
“ Escrow Agreement ”), pursuant to which an
escrow account (the “ Escrow Account ”) will be
established for the benefit of the Company and the Investors to
settle each purchase of the Securities, with the Shares being
settled through the facilities of The Depository Trust
Company’s DWAC system and the Warrants being issued in
registered certificated form. Prior to the Closing Date, each such
Investor shall deposit into the Escrow Account an amount equal to
the product of (x) the number of Securities such Investor has
agreed to purchase and (y) the purchase price per share as set
forth on the cover page of the Prospectus (the “ Purchase
Amount ”). The aggregate of all such Purchase Amounts is
herein referred to as the “ Escrow Funds .” On
the Closing Date, upon satisfaction or waiver of all the conditions
to Closing, the Escrow Agent will disburse the Escrow Funds from
the Escrow Account to the Company and the Placement Agent as
provided in the Escrow Agreement, and the Company shall cause the
Securities to be delivered to the Investors, which, with respect to
the Shares, shall be made through the facilities of The Depository
Trust Company’s DWAC system.
The Company acknowledges and agrees
that the Placement Agent shall act as an independent contractor,
and not as a fiduciary, and any duties of the Placement Agent with
respect to investment banking services to the Company, including
the offering of the Securities contemplated hereby (including in
connection with determining the terms of the offering), shall be
contractual in nature, as expressly set forth herein, and shall be
owed solely to the Company. Each party disclaims any intention to
impose any fiduciary or similar duty on the other. Additionally,
the Placement Agent has not advised, nor is advising, the Company
or any other person as to any legal, tax, investment, accounting or
regulatory matters in any jurisdiction with respect to the
transactions contemplated hereby. 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 Placement Agent shall
have no responsibility or liability to the Company with respect
thereto. Any review by the Placement Agent of the Company, the
transactions contemplated hereby or other matters relating to such
transactions has been and will be performed solely for the benefit
of the Placement Agent and has not been and shall not be on behalf
of the Company or any other person. It is understood that the
Placement Agent has not and will not be rendering an opinion to the
Company as to the fairness of the terms of the offering.
Notwithstanding anything in this Agreement to the contrary, the
Company acknowledges that the Placement Agent may have financial
interests in the success of the offering contemplated hereby that
are not limited to the Placement Fee. The Company hereby waives and
releases, to the fullest extent permitted by law, any claims that
the Company may have against the Placement Agent with respect to
any breach or alleged breach of fiduciary duty.
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It is understood that the Company
proposes to offer the Securities to the Investors upon the terms
and conditions set forth in the Registration Statement (hereinafter
defined).
3. Representations, Warranties
and Agreements of the Company . The Company represents and
warrants to and agrees with the Placement Agent as of the date
hereof and as of the Closing Date and any other date specified
below, that:
(i) At the time of filing the Registration Statement
on Form S-3 (File No. 333-133088), the Company met the
requirements for use of Form S-3 under the 1933 Act for a primary
offering. A Registration Statement on Form S-3 (Registration
No. 333-133088) with respect to the Securities, including a
base prospectus (the “ Base Prospectus ”), and
such amendments to such registration statement as may have been
required to the date of this Agreement, has been carefully prepared
by the Company pursuant to and in conformity with the requirements
of the Securities Act of 1933, as amended (the “ 1933
Act ”), and the rules and regulations thereunder (the
“ 1933 Act Rules and Regulations ”) of the
Securities and Exchange Commission (the “ SEC ”)
and has been filed with the SEC under the 1933 Act. Such
registration statement has been declared effective by the SEC.
Copies of such registration statement, including any amendments
thereto, each related preliminary prospectus (meeting the
requirements of Rule 430, 430A or 430B of the 1933 Act Rules
and Regulations) contained therein, and the exhibits, financial
statements and schedules thereto have heretofore been delivered by
the Company to the Placement Agent. A final prospectus supplement
containing information permitted to be omitted at the time of
effectiveness by Rule 430A or 430B of the 1933 Act Rules and
Regulations will be filed promptly by the Company with the SEC in
accordance with Rule 424(b) of the 1933 Act Rules and Regulations.
The term “ Registration Statement ” as used
herein means the registration statement as amended at the time it
became effective by the SEC under the 1933 Act (the “
Effective Date ”), including financial statements, all
exhibits and all documents incorporated by reference therein and,
if applicable, the information deemed to be included by Rule 430A
or 430B of the 1933 Act Rules and Regulations. If an abbreviated
registration statement is prepared and filed with the SEC in
accordance with Rule 462(b) under the 1933 Act (an “
Abbreviated Registration Statement ”), the term
“ Registration Statement ” as used in this
Agreement includes the Abbreviated Registration Statement.
The term “
Prospectus ” as used herein means, together with the
Base Prospectus, (i) the final prospectus supplement as first
filed with the SEC pursuant to Rule 424(b) of the 1933 Act Rules
and Regulations, or (ii) if no such filing is required, the
form of final prospectus included in the Registration Statement at
the Effective Date, including, in each case, the documents
incorporated by reference therein. The term “ Preliminary
Prospectus ” as used herein shall mean a preliminary
prospectus as contemplated by Rule 430, 430A or 430B of the 1933
Act Rules and Regulations included at any time in the Registration
Statement, including the Base Prospectus and any preliminary
prospectus supplement, and including in each case the documents
incorporated by reference therein. The term “ Free Writing
Prospectus ” as used herein shall have the meaning set
forth in Rule 405 of the 1933 Act. The term “ Issuer Free
Writing Prospectus ” as used herein shall have the
meaning set forth in Rule 433 of the 1933 Act Rules and
Regulations. The term “ Disclosure Package ” as
used herein shall mean the Preliminary Prospectus as most recently
amended or supplemented prior to the Initial Time of Sale (as
defined below) together with the Issuer
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Free Writing Prospectuses identified
in Schedule I hereto, if any, and any other Free Writing
Prospectus that the parties hereto shall hereafter expressly agree
to treat as part of the Disclosure Package. The Preliminary
Prospectus, if any, any Issuer Free Writing Prospectus required to
be filed pursuant to Rule 433(d) of the 1933 Act Rules and
Regulations and the Prospectus delivered to the Placement Agent for
use in connection with the offering of the Securities have been and
will be identical to the respective versions thereof transmitted to
the SEC for filing via the Electronic Data Gathering Analysis and
Retrieval System (“ EDGAR ”), except to the
extent permitted by Regulation S-T. For purposes of this Agreement,
the words “amend,” “amendment,”
“amended,” “supplement” or
“supplemented” with respect to the Registration
Statement, the Prospectus, any Free Writing Prospectus or the
Disclosure Package shall mean amendments or supplements to the
Registration Statement, the Prospectus, any Free Writing Prospectus
or the Disclosure Package, as the case may be, as well as documents
filed after the date of this Agreement and prior to the completion
of the distribution of the Securities and incorporated by reference
therein as described above.
(ii) Neither the SEC nor any state or other
jurisdiction or other regulatory body has issued, and neither is,
to the knowledge of the Company, threatening to issue, any stop
order under the 1933 Act or other order suspending the
effectiveness of the Registration Statement (as amended or
supplemented) or preventing or suspending the use of any
Preliminary Prospectus, Issuer Free Writing Prospectus, the
Disclosure Package or the Prospectus or suspending the
qualification or registration of the Securities for offering or
sale in any jurisdiction nor instituted or, to the knowledge of the
Company, threatened to institute proceedings for any such purpose.
The Preliminary Prospectus at its date of issue and as of 5:00 p.m.
Eastern Standard Time on the date hereof (the “ Initial
Time of Sale ”), the Registration Statement at each
effective date and the Initial Time of Sale, and the Prospectus and
any amendments or supplements thereto or to the Registration
Statement when they are filed with the SEC or become effective, as
the case may be, contain or will contain, as the case may be, all
statements that are required to be stated therein by, and in all
material respects conform or will conform, as the case may be, to
the requirements of, the 1933 Act and the 1933 Act Rules and
Regulations. Neither the Registration Statement nor any amendment
thereto, as of the applicable effective date, contains or will
contain, as the case may be, any untrue statement of a material
fact or omits or will omit to state any material fact required to
be stated therein or necessary to make the statements therein, not
misleading. Neither the Preliminary Prospectus, the Prospectus nor
any supplement thereto contains or will contain, as the case may
be, any untrue statement of a material fact or omits or will omit
to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Neither
the Disclosure Package nor any supplement thereto, at the Initial
Time of Sale, contains or will contain, as the case may be, any
untrue statement of a material fact or omits or will omit to state
any 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. Notwithstanding the
foregoing, the Company makes no representation or warranty as to
information contained in or omitted from the Registration
Statement, the Disclosure Package or the Prospectus, or any such
amendment or supplement, in reliance upon, and in conformity with,
written information furnished to
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the Company relating to the
Placement Agent by or on behalf of the Placement Agent expressly
for use in the preparation thereof (as provided in Section 12
hereof). There is no contract, agreement, understanding or
arrangement, whether written or oral, or document required to be
described in the Registration Statement, Disclosure Package or
Prospectus or to be filed as an exhibit to the Registration
Statement that is not described or filed as required. The documents
incorporated by reference in the Disclosure Package or the
Prospectus at the time they were filed with the SEC, complied in
all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the “ 1934 Act
”), and the rules and regulations adopted by the SEC
thereunder (the “ 1934 Act Rules and Regulations
”). Any future documents incorporated by reference so filed,
when they are filed, will comply in all material respects with the
requirements of the 1934 Act and the 1934 Act Rules and
Regulations; no such incorporated document contained or will
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading; and, when read together and
with the other information in each of the Disclosure Package and
the Prospectus, at the time the Registration Statement became
effective, at the Initial Time of Sale and at the Closing Date,
each such incorporated document did not or will not, as the case
may be, 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 not misleading.
(iii) The Company is eligible to use Issuer Free
Writing Prospectuses in connection with the offering of the
Securities pursuant to Rules 164 and 433 of the 1933 Act. Any
Issuer Free Writing Prospectus that the Company is required to file
pursuant to Rule 433(d) of the 1933 Act Rules and Regulations has
been, or will be, timely filed with the SEC in accordance with the
requirements of the 1933 Act Rules and Regulations. Each Issuer
Free Writing Prospectus that the Company has filed, or is required
to file, pursuant to Rule 433(d) of the 1933 Act or that was
prepared by or on behalf of or used by the Company complies or will
comply in all material respects with the requirements of the 1933
Act Rules and Regulations, including but not limited to legending
and recordkeeping requirements. Except for the Issuer Free Writing
Prospectuses, if any, identified in Schedule I hereto, the
Company has not prepared, used or referred to, and will not,
without your prior consent, prepare, use or refer to any Free
Writing Prospectus. Each Issuer Free Writing Prospectus, as of its
issue date and at all times through the completion of the offering
and sale of the Securities, did not, does not and will not include
any information that conflicted, conflicts or will conflict with
the information contained in the Registration Statement. The
Company filed the Registration Statement with the SEC before using
any Free Writing Prospectus. The Company has satisfied and will
satisfy the conditions of Rule 433 of the 1933 Act Rules and
Regulations such that any electronic road show need not be filed
with the SEC.
(iv) This Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and
legally binding obligation of the Company enforceable against the
Company in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors’ rights generally and by general
principles of equity (the “ Exceptions
”).
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(v) The Company and its Subsidiaries have been duly
organized and are validly existing as corporations in good standing
under the laws of the states or other jurisdictions in which they
are incorporated, with full power and authority (corporate and
other) to own, lease and operate their properties and conduct their
businesses as described in each of the Disclosure Package and the
Prospectus and, with respect to the Company, to execute and
deliver, and perform the Company’s obligations under, this
Agreement; the Company and its Subsidiaries are duly qualified to
do business as foreign corporations in good standing in each state
or other jurisdiction in which their ownership or leasing of
property or conduct of business legally requires such
qualification, except where the failure to be so qualified,
individually or in the aggregate, would not have a Material Adverse
Effect. The term “ Material Adverse Effect ” as
used herein means any material adverse effect on the condition
(financial or other), net worth, business, affairs, management,
prospects, results of operations or cash flow of the Company and
its Subsidiaries, taken as a whole. The Company has no significant
subsidiaries (as such term is defined in Rule 1-02(w) of Regulation
S-X promulgated by the Commission) other than those Subsidiaries
listed on Schedule II hereto (the “
Subsidiaries ”).
(vi) 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 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 in each of the
Disclosure Package and the Prospectus and, since the respective
dates as of which information is given in the Disclosure Package,
there has not been any change in the capital stock or long-term
debt of the Company or any of its Subsidiaries or any Material
Adverse Change, or any development involving a prospective Material
Adverse Change, otherwise than as set forth in each of the
Disclosure Package and the Prospectus. The term “ Material
Adverse Change ” as used herein means any change that has
a Material Adverse Effect.
(vii) The issuance and sale of the Securities and the
execution, delivery and performance by the Company of this
Agreement, and the consummation of the transactions herein
contemplated, will not 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 properties or assets of the Company
or any of its Subsidiaries under, 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
properties 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
action result in any violation of the provisions of the
Company’s certificate of incorporation or bylaws or any
statute, rule, regulation or other law, or any order or judgment,
of any court or governmental agency or body having jurisdiction
over the Company or any of its Subsidiaries or any of their
properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the execution, delivery
and performance of this Agreement, the issuance and sale of the
Securities or the
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consummation of the transactions
contemplated hereby, except such as have been, or will be prior to
the Closing Date, obtained under the 1933 Act or as may be required
by the National Association of Securities Dealers, Inc. (the
“ NASD ”) and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or blue sky laws in connection with the
purchase and distribution of the Securities to the
Investors.
(viii) The Company has duly and validly authorized
capital stock as set forth in each of the Disclosure Package and
Prospectus; all outstanding shares of Common Stock of the Company
and the Shares conform, or when issued will conform, to the
description thereof in the Prospectus and have been, or, when
issued and paid for in the manner described herein will be, duly
authorized, validly issued, fully paid and non-assessable; and the
issuance of the Securities to be purchased from the Company
hereunder is not subject to preemptive or other similar rights, or
any restriction upon the voting or transfer thereof pursuant to
applicable law or the Company’s certificate of incorporation,
by-laws or governing documents or any agreement to which the
Company or any of its Subsidiaries is a party or by which any of
them may be bound. All corporate action required to be taken by the
Company for the authorization, issuance and sale of the Securities
has been duly and validly taken. The Warrants conform, or when
issued will conform, to the description thereof in the Prospectus
and have been duly and validly authorized by the Company and upon
delivery to the Investors at the Closing Date will be valid and
binding obligations of the Company, enforceable in accordance with
their terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights and remedies of creditors generally or subject
to general principles of equity. The Warrant Shares initially
issuable upon exercise of the Warrants conform, or when issued will
conform, to the description thereof in the Prospectus and have been
duly authorized and reserved for issuance and when issued upon
payment of the exercise price therefor will be validly issued,
fully paid and nonassessable. Except as disclosed in each of the
Disclosure Package and Prospectus, there are no outstanding
subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or rights related to or entitling
any person to purchase or otherwise to acquire any shares of, or
any security convertible into or exchangeable or exercisable for,
the capital stock of, or other ownership interest in, the Company,
except for such options or rights as may have been granted by the
Company to employees or directors pursuant to its stock option or
stock purchase plans. The outstanding shares of capital stock of
the Company’s Subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable and are owned by
the Company free and clear of any mortgage, pledge, lien,
encumbrance, charge or adverse claim and are not the subject of any
agreement or understanding with any person and were not issued in
violation of any preemptive or similar rights; and there are no
outstanding subscriptions, rights, warrants, options, calls,
convertible securities, commitments of sale or instruments related
to or entitling any person to purchase or otherwise acquire any
shares of, or any security convertible into or exchangeable or
exercisable for, the capital stock of, or other ownership interest
in any of the Subsidiaries.
(ix) The statements set forth in each of the
Disclosure Package and the Prospectus describing the Securities and
this Agreement, insofar as they purport to describe the provisions
of the laws and documents referred to therein, are accurate,
complete and fair.
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(x) Each of the Company and its Subsidiaries is in
possession of and is operating in compliance with all franchises,
grants, authorizations, licenses, certificates, permits, easements,
consents, orders and approvals (“ Permits ”)
from all state, federal, foreign and other regulatory authorities,
and has satisfied the requirements imposed by regulatory bodies,
administrative agencies or other governmental bodies, agencies or
officials, that are required for the Company and its Subsidiaries
lawfully to own, lease and operate their properties and conduct
their businesses as described in each of the Disclosure Package and
the Prospectus, and each of the Company and its Subsidiaries is
conducting its business in compliance with all of the laws, rules
and regulations of each jurisdiction in which it conducts its
business, in each case with such exceptions, individually or in the
aggregate, as would not have a Material Adverse Effect; each of the
Company and its Subsidiaries has filed all notices, reports,
documents or other information (“ Notices ”)
required to be filed under applicable laws, rules and regulations,
in each case, with such exceptions, individually or in the
aggregate, as would not have a Material Adverse Effect; and, except
as otherwise specifically described in each of the Disclosure
Package and the Prospectus, neither the Company nor any of its
Subsidiaries has received any notification from any court or
governmental body, authority or agency, relating to the revocation
or modification of any such Permit or to the effect that any
additional authorization, approval, order, consent, license,
certificate, permit, registration or qualification (“
Approvals ”) from such regulatory authority is needed
to be obtained by any of them, in any case where it could be
reasonably expected that obtaining such Approvals or the failure to
obtain such Approvals, individually or in the aggregate, would have
a Material Adverse Effect.
(xi) The Company and its Subsidiaries have filed all
necessary federal, state and foreign income and franchise tax
returns and paid all taxes shown as due thereon; all such tax
returns are complete and correct in all material respects; all tax
liabilities are adequately provided for on the books of the Company
and its Subsidiaries except to such extent as would not have a
Material Adverse Effect; the Company and its Subsidiaries have made
all necessary payroll tax payments; and the Company and its
Subsidiaries have no knowledge of any tax proceeding or action
pending or threatened against the Company or its Subsidiaries that,
individually or in the aggregate, might have a Material Adverse
Effect.
(xii) Except as described in each of the Disclosure
Package and the Prospectus, the Company and its Subsidiaries own or
possess, or can acquire on reasonable terms, adequate patents,
patent licenses, trademarks, service marks and trade names
necessary to conduct the business now operated by them, and neither
the Company nor any of its Subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with
respect to any patents, patent licenses, trademarks, service marks
or trade names that, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect.
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(xiii) The Company and its Subsidiaries have good and
marketable title in fee simple to all items of real property and
good and marketable title to all personal property owned by them,
in each case free and clear of all liens, encumbrances,
restrictions and defects except such as are described in each of
the Disclosure Package and the Prospectus or do not materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property; and any property
held under lease or sublease by the Company or any of its
Subsidiaries is held under valid, subsisting and enforceable leases
or subleases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such
property by the Company and its Subsidiaries; and neither the
Company nor any of its Subsidiaries has any notice or knowledge of
any material claim of any sort that has been, or may be, asserted
by anyone adverse to the Company’s or any of its Subsidiaries
rights as lessee or sublessee under any lease or sublease described
above, or affecting or questioning the Company’s or any of
its Subsidiaries’ rights to the continued possession of the
leased or subleased premises under any such lease or sublease in
conflict with the terms thereof.
(xiv) Except as described in each of the Disclosure
Package and the Prospectus, there is no pending action, suit or
other proceeding involving the Company or any of its Subsidiaries
or any of their material assets for any failure of the Company or
any of its Subsidiaries, or any predecessor thereof, to comply with
any requirements of federal, state or local regulation relating to
air, water, solid waste management, hazardous or toxic substances,
or the protection of health, safety or the environment. Except as
described in each of the Disclosure Package and the Prospectus,
none of the property owned or leased by the Company or any of its
Subsidiaries is, to the best knowledge of the Company, contaminated
with any waste or hazardous or toxic substances, and neither the
Company nor any of its Subsidiaries may be deemed an “owner
or operator” of a “facility” or
“vessel” that owns, possesses, transports, generates or
disposes of a “hazardous substance” as those terms are
defined in §9601 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. §9601
et seq .
(xv) No labor disturbance exists with the employees
of the Company or any of its Subsidiaries or is imminent that,
individually or in the aggregate, would have a Material Adverse
Effect. None of the employees of the Company or any of its
Subsidiaries is represented by a union and, to the best knowledge
of the Company and its Subsidiaries, no union organizing activities
are taking place. Neither the Company nor any of its Subsidiaries
has violated any federal, state or local law or foreign law
relating to discrimination in hiring, promotion or pay of
employees, nor any applicable wage or hour laws, or the rules and
regulations thereunder, or analogous foreign laws and regulations,
that might, individually or in the aggregate, result in a Material
Adverse Effect.
(xvi) The Company and its Subsidiaries are in
compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974,
as amended, including the regulations and published interpretations
thereunder (“ ERISA ”); no “reportable
event” (as defined in ERISA) has occurred with respect to any
“pension plan” (as defined in ERISA) for which the
Company and its
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Subsidiaries would have any
liability; the Company and its Subsidiaries have not incurred and
do not expect to incur liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any
“pension plan” or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the “
Code ”); and 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 in all material respects, and nothing has
occurred, whether by action or by failure to act, that would cause
the loss of such qualification.
(xvii) The Company and its Subsidiaries maintain
insurance of the types and in the amounts generally deemed adequate
for its business, including, but not limited to, directors’
and officers’ insurance, insurance covering real and personal
property owned or leased by the Company and its Subsidiaries
against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in
full force and effect. Neither the Company nor any of its
Subsidiaries has been refused any insurance coverage sought or
applied for, and the Company has no reason to believe that it and
its Subsidiaries will not be able to renew their existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse
Effect.
(xviii) Neither the Company nor any of its Subsidiaries
is, or with the giving of notice or lapse of time or both would be,
in default or violation with respect to its certificate of
incorporation or by-laws. Neither the Company nor any of its
Subsidiaries is, or with the giving of notice or lapse of time or
both would be, in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in
any material indenture, mortgage, deed of trust, loan agreement,
lease 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 properties or
assets of the Company or any of its Subsidiaries is subject, or in
violation of any statutes, laws, ordinances or governmental rules
or regulations or any orders or decrees to which it is subject,
including, without limitation, Section 13 of the 1934 Act,
which default or violation, individually or in the aggregate, would
have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has, at any time during the past five years,
(A) made any unlawful contributions to any candidate for any
political office, or failed fully to disclose any contribution in
violation of law, or (B) made any payment to any state,
federal or foreign government official, or other person charged
with similar public or quasi-public duty (other than payment
required or permitted by applicable law).
(xix) Other than as set forth in each of the
Disclosure Package and the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
Subsidiaries is a party or of which any property of the Company or
any of its Subsidiaries is the subject that, if determined
adversely to the Company or any of its Subsidiaries, would
individually or in the aggregate have a Material Adverse Effect or
that would materially and adversely affect the consummation of the
transactions
10
contemplated hereby or that is
required to be disclosed in each of the Disclosure Package or the
Prospectus; to the best of the Company’s knowledge, no such
proceedings are threatened or contemplated.
(xx) 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 (the “
1935 Act ”).
(xxi) The Company is not and, after giving effect to
the offering and sale of the Securities, will not be an
“investment company” or an entity
“controlled” by an “investment company,” as
such terms are defined in the Investment Company Act of 1940, as
amended (the “ 1940 Act ”).
(xxii) At the earliest time after the filing of the
Registration Statement at which the Company or another offering
participant made a bona fide offer (within the meaning of
Rule 164(a)(2) of the 1933 Act Rules and Regulations) and as
of the date hereof, the Company was not and is not an
“ineligible issuer” as such term is defined in Rule 405
of the 1933 Act Rules and Regulations, without taking account of
any determination by the SEC that it is not necessary that the
Company be considered an “ineligible
issuer.”
(xxiii) Stonefield Josephson Inc., the accounting firm
that has certified the financial statements filed with or
incorporated by reference in and as a part of the Registration
Statement, is an independent registered public accounting firm
within the meaning of the 1933 Act and the 1933 Act Rules and
Regulations and the rules and regulations of the Public Company
Accounting Oversight Board (“ PCAOB ”) of the
United States. The Company and each of its Subsidiaries maintains a
system of internal accounting controls sufficient to provide
reasonable assurance that: (1) transactions are executed in
accordance with management’s general or specific
authorization; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (3) access to assets is permitted
only in accordance with management’s general or specific
authorization; and (4) the recorded accounts for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect thereto. The consolidated
financial statements and schedules of the Company, including the
notes thereto, filed with (or incorporated by reference) and as a
part of the Registration Statement, Disclosure Package or
Prospectus, are accurate in all material respects and present
fairly the financial condition of the Company and its Subsidiaries
as of the respective dates thereof and the consolidated results of
operations and changes in financial position and consolidated
statements of cash flow for the respective periods covered thereby,
all in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved
except as otherwise disclosed therein. All adjustments necessary
for a fair presentation of results for such periods have been made.
The selected financial data included or incorporated by reference
in the Registration Statement, Disclosure Package and Prospectus
present fairly the information
11
shown therein and have been compiled
on a basis consistent with that of the audited financial
statements. Any operating or other statistical data included or
incorporated by reference in the Registration Statement, Disclosure
Package and Prospectus comply in all material respects with the
1933 Act and the 1933 Act Rules and Regulations and present fairly
the information shown therein and are based on or derived from
sources that the Company reasonably and in good faith believes are
reliable and accurate, and such data agree with the sources from
which they are derived. All non-GAAP financial information included
(or incorporated by reference) in the Registration Statement,
Disclosure Package or Prospectus complies with the requirements of
Regulation G and Item 10 of Regulation S-K under the 1933
Act.
(xxiv) Except as disclosed in each of the Disclosure
Package and the Prospectus, no holder of any security of the
Company has any right to require registration of shares of Common
Stock or any other security of the Company because of the filing of
the Registration Statement or the consummation of the transactions
contemplated hereby and, except as disclosed in each of the
Disclosure Package and the Prospectus, no person has the right to
require registration under the 1933 Act of any shares of Common
Stock or other securities of the Company. No person has the right,
contractual or otherwise, to cause the Company to permit such
person to underwrite the sale of any of the Securities. Except for
this Agreement, there are no contracts, agreements or
understandings between the Company or any of its Subsidiaries and
any person that would give rise to a valid claim against the
Company, its Subsidiaries or any Placement Agent for a brokerage
commission, finder’s fee or like payment in connection with
the issuance, purchase and sale of the Securities.
(xxv) The Company has not distributed and, prior to
the later to occur of (A) the Closing Date and
(B) completion of the distribution of the Securities, will not
distribute any offering material in connection with the offering
and sale of the Securities other than the Registration Statement,
the Preliminary Prospectus, any Issuer Free Writing Prospectus
identified in Schedule I hereto, the Disclosure Package and
the Prospectus.
(xxvi) The Company has not taken and will not take,
directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or
manipulation of the price of the Company’s Common Stock, and
the Company is not aware of any such action taken or to be taken by
affiliates of the Company.
(xxvii) There is not currently and has not in the past
been a failure on the part of the Company or any of its respective
directors or officers, in their capacities as such, to comply with
any applicable provisions of the Sarbanes-Oxley Act of 2002
(“ Sarbanes-Oxley ”) and the rules and
regulations promulgated in connection therewith, including Sections
302, 402 and 906, and the statements contained in any certification
pursuant to such Act and related rules and regulations are complete
and correct.
(xxviii) The Company has established and maintains
disclosure controls and procedures and internal control over
financial reporting as are currently required (as
12
such terms are defined in Rule
13a-15 and 15d-15 under the 1934 Act); the Company’s
disclosure controls and procedures (i) are designed to ensure
that information required to be disclosed by the Company in the
reports that it files or submits under the 1934 Act is accumulated
and communicated to management, including the principal executive
and principal financial officer of the Company, or persons
performing similar functions, as appropriate to allow timely
decisions regarding required disclosure, and that such information
is recorded, processed, summarized and reported, within the time
periods specified in the 1934 Act Rules and Regulations;
(ii) have been evaluated for effectiveness; and (iii) are
effective in all material respects to perform the functions for
which they were established.
(xxix) Except as discussed with the Company’s
auditors and audit committee and as disclosed in each of the
Disclosure Package and the Prospectus, (i) there are no
significant deficiencies or material weaknesses in the design or
operation of internal control over financial reporting that are
reasonably likely to adversely affect the Company’s ability
to record, process, summarize, and report financial data and
(ii) there is, and there has been, no fraud, whether or not
material, that involves management or other employees who have a
role in the Company’s internal control over financial
reporting.
(xxx) Since the date of the end of the last fiscal
year for which audited financial statements are included or
incorporated by reference in each of the Disclosure Package and the
Prospectus, there have been no significant changes in internal
control over financial reporting or in other factors that could
significantly affect internal control over financial reporting,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
(xxxi) The Company has received no written comments
from the SEC staff regarding its periodic or current reports under
the 1934 Act that remain unresolved and have not been disclosed in
the Registration Statement, Disclosure Package and
Prospectus.
(xxxii) No relationship, direct or indirect, exists
between or among the Company and any director, officer or
stockholder of the Company, or any member of his or her immediate
family, or any customers or suppliers that is required to be
described in the Registration Statement, the Disclosure Package or
the Prospectus and that is not so described and described as
required in material compliance with such requirement. There are no
outstanding loans, advances (except normal advances for business
expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any member of their
respective immediate families, except as disclosed in the
Registration Statement, the Disclosure Package and the Prospectus.
The Company has not, in violation of the Sarbanes-Oxley Act,
directly or indirectly, extended or maintained credit,
arrange
