Exhibit 1.1
9,600,000 Shares
HEADWATERS
INCORPORATED
Common Stock
PLACEMENT AGENCY
AGREEMENT
September 17, 2009
Canaccord Adams Inc.,
Stephens Inc., and
Avondale Partners, LLC
c/o Canaccord Adams Inc.
99 High Street
Boston, Massachusetts 02110
Ladies and Gentlemen:
Headwaters Incorporated, a Delaware
corporation (the “ Company ”), proposes, subject
to the terms and conditions stated in this Placement Agency
Agreement (this “ Agreement ”) and the
Subscription Agreements in the form of Exhibit A attached
hereto (the “ Subscription Agreements ”) entered
into with the investors identified therein (each, an “
Investor ” and collectively, the “
Investors ”), to issue and sell up to an aggregate of
9,600,000 shares (the “ Shares ”) of the
Company’s common stock, par value $0.001 per share (the
“ Common Stock ”). The Company hereby confirms
its several agreements with Canaccord Adams Inc. (“
Canaccord ”), Stephens Inc. (“ Stephens
”) and Avondale Partners, LLC (“ Avondale
”) as set forth below. Canaccord is referred to as the
“ Lead Placement Agent ,” each of Stephens and
Avondale is individually referred to as a “ Co-Placement
Agent ;” and collectively, Canaccord, Stephens and
Avondale are to as to the “ Placement Agents.”
The Shares are more fully described in the Prospectus (as defined
below).
1. Agreement to Act as
Placement Agents; Delivery and Payment . On the basis of
the representations, warranties and agreements of the Company
herein contained, and subject to the terms and conditions set forth
in this Agreement:
(a) The Company hereby engages the
Placement Agents, as the exclusive agents of the Company, to, on a
commercially reasonable efforts basis, solicit offers to purchase
Shares from the Company on the terms and subject to the conditions
set forth in the Subscription Agreements and Prospectus (as defined
below). Each Placement Agent shall use commercially reasonable
efforts to assist the Company in obtaining performance by each
Investor whose offer to purchase the Shares was solicited by such
Placement Agent and accepted by the Company, but such Placement
Agent shall not, except as otherwise provided in this Agreement,
have any liability to the Company in the event any such purchase is
not consummated for any reason. Under no circumstances will any
Placement Agent or any of its affiliates be obligated to underwrite
or purchase any of the Shares for its own account or otherwise
provide any financing.
Each Placement Agent shall act
solely as the Company’s agent and not as principal. No
Placement Agent shall have any authority to bind the Company with
respect to any prospective offer to purchase Shares, and the
Company shall have the sole right to accept offers to purchase
Shares and may reject any such offer, in whole or in part. Each
Placement Agent has the right, in its discretion, without notice to
the Company, to reject any offer to purchase Shares received by it,
in whole or in part, and any such rejection shall not be deemed a
breach of this Agreement.
(b) As compensation for services
rendered by the Placement Agents hereunder, on the Closing Date (as
defined below), the Company shall pay or cause to be paid to the
Placement Agents by wire transfer of immediately available funds to
an account or accounts designated by the Placement Agents, an
aggregate amount equal to six percent (6%) of the gross
proceeds received by the Company from the sale of the Shares to
Investors (the “ Agency Fee ”). Such amount may
be deducted from the payment made by the Investor(s) to the Company
and paid directly to the Placement Agents on the Closing Date. The
Agency Fee shall be allocated among the Placement Agents pursuant
to Schedule I hereto. Each Placement Agent agrees that the
foregoing compensation, together with any expense reimbursement
payable hereunder, constitutes all of the compensation that the
Placement Agents shall be entitled to receive in connection with
the Offering contemplated hereby.
(c) The Shares are being sold to the
Investors at a price of $3.90 per share (the “ Purchase
Price ”) as set forth on the cover page of the Prospectus
(as defined below). The purchases of Shares by the Investors shall
be evidenced by the execution of the Subscription Agreements by
each of the parties thereto in the form attached hereto as
Exhibit A .
(d) Prior to the earlier of (
i ) the date on which this Agreement is terminated and
( ii ) the Closing Date, the Company shall not, without
the prior written consent of the Lead Placement Agent, solicit or
accept offers to purchase shares of the Common Stock (other than
pursuant to the exercise of options or warrants to purchase shares
of Common Stock that are outstanding at the date hereof) otherwise
than through the Placement Agents in accordance
herewith.
(e) No Shares 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 Shares shall have been delivered to
the Investor purchasing such Shares against payment therefor by
such Investor. If the Company shall default in its obligations to
deliver Shares to an Investor whose offer it has accepted, the
Company shall indemnify and hold the Placement Agents harmless
against any loss, claim, damage or liability directly or indirectly
arising from or as a result of the default by the Company in
accordance with the procedures set forth in
Section 6(c) hereof.
(f) Payment of the purchase price
for, and delivery of the Shares shall be made at a closing (the
“ Closing ”) at the offices of Pillsbury
Winthrop Shaw Pittman LLP, counsel for the Company, located at 50
Fremont Street, San Francisco, CA 94105-2228, at 10:00 a.m.,
New York City time, on September 22, 2009 or at such other
time and date as the Placement Agents and the Company determine
pursuant to Rule 15c6-1(a) under the Securities Exchange Act of
1934, as amended (the “ Exchange Act ”) (such
date of payment and delivery being herein referred to as the
“ Closing Date ”). Unless otherwise specified in
the applicable
2
Subscription Agreement, the Shares
will be settled through the facilities of The Depository Trust
Company’s DWAC system. Subject to the terms hereof, with
respect to Shares settled through the facilities of The Depository
Trust Company’s DWAC system, payment of the purchase price
for the Shares shall be made to the Company in the manner set forth
below by Federal Funds wire transfer, against delivery of the
Shares to such persons and shall be registered in the name or names
and shall be in such denominations as the Placement Agents may
request at least one business day before the Closing Date. Payment
of the purchase price for the Shares to be purchased by Investors
shall be made by such Investors directly to the Company. Subject to
the terms and conditions hereof, on the Closing Date, the Company
shall pay to each Placement Agent the amount of expenses for which
each such Placement Agent is entitled to reimbursement pursuant
hereto. At least one day prior to the Closing Date, each Placement
Agent shall submit to the Company its bona fide estimate of the
amount of expenses for which it is entitled to reimbursement
pursuant hereto. As soon as reasonably practicable after the
Closing Date, each Placement Agent shall submit to the Company its
expense reimbursement invoice and the Company or such Placement
Agent, as applicable, shall make any necessary reconciling
payment(s) within thirty days of receipt of such
invoices.
2. Representations and
Warranties of the Company . The Company represents and
warrants to the Placement Agents as of the date hereof, and as of
the Closing Date and agrees with the Placement Agents, as
follows:
(a) Filing of Registration
Statement . The Company has prepared and filed, in conformity
with the requirements of the Securities Act of 1933, as amended
(the “ Securities Act ”), and the published
rules and regulations thereunder (the “ Rules and
Regulations ”) adopted by the Securities and Exchange
Commission (the “ Commission ”), a registration
statement, including a prospectus, on Form S-3 (File
No. 333-155565), which became effective as of April 16,
2007, relating to the Shares and the offering thereof (the “
Offering ”) from time to time in accordance with Rule
415(a)(1)(x) of the Rules and Regulations, and such amendments
thereof as may have been required to the date of this Agreement.
The term “ Registration Statement ” as used in
this Agreement means the aforementioned registration statement, as
amended at the time of such registration statement’s
effectiveness for purposes of Section 11 of the Securities
Act, (the “ Effective Time ”), including (
i ) all documents filed as a part thereof or
incorporated or deemed to be incorporated by reference therein and
( ii ) any information in the corresponding Base
Prospectus (as defined below) or a prospectus supplement filed with
the Commission pursuant to Rule 424(b) under the Securities Act, to
the extent such information is deemed pursuant to Rule 430A
(“ Rule 430A ”), 430B (“
Rule 430B ”) or 430C (“
Rule 430C ”) under the Securities Act to be a
part thereof at the Effective Time. If the Company has filed an
abbreviated registration statement to register additional shares of
Common Stock pursuant to Rule 462(b) under the Rules and
Regulations (the “ Rule 462(b) Registration Statement
”), then any reference herein to the term “
Registration Statement ” shall also be deemed to
include such Rule 462(b) Registration Statement. For purposes of
this Agreement, all references to the Registration Statement, the
Base Prospectus, any Preliminary Prospectus (as defined below), the
Prospectus (as defined in below) or any amendment or supplement to
any of the foregoing shall be deemed to include the copy filed with
the Commission pursuant to its Electronic Data Gathering, Analysis
and Retrieval System (“ EDGAR ”). All references
in this Agreement to amendments or supplements to the Registration
Statement, the Base Prospectus, any Preliminary Prospectus or the
Prospectus shall be deemed to mean and include the subsequent
filing of any
3
document under the Exchange Act and
which is deemed to be incorporated therein by reference therein or
otherwise deemed to be a part thereof.
(b) Effectiveness of Registration
Statement; Certain Defined Terms . The Company and the
transactions contemplated by this Agreement meet the requirements
and comply with the conditions for the use of Form S-3 under the
Securities Act. The Registration Statement meets, and the offering
and sale of the Shares 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). The Company has complied, to the Commission’s
satisfaction, with all requests of the Commission for additional or
supplemental information. No stop order preventing or suspending
use of the Registration Statement, any Preliminary Prospectus or
the Prospectus or the effectiveness of the Registration Statement
has been issued by the Commission, and no proceedings for such
purpose pursuant to Section 8A of the Securities Act against
the Company or related to the Offering have been instituted or are
pending or, to the Company’s knowledge, are contemplated or
threatened by the Commission, and any request received by the
Company on the part of the Commission for additional information
has been complied with. As used in this Agreement:
(1) “ Base Prospectus
” means the prospectus included in the Registration Statement
at the Effective Time.
(2) “ Disclosure
Package ” means ( i ) the Statutory
Prospectus, ( ii ) each Issuer Free Writing Prospectus,
if any, filed or used by the Company on or before the Effective
Time and listed on Schedule I hereto (other than a roadshow
that is an Issuer Free Writing Prospectus but is not required to be
filed under Rule 433 of the Rules and Regulations) and ( iii
) the pricing and other information as set forth on Exhibit
B hereto, all considered together.
(3) “ Issuer Free Writing
Prospectus ” means any “issuer free writing
prospectus,” as defined in Rule 433 of the Rules and
Regulations relating to the Shares 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.
(4) “ Preliminary
Prospectus ” means any preliminary prospectus supplement,
subject to completion, relating to the Shares, filed by the Company
with the Commission pursuant to Rule 424(b) under the Securities
Act for use in connection with the offering and sale of the Shares,
together with the Base Prospectus attached to or used with such
preliminary prospectus supplement.
(5) “ Prospectus
” means the final prospectus supplement, relating to the
Shares, filed by the Company with the Commission pursuant to Rule
424(b) under the Securities Act on or before the second business
day after the date hereof (or such earlier time as may be required
under the Securities Act), in the form furnished by the Company to
the Placement Agents, for use in connection with the offering and
sale of the Shares that discloses the public offering price and
other final terms of the Shares, together with the Base Prospectus
attached to or used with such final prospectus
supplement.
4
(6) “ Statutory
Prospectus ” means the Preliminary Prospectus, if any,
and the Base Prospectus, each as amended and supplemented
immediately prior to the Time of Sale, including any document
incorporated by reference therein and any prospectus
supplement.
(7) “Time of
Sale” means 3:55 p.m., New York City time, on the
date of this Agreement.
(c) Contents of Registration
Statement . The Registration Statement complied when it became
effective, complies as of the date hereof and, as amended or
supplemented, at the Time of Sale and at all times during which a
prospectus is required by the Securities Act to be delivered
(whether physically or through compliance with Rule 172 under the
Securities Act or any similar rule) in connection with any sale of
Shares (the “ Prospectus Delivery Period ”),
will comply, in all material respects, with the requirements of the
Securities Act and the Rules and Regulations; the Registration
Statement did not, as of the Effective Time, contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; provided that the Company
makes no representation or warranty in this subsection (c)
with respect to statements in or omissions from the
Registration Statement in reliance upon, and in conformity with,
written information furnished to the Company by the Placement
Agents specifically for inclusion therein, which information the
parties hereto agree is limited to the Placement Agents’
Information (as defined in Section 7
hereof).
(d) Contents of Prospectus .
The Prospectus will comply, as of the date that it is filed with
the Commission, the date of its delivery to Investors and at all
times during the Prospectus Delivery Period, in all material
respects, with the requirements of the Securities Act; at no time
during the period that begins on the date the Prospectus is filed
with the Commission and ends at the end of the Prospectus Delivery
Period will the Prospectus, as then amended or supplemented,
include an 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 statements in or
omissions from the Prospectus in reliance upon, and in conformity
with, written information furnished to the Company by the Placement
Agents specifically for inclusion therein, which information the
parties hereto agree is limited to the Placement Agents’
Information. The Prospectus contains all required information under
the Securities Act with respect to the Shares and the distribution
of the Shares.
(e) Incorporated Documents .
Each of the documents incorporated or deemed to be incorporated by
reference in the Registration Statement, at the time such document
was filed with the Commission or at the time such document became
effective, as applicable, complied, in all material respects, with
the requirements of the Exchange Act, was filed on a timely basis
with the Commission and did not include an 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.
5
(f) Disclosure Package . The
Disclosure Package, as of the Time of Sale, did not, and at the
Closing Date will not, contain any untrue statement of a material
fact or omit to state any 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; provided that the Company makes no
representations or warranties in this subsection (f)
with respect to statements in or omissions from the
Disclosure Package in reliance upon, and in conformity with,
written information furnished to the Company by the Placement
Agents specifically for inclusion therein, which information the
parties hereto agree is limited to the Placement Agents’
Information.
(g) Distributed Materials;
Conflict with Registration Statement . Other than the Base
Prospectus, any Preliminary Prospectus and the Prospectus, the
Company has not made, used, prepared, authorized, approved or
referred to and will not make, use, prepare, authorize, approve or
refer to any “written communication” (as defined in
Rule 405 under the Securities Act) that constitutes an offer to
sell or a solicitation of an offer to buy the Shares other than (
i ) any document not constituting a prospectus pursuant
to Section 2(a)(10)(a) of the Securities Act or Rule 134 under
the Securities Act or ( ii ) the documents listed on
Schedule II hereto and other written communications approved
in advance by the Placement Agents.
(h) Issuer Free Writing
Prospectuses . Each Issuer Free Writing Prospectus, if any,
conformed or will conform in all material respects to the
requirements of the Securities Act and the Rules and Regulations on
the date of first use, and the Company has complied or will comply
with any filing requirements applicable to such Issuer Free Writing
Prospectus pursuant to the Rules and Regulations. Each Issuer Free
Writing Prospectus, if any, when considered together with the
Disclosure Package, as of its issue date and at all subsequent
times through the completion of the Prospectus Delivery Period 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 Statutory 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 prevailing at
the subsequent time, not misleading; provided that the
Company makes no representation or warranty with respect 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 Agents specifically for
inclusion therein, which information the parties hereto agree is
limited to the Placement Agents’ Information.
(i) Not an Ineligible Issuer
. ( i ) At the earliest time after the filing of the
Registration Statement that the Company or another offering
participant made a bona fide offer (within the meaning of Rule
164(h)(2) under the Securities Act) of the Shares and ( ii
) at the date hereof, the Company was not and is not an
“ineligible issuer,” as defined in Rule 405 under the
Securities Act (“ Rule 405 ”).
(j) Due Incorporation . The
Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of
Delaware, with the corporate power and authority to own its
properties and to conduct its business as it is
currently
6
being conducted and as described in
the Registration Statement, the Prospectus and the Disclosure
Package. The Company is duly qualified to transact business and is
in good standing as a foreign corporation or other legal entity in
each other jurisdiction in which its ownership or leasing of
property or the conduct of its business requires such
qualification, except where the failure to be so qualified or in
good standing or have such power or authority ( i
) would not have, individually or in the aggregate, a material
adverse effect upon, the general affairs, business, operations,
prospects, properties, financial condition, or results of
operations of the Company and its subsidiaries, taken as a whole,
or ( ii ) impair in any material respect the power or
ability of the Company to perform its obligations under this
Agreement or to consummate any transactions contemplated by the
Agreement and the Subscription Agreements, including the issuance
and sale of the Shares (any such effect as described in clauses
(i) or (ii), a “ Material Adverse Effect
”).
(k) Subsidiaries . Except as
described in the Registration Statement, the Prospectus and the
Disclosure Package, the Company has no subsidiaries and does not
own any beneficial interest, directly or indirectly, in any
corporation, partnership, joint venture or other business entity.
Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, has the corporate power
and authority to own its property and to conduct its business as
described in the Registration Statement, the Prospectus and the
Disclosure Package and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse
Effect; all of the issued shares of capital stock of each
subsidiary of the Company (x) have been duly and validly
authorized and issued, (y) are fully paid and nonassessable
and (z) are owned directly by the Company (except with respect
to subsection (z) for ( i ) FlexCrete
Building Systems, L.C., in which Headwaters Resources owns a 90%
limited company interest, (ii) Blue Flint Ethanol LLC, in
which HES Ethanol Holdings owns a 51% limited liability company
interest, (iii) American Lignite Energy, LLC, a Delaware
limited liability company, of which Headwaters Energy Services
Corp. is a 33.3% member, (iv) Evonik Headwaters LLP, in which
Headwaters Incorporated owns a 50% interest, (v) Evonik
Headwaters Korea Co., Ltd., in which Headwaters Incorporated owns a
50% interest, and (vi) Headwaters Clean Carbon Services LLC,
in which Headwaters Energy Services Corp. owns a 51% interest) free
and clear of all liens, encumbrances, equities or claims except for
the security interests granted under the senior secured credit
agreement, dated September 8, 2004, as amended, between the
Company and various lenders and Morgan Stanley Senior Funding,
Inc., as administrative agent.
(l) Due Authorization and
Enforceability . The Company has the full right, power and
authority to enter into this Agreement and the Subscription
Agreements, and to perform and discharge its obligations hereunder
and thereunder; and each of this Agreement and the Subscription
Agreements has been duly authorized, executed and delivered by the
Company, and constitutes a valid, legal and binding obligation of
the Company, enforceable against the Company in accordance with its
terms, except as rights to indemnity hereunder may be limited by
federal or state securities laws and except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization
or similar laws affecting the rights of creditors generally and
subject to general principles of equity.
7
(m) The Shares . The issuance
of the Shares has been duly and validly authorized by the Company
and, when issued, delivered and paid for in accordance with the
terms of this Agreement and the Subscription Agreements, will have
been duly and validly issued and will be fully paid and
nonassessable, will not be subject to any statutory or contractual
preemptive rights or other rights to subscribe for or purchase or
acquire any shares of Common Stock of the Company that have not
been waived or complied with, and will conform in all material
respects to the description thereof contained in the Disclosure
Package and the Prospectus and such description conforms in all
material respects to the rights set forth in the instruments
defining the same.
(n) Capitalization . The
information set forth under the caption
“Capitalization” in the Statutory Prospectus (and any
similar sections or information, if any, contained in the
Disclosure Package) is fairly presented on a basis consistent with
the Company’s financial statements. The certificates
evidencing the Shares of Common Stock are in due and proper legal
form and have been duly authorized for issuance by the Company. The
authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus
under the caption “Description of Capital Stock” (and
any similar sections or information, if any, contained in the
Disclosure Package). The issued and outstanding shares of capital
stock of the Company have been duly authorized and validly issued,
are fully paid and nonassessable, and have been issued in
compliance with all 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 or acquire any securities of the
Company or any of its subsidiaries. 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 for, any
capital stock of the Company or any of its subsidiaries other than
those described in the Prospectus and the 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 Prospectus and the
Disclosure Package, accurately and fairly present the information
required to be shown with respect to such plans, arrangements,
options and rights. The issued and outstanding shares of capital
stock of each of the Company’s subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable,
have been issued in compliance with all federal and state
securities laws, and are owned directly by the Company or by
another wholly-owned subsidiary of the Company free and clear of
any lien, encumbrance, security interest, claim or charge, other
than those described in, or incorporated by reference into the
Registration Statement and the Prospectus.
(o) No Conflict . The
execution, delivery and performance by the Company of this
Agreement and the Subscription Agreements, and the consummation of
the transactions contemplated hereby and thereby, including the
issuance and sale of the Shares by the Company, will not conflict
with or result in a breach or violation of, or constitute a default
under (nor constitute any event which with or without notice, lapse
of time or both would result in any breach or violation of or
constitute a default 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 its
subsidiaries pursuant to ( i ) any indenture, mortgage,
deed of trust, loan agreement or other material agreement or
instrument to which the
8
Company or any of its subsidiaries
is a party or by which either the Company or its subsidiaries or
any of their properties may be bound or to which any of their
property or assets is subject, ( ii ) result in any
violation of the provisions of the charter or by-laws of the
Company or any of its subsidiaries, or ( iii ) result
in any violation in any material respect of 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 properties or assets; except with respect to
clauses (i) and (iii) above, to the extent that such
conflict, breach or violation has been waived.
(p) No Consents Required . No
approval, authorization, consent 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
in connection with the Company’s execution, delivery and
performance of this Agreement or the Subscription Agreements, the
consummation by the Company of the transactions contemplated hereby
or thereby or the issuance and sale of the Shares other than (
i ) as may be required under the Securities Act, (
ii ) any necessary qualification of the Shares under
the securities or blue sky laws of the various jurisdictions in
which the Shares are being offered by the Placement Agents, (
iii ) under the rules and regulations of the Financial
Industry Regulatory Authority (“ FINRA ”) or (
iv ) subject to the representations in
Section 2(rr), in connection with the listing of the Shares on
the New York Stock Exchange.
(q) Preemptive Rights . There
are no preemptive rights or other rights (other than rights which
have been waived in writing in connection with the transactions
contemplated by this Agreement or otherwise satisfied) to subscribe
for or to purchase any shares of Common Stock or shares of any
other capital stock or other equity interests of the Company or any
of its subsidiaries, or any agreement or arrangement between the
Company and any of the Company’s stockholders which grant
special rights with respect to any shares of the Company’s
capital stock or which in any way affect any stockholder’s
ability or right to alienate freely or vote such shares.
(r) Registration Rights .
Except as described in the Registration Statement, there are no
contracts, agreements or understandings between the Company or any
of its subsidiaries and any person granting such person the right
(other than rights which have been waived in writing in connection
with the transactions contemplated by this Agreement or otherwise
satisfied) to require the Company or any of its subsidiaries to
register any securities with the Commission.
(s) Independent Accountants .
To the Company’s knowledge, each of BDO Seidman, LLP and
Ernst & Young, LLP, whose reports on the consolidated
financial statements of the Company are incorporated by reference
in the Registration Statement, the Prospectus and the Disclosure
Package, is ( i ) an independent public accounting firm
within the meaning of the Securities Act, ( ii ) a
registered public accounting firm (as defined in
Section 2(a)(12) of the Sarbanes-Oxley Act of 2002 (the
“ Sarbanes-Oxley Act ”)), and ( iii
) not in violation of the auditor independence requirements of
the Sarbanes-Oxley Act. Except as disclosed in the Registration
Statement and as pre-approved in accordance with the requirements
set forth in Section 10A of the Exchange Act, neither BDO
Seidman, LLP nor Ernst & Young LLP has been engaged by
the
9
Company to perform any
“prohibited activities” (as defined in Section 10A
of the Exchange Act).
(t) Financial Statements .
The consolidated financial statements of the Company, together with
the related schedules and notes thereto, set forth or incorporated
by reference in the Registration Statement, the Prospectus and the
Disclosure Package comply in all material respects with the
applicable requirements of the Securities Act and the Exchange Act,
as applicable, and present fairly in all material respects (
i ) the financial condition of the Company and its
consolidated subsidiaries as of the dates indicated and ( ii
) the consolidated results of operations, stockholders’
equity and changes in cash flows of the Company and its
consolidated subsidiaries for the periods therein specified; and
such financial statements and related schedules and notes thereto
have been prepared in conformity with United States generally
accepted accounting principles, consistently applied throughout the
periods involved (except as otherwise stated therein and subject,
in the case of unaudited financial statements, to the absence of
footnotes and normal year-end adjustments). There are no other
financial statements (historical or pro forma) that are required to
be included or incorporated by reference in the Registration
Statement, the Prospectus or the Disclosure Package; and the
Company does not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet obligations),
not disclosed in the Registration Statement, the Disclosure Package
and the Prospectus; and all disclosures contained in the
Registration Statement, the Disclosure Package and the Prospectus
regarding “non-GAAP financial measures” (as such term
is defined by the rules and regulations of the Commission) comply
with Regulation G of the Exchange Act and Item 10(e) of
Regulation S-K under the Securities Act, to the extent applicable,
and present fairly the information shown therein and the
Company’s basis for using such measures.
(u) Absence of Material
Changes . Subsequent to the respective dates as of which
information is given in the Registration Statement, the Prospectus
and the Disclosure Package, and except as may be otherwise stated
or incorporated by reference in the Registration Statement, the
Prospectus and the Disclosure Package, there has not been (
i ) any Material Adverse Effect, ( ii ) any
transaction which is material to the Company or any of its
subsidiaries taken as a whole, ( iii ) any obligation,
direct or contingent (including any off-balance sheet obligations),
incurred by the Company or any of its subsidiaries, which is
material to the Company or any of its subsidiaries taken as a
whole, ( iv ) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company, (
v ) any change in the capital stock (other than a
change in the number of outstanding shares of Common Stock due to
the issuance of shares upon the exercise of outstanding options or
warrants or the conversion of convertible indebtedness), or
material change in the short-term debt or long-term debt of the
Company or any of its subsidiaries taken as a whole (other than
upon conversion of convertible indebtedness) or any issuance of
options, warrants, convertible securities or other rights to
purchase the capital stock (other than grants of stock options
under the Company’s stock option plans existing on the date
hereof) of the Company or any of its subsidiaries.
(v) Legal Proceedings . There
are no legal or governmental actions, suits, claims or proceedings
pending or, to the Company’s knowledge, threatened or
contemplated to which the Company or any of its subsidiaries is or
would be a party or of which any of their respective properties is
or would be subject at law or in equity, before or by any federal,
state, local or foreign governmental or regulatory commission,
board, body, authority or agency, or
10
before or by any self-regulatory
organization or other non-governmental regulatory authority which
are required to be described in the Registration Statement, the
Disclosure Package or the Prospectus or a document incorporated by
reference therein and are not so described therein, or which,
singularly or in the aggregate, if resolved adversely to the
Company or such subsidiary, would reasonably be likely to result in
a Material Adverse Effect or prevent or materially and adversely
affect the ability of the Company to consummate the transactions
contemplated hereby. To the Company’s knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by other third parties.
(w) No Violation . Neither
the Company nor any of its subsidiaries is in breach or violation
of or in default (nor has any event occurred which with notice,
lapse of time or both would result in any breach or violation of,
or constitute a default) ( i ) under the provisions of
its charter or bylaws (or analogous governing instrument, as
applicable), ( ii ) in the performance or observance of
any term, covenant, obligation, agreement or condition contained in
any indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness, or any license, lease,
contract or other agreement or instrument to which the Company or
such subsidiary is a party or by which any of its properties may be
bound or affected, or ( iii ) in the performance or
observance of any statute, law, rule, regulation, ordinance,
judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or such subsidiary
or any of its properties, as applicable, except, with respect to
clauses (ii) and (iii) above, to the extent any such
contravention has been waived or would not result in a Material
Adverse Effect.
(x) Permits . The Company and
each of its subsidiaries have made all filings, applications and
submissions required by, and owns or possesses all approvals,
licenses, certificates, certifications, clearances, consents,
exemptions, marks, notifications, orders, permits and other
authorizations issued by, the appropriate federal, state or foreign
regulatory authorities, including, without limitation, the Federal
Energy Regulatory Commission, necessary to conduct its business as
described in the Disclosure Package (collectively, “
Permits ”), and is in compliance in all material
respects with the terms and conditions of all such Permits. All
such Permits are valid and in full force and effect. Neither the
Company nor any of its subsidiaries has received any notice of any
proceedings relating to revocation or modification of, any such
Permit, which, individually or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have a Material
Adverse Effect. Except as may be required under the Securities Act
and state and foreign Blue Sky laws and the rules and regulations
of FINRA, no other Permits are required for the Company or any of
its subsidiaries to enter into, deliver and perform this Agreement
and to issue and sell the Shares to be issued and sold by the
Company hereunder.
(y) Not an Investment Company
. The Company is not or, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as
described in the Disclosure Package and the Prospectus, will not be
( i ) required to register as an “investment
company” as defined in the Investment Company Act of 1940, as
amended (the “ Investment Company Act” ), and
the rules and regulations of the Commission thereunder or (
ii ) a “business development company” (as
defined in Section 2(a)(48) of the Investment Company
Act).
11
(z) No Price Stabilization .
Neither the Company nor any of its subsidiaries nor, to the
Company’s knowledge, any of the officers or directors of the
Company or its subsidiaries, has taken or will take, directly or
indirectly, any action designed to or that might be reasonably
expected to cause or result in, or which has constituted or which
might reasonably be expected to constitute the stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(aa) Good Title to Property .
The Company and its subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to
all personal property owned by them which is material to the
business of the Company and its subsidiaries, in each case free and
clear of all liens, claims, security interests, other encumbrances
or defects (collectively, “ Liens ”), except
such as are described in the Registration Statement, the Disclosure
Package and the Prospectus or such as 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 by the Company and its
subsidiaries; and any real property and buildings held under lease
by the Company and its subsidiaries which are material to the
business of the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company
and its subsidiaries, in each case except as described in the
Registration Statement, the Disclosure Package and the
Prospectus.
(bb) Intellectual Property
Rights . The Company and its subsidiaries own or possess, or
can acquire on reasonable terms, all material patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks,
service marks and trade names currently employed by them in
connection with 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 of the foregoing which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect.
(cc) No Labor Disputes . No
labor problem or dispute with the employees of the Company or any
of the Company’s subsidiaries exists, or, to the
Company’s knowledge, is threatened or imminent, which would
reasonably be expected to result in a Material Adverse Effect. The
Company is not aware that any key employee or significant group of
employees of the Company or any of the Company’s subsidiaries
plans to terminate employment with the Company or any of the
Company’s subsidiaries.
(dd) Taxes . The Company and
each of its subsidiaries ( i ) has timely filed all
material federal, state, local and foreign income and franchise tax
returns (or timely filed applicable extensions therefor) that have
been required to be filed and ( ii ) is not in default
in any material respect in the payment of any taxes which were
payable pursuant to such returns or any assessments with respect
thereto, other than any which the Company or any of its
subsidiaries is contesting in good faith and for which adequate
reserves have been provided and reflected in the Company’s
financial statements included in the Registration Statement, or
that has been otherwise disclosed in the Disclosure Package. Except
as had been disclosed in the Disclosure Package, neither the
Company nor any of its subsidiaries has any tax deficiency that has
been or,
12
to the knowledge of the Company, is
reasonably likely to be asserted or threatened against it that
would result in a Material Adverse Effect. Neither the Company nor
any of its subsidiaries has engaged in any transaction which is a
corporate tax shelter by the Internal Revenue Service or any other
taxing authority.
(ee) Compliance with
Environmental Laws . The Company and its subsidiaries (
i ) are in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
(“ Environmental Laws ”), ( ii
) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct
their respective businesses and ( iii ) are in
compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses
or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly
or in the aggregate, have a Material Adverse Effect. There are no
costs or liabilities associated with Environmental Laws (including,
without limitation, any capital or operating expenditures required
for cleanup, closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related constraints on
operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a Material
Adverse Effect.
(ff) Insurance . The Company
and its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which
they are engaged; except as disclosed in the Registration
Statement, the Disclosure Package and the Prospectus, neither the
Company nor any of its subsidiaries has been refused any insurance
coverage sought or applied for that is material to the business of
the Company and the subsidiaries; and neither the Company nor any
of its subsidiaries has 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 from similar
insurers as may be necessary to continue its business at a cost
that would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole, except as described in the
Registration Statement, the Disclosure Package and the
Prospectus.
(gg) Accounting Controls .
The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that ( i
) transactions are executed in accordance with
management’s general or specific authorization; ( ii
) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted
accounting principles 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.
(hh) Disclosure Controls .
The Company has established, maintains and evaluates
“disclosure controls and procedures” (as such term is
defined in Rule 13a-15(e) and 15d-15(e) under the Exchange
Act), which ( i ) are designed to ensure that material
information relating to the Company and its subsidiaries is made
known to the Company’s principal executive officer and its
principal financial officer by others within those entities,
particularly
13
during the periods in which the
periodic reports required under the Exchange Act are being
prepared, ( ii ) have been evaluated for effectiveness
as of the end of the last fiscal period covered by the Registration
Statement; and ( iii ) such disclosure controls and
procedures are effective to perform the functions for which they
were established. There are no significant deficiencies or material
weaknesses in the design or operation of internal controls which
could adversely affect the Company’s ability to record,
process, summarize, or report financial data to management and the
Board of Directors of the Company. The Company is not aware of any
fraud, whether or not material, that involves management or other
employees who have a role in the Company’s internal controls;
and since the date of the most recent evaluation of such disclosure
controls and procedures, there have been no significant changes in
internal controls or in other factors that could significantly
affect internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses. Except
as set forth in the Disclosure Package, the Audit Committee of the
Board of Directors of the Company (the “ Audit
Committee ”) is not reviewing or investigating, and
neither the Company’s independent auditors nor its internal
auditors have recommended that the Audit Committee review or
investigate, ( i ) adding to, deleting, changing the
application of or changing the Company’s disclosure with
respect to, any of the Company’s material accounting
policies, ( ii ) any manner which could result in a
restatement of the Company’s financial statements for any
annual or interim period during the current or prior three fiscal
years, or ( iii ) a significant deficiency, material
weakness, change in internal control over financial reporting or
fraud involving management or other employees who have a
significant role in the internal control over financial
reporting.
(ii) Contracts; Off-Balance Sheet
Interests . There is no contract, permit or instrument, or
off-balance sheet transaction (including without limitation, any
“variable interests” in “variable interest
entities,” as such terms are defined in Financial Accounting
Standards Board Interpretation No. 46) of a character required
by the Securities Act or the Rules and Regulations to be described
in the Registration Statement or the Disclosure Package or to be
filed as an exhibit to the Registration Statement or document
incorporated by reference therein, which is not described or filed
as required. Each description of any such contract, permit or
instrument in the Registration Statement or the Disclosure Package
accurately reflects in all material respects the terms of the
underlying document, contract, permit or instrument. No default
exists, and no event has occurred which with notice or lapse of
time or both would constitute a default, in the due performance and
observance of any term, covenant or condition, by the Company or a
subsidiary, if a subsidiary is a party thereto, of any agreement to
which the Company or any of its subsidiaries is a party which
default or event, i
