4,249,668 Units
CYCLACEL
PHARMACEUTICALS, INC.
PLACEMENT AGENT
AGREEMENT
February 12,
2007
Lazard Capital Markets
LLC
Needham & Company, LLC
ThinkEquity Partners LLC
c/o Lazard Capital Markets LLC
30 Rockefeller Plaza
New York, New York 10020
Dear Sirs:
1.
INTRODUCTION . Cyclacel
Pharmaceuticals, Inc., a Delaware corporation (the ‘‘
Company ’’), proposes to issue and sell to the
purchasers, pursuant to the terms of this Placement Agent Agreement
(this ‘‘ Agreement ’’) and the
Subscription Agreements in the form of Exhibit A attached
hereto (the ‘‘ Subscription Agreements
’’) entered into with the purchasers identified therein
(each a ‘‘ Purchaser ’’ and
collectively, the ‘‘ Purchasers ’’),
up to an aggregate of 4,249,668 units (the ‘‘
Units ’’) with each Unit consisting of (i) one
share of common stock, $0.001 par value per share (the
‘‘ Common Stock ’’) of the Company
and (ii) one warrant to purchase 0.25 shares of Common Stock (the
‘‘ Warrants ’’). The terms and
conditions of the Warrants are set forth in the form of Exhibit
B attached hereto. The Company hereby confirms its agreement
with Lazard Capital Markets LLC (‘‘ LCM
’’), Needham & Company, LLC (‘‘
Needham ’’) and ThinkEquity Partners LLC
(‘‘ ThinkEquity ,’’ and together
with LCM and Needham, the ‘‘ Placement Agents
’’) to act as Placement Agents in accordance with the
terms and conditions hereof. LCM is acting as the representative of
the Placement Agents, and in such capacity is hereinafter referred
to as the ‘‘ Representative
.’’
2.
AGREEMENT TO ACT AS
PLACEMENT AGENTS; PLACEMENT OF SECURITIES. On the basis
of the representations, warranties and agreements of the Company
herein contained, and subject to all the terms and conditions of
this Agreement:
2.1 The
Company hereby authorizes the Placement Agents to act as its
exclusive agents to solicit offers for the purchase of all or part
of the Units from the Company in connection with the proposed
offering of the Units (the ‘‘ Offering
’’). Until the Closing Date (as defined in
Section 4 hereof) or earlier upon termination of this
Agreement pursuant to Section 9 , the Company shall not,
without the prior written consent of the Representative, solicit or
accept offers to purchase Units otherwise than through the
Placement Agents. LCM may utilize the expertise of Lazard
Frères & Co. LLC in connection with LCM’s
placement agent activities.
2.2 The
Placement Agents agree, as agents of the Company, to use their best
efforts to solicit offers to purchase the Units from the Company on
the terms and subject to the conditions set forth in the Prospectus
(as defined below). The Placement Agents shall use commercially
reasonable efforts to assist the Company in obtaining performance
by each Purchaser whose offer to purchase Units has been solicited
by the Placement Agents and accepted by the Company, but the
Placement Agents shall not, except as otherwise provided in this
Agreement, be obligated to disclose the identity of any potential
purchaser or have any liability to the Company in the event any
such purchase is not consummated for any reason. Under no
circumstances will the Placement Agents be obligated to underwrite
or purchase any Units for their own accounts and, in soliciting
purchases of Units, the Placement Agents shall act solely as the
Company’s agents and not as principals. Notwithstanding the
foregoing and except as otherwise provided in
Section 2.3 , it is understood and agreed that the
Placement Agents (or their affiliates) may, solely at their
discretion and without any obligation to do so, purchase Units as
principals.
2.3 Subject
to the provisions of this Section 2 , offers for the
purchase of Units may be solicited by the Placement Agents as
agents for the Company at such times and in such amounts
as the Placement Agents
deem advisable. Each Placement Agent shall communicate to the
Company, orally or in writing, each reasonable offer to purchase
Units received by it as agent of the Company. The Company shall
have the sole right to accept offers to purchase the Units and may
reject any such offer, in whole or in part. Each Placement Agent
shall have the right, in its discretion reasonably exercised,
without notice to the Company, to reject any offer to purchase
Units received by it, in whole or in part, and any such rejection
shall not be deemed a breach of its agreement contained
herein.
2.4 The Units
are being sold to the Purchasers at a price of $8.47125 per Unit.
The purchases of the Units by the Purchasers shall be evidenced by
the execution of Subscription Agreements by each of the Purchasers
and the Company.
2.5 As
compensation for services rendered, on the Closing Date (as defined
in Section 4 hereof), the Company shall pay to the Placement
Agents by wire transfer of immediately available funds to an
account or accounts designated by the Representative, an aggregate
amount equal to six and one-half percent (6.5%) of the gross
proceeds received by the Company from the sale of the Units on such
Closing Date.
2.6 No Units
which the Company has agreed to sell pursuant to this Agreement
shall be deemed to have been purchased and paid for, or sold by the
Company, until such Units shall have been delivered to the
Purchaser thereof against payment by such Purchaser. If the Company
shall default in its obligations to deliver Units to a Purchaser
whose offer it has accepted, the Company shall indemnify and hold
the Placement Agents harmless against any loss, claim, damage or
expense arising from or as a result of such default by the Company
in accordance with the procedures set forth in Section 8(c)
herein.
3.
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Placement Agents
and the Purchasers that:
(a) The
Company has prepared and filed in conformity with the requirements
of the Securities Act of 1933, as amended (the ‘‘
Securities Act ’’), and published rules and
regulations thereunder (the ‘‘ Rules and
Regulations ’’) adopted by the Securities and
Exchange Commission (the ‘‘ Commission
’’), a ‘‘shelf’’ Registration
Statement (as hereinafter defined) on Form S-3 (File No.
333-140034), which became effective as of February 12, 2007 (the
‘‘ Effective Date ’’), including a
base prospectus relating to the securities registered pursuant to
such Registration Statement (the ‘‘ Base
Prospectus ’’), and such amendments and supplements
thereto as may have been required to the date of this Agreement.
The term ‘‘ Registration Statement
’’ as used in this Agreement means the registration
statement (including all exhibits, financial schedules and all
documents and information deemed to be a part of the Registration
Statement pursuant to Rule 430A under the Securities Act), as
amended and/or supplemented to the date of this Agreement,
including the Base Prospectus. The Registration Statement is
effective under the Securities Act and no stop order preventing or
suspending the effectiveness of the Registration Statement or
suspending or preventing the use of the Prospectus has been issued
by the Commission and no proceedings for that purpose have been
instituted or, to the knowledge of the Company, are threatened by
the Commission. The Company, if required by the Rules and
Regulations of the Commission, will file the Prospectus (as defined
below), with the Commission pursuant to Rule 424(b) of the Rules
and Regulations. The term ‘‘ Prospectus
,’’ as used in this Agreement means the Prospectus, in
the form in which it is to be filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations, or, if the Prospectus is
not to be filed with the Commission pursuant to Rule 424(b), the
Prospectus in the form included as part of the Registration
Statement as of the Effective Date, except that if any revised
prospectus or prospectus supplement shall be provided to the
Representative by the Company for use in connection with the
offering and sale of the Units which differs from the Prospectus
(whether or not such revised prospectus or prospectus supplement is
required to be filed by the Company pursuant to Rule 424(b) of the
Rules and Regulations), the term ‘‘ Prospectus
’’ shall refer to such revised prospectus or prospectus
supplement, as the case may be, from and after the time it is first
provided to the Representative for such use. Any preliminary
prospectus or prospectus
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subject to completion
included in the Registration Statement or filed with the Commission
pursuant to Rule 424 under the Securities Act is hereafter called a
‘‘ Preliminary Prospectus .’’ Any
reference herein to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 which were filed under the Securities Exchange
Act of 1934, as amended (the ‘‘ Exchange Act
’’), on or before the last to occur of the Effective
Date, the date of the Preliminary Prospectus, or the date of the
Prospectus, and any reference herein to the terms
‘‘amend,’’
‘‘amendment,’’ or
‘‘supplement’’ with respect to the
Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include (i) the filing
of any document under the Exchange Act after the Effective Date,
the date of such Preliminary Prospectus or the date of the
Prospectus, as the case may be, which is incorporated by reference
and (ii) any such document so filed. If the Company has filed an
abbreviated registration statement to register additional
securities pursuant to Rule 462(b) under the Rules (the
‘‘ 462(b) Registration Statement
’’), then any reference herein to the Registration
Statement shall also be deemed to include such 462(b) Registration
Statement.
(b) As of the
Applicable Time (as defined below) and as of the Closing Date,
neither (i) any General Use Free Writing Prospectus (as defined
below) issued at or prior to the Applicable Time, and the Pricing
Prospectus (as defined below) and the information included on
Schedule A hereto, all considered together (collectively,
the ‘‘ General Disclosure Package
’’), nor (ii) any individual Limited Use Free Writing
Prospectus (as defined below), when considered together with the
General Disclosure Package, included or will include, any untrue
statement of a material fact or omitted or as of the Closing Date
will omit, to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however , that the
Company makes no representations or warranties as to information
contained in or omitted from any Issuer Free Writing Prospectus, in
reliance upon, and in conformity with, written information
furnished to the Company through the Representative by or on behalf
of any Placement Agent specifically for inclusion therein, which
information the parties hereto agree is limited to the Placement
Agents’ Information (as defined in Section 18) . As
used in this paragraph (b) and elsewhere in this
Agreement:
‘‘
Applicable Time ’’ means 5:00 P.M., New York
time, on the date of this Agreement.
‘‘
Pricing Prospectus ’’ means the Preliminary
Prospectus, if any, and the Base Prospectus, each as amended and
supplemented immediately prior to the Applicable Time, including
any document incorporated by reference therein and any prospectus
supplement deemed to be a part thereof.
‘‘ Issuer
Free Writing Prospectus ’’ means any
‘‘issuer free writing prospectus,’’ as
defined in Rule 433 under the Securities Act relating to the Units
in the form filed or required to be filed with the Commission or,
if not required to be filed, in the form retained in the
Company’s records pursuant to Rule 433(g) under the
Securities Act.
‘‘
General Use Free Writing Prospectus ’’ means any
Issuer Free Writing Prospectus that is identified on Schedule
A to this Agreement.
‘‘
Limited Use Free Writing Prospectuses ’’ means
any Issuer Free Writing Prospectus that is not a General Use Free
Writing Prospectus.
(c) No order
preventing or suspending the use of any Preliminary Prospectus, any
Issuer Free Writing Prospectus or the Prospectus relating to the
Offering has been issued by the Commission, and no proceeding for
that purpose or pursuant to Section 8A of the Securities Act has
been instituted or threatened by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Securities Act and
the Rules and Regulations, and did not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; provided, however , that the Company makes no
representations or warranties as to information contained in or
omitted from any Preliminary Prospectus, in reliance upon, and in
conformity with, written
3
information furnished to
the Company through the Representative by or on behalf of any
Placement Agent specifically for inclusion therein, which
information the parties hereto agree is limited to the Placement
Agents’ Information (as defined in Section 18)
.
(d) At the
time the Registration Statement became or becomes effective, at the
date of this Agreement and at the Closing Date, the Registration
Statement conformed and will conform in all material respects to
the requirements of the Securities Act and the Rules and
Regulations and did not and will not contain any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading; the Prospectus, at the time the Prospectus was issued
and at the Closing Date, conformed and will conform in all material
respects to the requirements of the Securities Act and the Rules
and Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading ;
provided , however , that the foregoing representations
and warranties in this paragraph (d) shall not apply to
information contained in or omitted from the Registration Statement
or the Prospectus in reliance upon, and in conformity with, written
information furnished to the Company through the Representative by
or on behalf of any Placement Agent specifically for inclusion
therein, which information the parties hereto agree is limited to
the Placement Agents’ Information (as defined in Section
18) .
(e) Each
Issuer Free Writing Prospectus, if any, as of its issue date and at
all subsequent times through the completion of the public offer and
sale of the Units or until any earlier date that the Company
notified or notifies the Representative as described in Section
5(e) , did not, does not and will not include any information
that conflicted, conflicts or will conflict with the information
contained in the Registration Statement, Pricing Prospectus or the
Prospectus, including any document incorporated by reference
therein and any prospectus supplement deemed to be a part thereof
that has not been superseded or modified, or includes an untrue
statement of a material fact or omitted or would omit to state a
material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances
prevailing at the subsequent time, not misleading. The foregoing
sentence does not apply to statements in or omissions from any
Issuer Free Writing Prospectus in reliance upon, and in conformity
with, written information furnished to the Company through the
Representative by or on behalf of any Placement Agent specifically
for inclusion therein, which information the parties hereto agree
is limited to the Placement Agents’ Information (as defined
in Section 18) .
(f) The
documents incorporated by reference in the Prospectus, when they
became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules
and regulations of the Commission thereunder and none of such
documents contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; and any
further documents so filed and incorporated by reference in the
Prospectus, when such documents become effective or are filed with
the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading.
(g) The
Company has not, directly or indirectly, distributed and will not
distribute any offering material in connection with the Offering
other than any Preliminary Prospectus, the Prospectus and other
materials, if any, permitted under the Securities Act and
consistent with Section 5(b) below. The Company will file
with the Commission all Issuer Free Writing Prospectuses, if any,
in the time and manner required under Rules 163(b)(2) and 433(d)
under the Securities Act.
(h) The
Company and each Subsidiary (as defined below) has been duly
organized and is validly existing as a corporation in good standing
(or the foreign equivalent thereof) under the
4
laws of its jurisdiction
of organization. The Company and each Subsidiary is duly qualified,
or is the process of being qualified, to do business and is in good
standing, or will be in good standing upon such qualification, as a
foreign corporation in each jurisdiction in which its ownership or
lease of property or the conduct of its business requires such
qualification and has all power and authority necessary to own or
hold its properties and to conduct the business in which it is
engaged, except where the failure to so qualify or have such power
or authority (i) would not have, singularly or in the aggregate, a
material adverse effect on the condition (financial or otherwise),
results of operations, assets or business or prospects of the
Company or any Subsidiary, taken as a whole, or (ii) impair in any
material respect the ability of the Company to perform its
obligations under this Agreement or to consummate any transactions
contemplated by the Agreement, the General Disclosure Package or
the Prospectus (any such effect as described in clauses (i) or
(ii), a ‘‘ Material Adverse Effect
’’). The Company owns or controls, directly or
indirectly, only the following corporations, partnerships, limited
liability partnerships, limited liability companies, associations
or other entities: Cyclacel Limited, a private limited company
organized under the laws of England and Wales (‘‘
Subsidiary ’’).
(i) The
Company has the full right, power and authority to enter into this
Agreement, each of the Subscription Agreements and that certain
Escrow Agreement (the ‘‘ Escrow Agreement
’’) dated as of the date hereof by and among the
Company, the Placement Agents and the escrow agent named therein,
and to perform and to discharge its obligations hereunder and
thereunder; and each of this Agreement and each of the Subscription
Agreements have been duly authorized, executed and delivered by the
Company, and constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms.
(j) The
shares of Common Stock to be issued and sold by the Company to the
Purchasers hereunder and under the Subscription Agreements and the
shares of Common Stock issuable upon the exercise of the Warrants
(the ‘‘ Warrant Shares ’’) have been
duly and validly authorized and the Common Stock, when issued and
delivered against payment therefor as provided herein and in the
Subscription Agreements and the Warrant Shares, when issued and
delivered against payment therefore as provided in the Warrants,
will be duly and validly issued, fully paid and non-assessable and
free of any preemptive or similar rights and will conform to the
description thereof contained in the General Disclosure Package and
the Prospectus.
(k) The
Company has an authorized capitalization as set forth in the
Pricing Prospectus, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable, have been issued in compliance
with federal and state securities laws, and conform to the
description thereof contained in the General Disclosure Package and
the Prospectus. As of December 31, 2006, there were 16,157,953
shares of Common Stock issued and outstanding, 2,046,813 shares of
Preferred Stock, par value $0.001 of the Company, issued and
outstanding and 4,755,540 shares of Common Stock were issuable upon
the exercise of all options, warrants and convertible securities
outstanding as of such date. Since such date, the Company has not
issued any securities, other than Common Stock of the Company
issued pursuant to the exercise of stock options previously
outstanding under the Company’s stock option plans or the
issuance of restricted Common Stock pursuant to employee stock
purchase plans. None of the outstanding shares of Common Stock was
issued in violation of any preemptive rights, rights of first
refusal or other similar rights to subscribe for or purchase
securities of the Company. There are no authorized or outstanding
shares of capital stock, options, warrants, preemptive rights,
rights of first refusal or other rights to purchase, or equity or
debt securities convertible into or exchangeable or exercisable
for, any capital stock of the Company or any of its subsidiaries
other than those described above or accurately described in the
General Disclosure Package. The description of the Company’s
stock option, stock bonus and other stock plans or arrangements,
and the options or other rights granted thereunder, as described in
the General Disclosure Package and the Prospectus, accurately and
fairly present the information required to be shown with respect to
such plans, arrangements, options and rights.
(l) All the
outstanding shares of capital stock of each Subsidiary have been
duly authorized and validly issued, are fully paid and
non-assessable and, except to the extent set forth in
the
5
General Disclosure
Package or the Prospectus, are owned by the Company directly or
indirectly through one or more wholly-owned subsidiaries, free and
clear of any claim, lien, encumbrance, security interest,
restriction upon voting or transfer or any other claim of any third
party.
(m) The
execution, delivery and performance of this Agreement, the
Subscription Agreements and the Escrow Agreement by the Company,
the issue and sale of the Units by the Company and the consummation
of the transactions contemplated hereby and thereby will not (with
or without notice or lapse of time or both) conflict with or result
in a breach or violation of any of the terms or provisions of,
constitute a default under, give rise to any right of termination
or other right or the cancellation or acceleration of any right or
obligation or loss of a benefit under, or give rise to the creation
or imposition of any lien, encumbrance, security interest, claim or
charge upon any property or assets of the Company or any Subsidiary
pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary is
bound or to which any of the property or assets of the Company or
any Subsidiary is subject, nor will such actions result in any
violation of the provisions of the charter or by-laws (or analogous
governing instruments, as applicable) of the Company or any
Subsidiary or, to the Company’s knowledge, 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 Subsidiary or any of their
properties or assets.
(n) Except
for the registration of the securities offered in the Offering
under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state or foreign securities
laws, the National Association of Securities Dealers, Inc. and the
Nasdaq Global Market (‘‘ Nasdaq GM
’’) in connection with the offering and sale of the
Units by the Company, no consent, approval, authorization or order
of, or filing, qualification or registration with, any court or
governmental agency or body, foreign or domestic, which has not
been made, obtained or taken and is not in full force and effect,
is required for the execution, delivery and performance of this
Agreement, the Subscription Agreements and the Escrow Agreement by
the Company, the offer or sale of the Units or the consummation of
the transactions contemplated hereby or thereby.
(o) Ernst
& Young LLP, who have certified certain financial statements
and related schedules included or incorporated by reference in the
Registration Statement, the General Disclosure Package and the
Prospectus, and have audited the Company’s internal control
over financial reporting and management’s assessment thereof,
is an independent registered public accounting firm as required by
the Securities Act and the Rules and Regulations and the Public
Company Accounting Oversight Board (United States) (the
‘‘ PCAOB ’’). Except as pre-approved
in accordance with the requirements set forth in Section 10A of the
Exchange Act, Ernst & Young LLP has not been engaged by the
Company to perform any ‘‘prohibited
activities’’ (as defined in Section 10A of the Exchange
Act).
(p) The
financial statements, together with the related notes and
schedules, included or incorporated by reference in the General
Disclosure Package, the Prospectus and in the Registration
Statement fairly present the financial position and the results of
operations and changes in financial position of the Company and its
consolidated subsidiaries and other consolidated entities at the
respective dates or for the respective periods therein specified.
Such statements and related notes and schedules have been prepared
in accordance with the generally accepted accounting principles in
the United States (‘‘ GAAP ’’)
applied on a consistent basis throughout the periods involved
except as may be set forth in the related notes included or
incorporated by reference in the General Disclosure Package. The
financial statements, together with the related notes and
schedules, included or incorporated by reference in the General
Disclosure Package and the Prospectus comply in all material
respects with the Securities Act, the Exchange Act, and the Rules
and Regulations and the rules and regulations under the Exchange
Act. No other financial statements or supporting schedules or
exhibits are required by the Securities Act or the Rules and
Regulations to be described, or included or incorporated by
reference in the Registration Statement, the General Disclosure
Package or the Prospectus. There
6
is no pro forma or as
adjusted financial information which is required to be included in
the Registration Statement, the General Disclosure Package, or and
the Prospectus or a document incorporated by reference therein in
accordance with the Securities Act and the Rules and Regulations
which has not been included or incorporated as so required. The pro
forma and pro forma as adjusted financial information and the
related notes included or incorporated by reference in the
Registration Statement, the General Disclosure Package and the
Prospectus have been properly compiled and prepared in accordance
with the applicable requirements of the Securities Act and the
Rules and Regulations and present fairly the information shown
therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to
therein.
(q) Neither
the Company nor any Subsidiary has sustained, since the date of the
latest audited financial statements included or incorporated by
reference in the General Disclosure Package, any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the General Disclosure
Package; and, since such date, there has not been any change in the
capital stock or long-term debt of the Company or any Subsidiary or
any material adverse changes, or any development involving a
prospective material adverse change, in or affecting the business,
assets, general affairs, management, financial position, prospects,
stockholders’ equity or results of operations of the Company
or any Subsidiary, otherwise than as set forth or contemplated in
the General Disclosure Package.
(r) Except as
set forth in the General Disclosure Package, there is no legal or
governmental action, suit, claim or proceeding pending to which the
Company or any Subsidiary is a party or of which any property or
assets of the Company or any Subsidiary is the subject which is
required to be described in the Registration Statement, the General
Disclosure Package or the Prospectus or a document incorporated by
reference therein and is not described therein, or which,
singularly or in the aggregate, if determined adversely to the
Company or any Subsidiary could have a Material Adverse Effect or
prevent the consummation of the transactions contemplated hereby;
and to the best of the Company’s knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(s) Neither
the Company nor any Subsidiary is in (i) violation of its charter
or by-laws (or analogous governing instrument, as applicable), (ii)
default in any respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default,
in the due performance or observance of any term, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it is bound or to which any of its property or
assets is subject or (iii) to the Company’s knowledge,
violation of any law, ordinance, governmental rule, regulation or
court order, decree or judgment to which it or its property or
assets is subject except, in the case of clauses (ii) and (iii) of
this paragraph (s), for any violations or defaults which,
singularly or in the aggregate, would not have a Material Adverse
Effect.
(t) The
Company and each Subsidiary possesses all licenses, certificates,
authorizations and permits issued by, and have made all
declarations and filings with, the appropriate local, state,
federal or foreign regulatory agencies or bodies which are
necessary or desirable for the ownership of its properties or the
conduct of its businesses as described in the General Disclosure
Package and the Prospectus (collectively, the ‘‘
Governmental Permits ’’) except where any
failures to possess or make the same, singularly or in the
aggregate, would not have a Material Adverse Effect. The Company
and each Subsidiary is in compliance with all such Governmental
Permits; all such Governmental Permits are valid and in full force
and effect, except where the validity or failure to be in full
force and effect would not, singularly or in the aggregate, have a
Material Adverse Effect. To the Company’s knowledge, all such
Governmental Permits are free and clear of any restriction or
condition that are in addition to, or materially different from
those normally applicable to similar licenses, certificates,
authorizations and permits. Neither the Company nor any Subsidiary
has received notification of any revocation or modification (or
proceedings related
7
thereto) of any such
Governmental Permit and the Company has no reason to believe that
any such Governmental Permit will not be renewed.
(u) Neither
the Company nor any Subsidiary is or, after giving effect to the
offering of the Units and the application of the proceeds thereof
as described in the General Disclosure Package and the Prospectus,
will become an ‘‘investment company’’
within the meaning of the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission
thereunder.
(v) Neither
the Company nor any Subsidiary, nor to the Company’s
knowledge, any of the Company’s and any Subsidiary’s
officers, directors or affiliates has taken or will take, directly
or indirectly, any action designed or intended to stabilize or
manipulate the price of any security of the Company, or which
caused or resulted in, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of
the price of any security of the Company.
(w) To the
best of the Company’s knowledge, the Company and each
Subsidiary owns or possesses the right to use all patents,
trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions,
software, databases, know-how, Internet domain names, trade secrets
and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures, and other
intellectual property (collectively, ‘‘ Intellectual
Property ’’) necessary to carry on their respective
businesses as currently conducted, and as proposed to be conducted
and described in the General Disclosure Package and the Prospectus,
and the Company is not aware of any claim to the contrary or any
challenge by any other person to the rights of the Company or any
Subsidiary with respect to the foregoing except for those that
could not have a Material Adverse Effect. The Intellectual Property
licenses described in the General Disclosure Package and the
Prospectus are valid, binding upon, and enforceable by or against
the parties thereto in accordance to its terms. The Company and
each Subsidiary has complied in all material respects with, and is
not in breach nor has received any asserted or threatened claim of
breach of, any Intellectual Property license, and the Company has
no knowledge of any breach or anticipated breach by any other
person to any Intellectual Property license. To the best of the
Company’s knowledge, the Company’s and each
Subsidiary’s business as now conducted and as proposed to be
conducted does not and will not infringe or conflict with any valid
patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses or other Intellectual Property or franchise right
of any person, except for any such acts that would not have a
Material Adverse Effect. No claim has been made against the Company
or any Subsidiary alleging the infringement by the Company or any
Subsidiary of any patent, trademark, service mark, trade name,
copyright, trade secret, license in or other intellectual property
right or franchise right of any person. The Company and each
Subsidiary has taken all reasonable steps to protect, maintain and
safeguard its rights in all Intellectual Property, including the
execution of appropriate nondisclosure and confidentiality
agreements. The consummation of the transactions contemplated by
this Agreement will not result in the loss or impairment of or
payment of any additional amounts with respect to, nor require the
consent of any other person in respect of, each of the
Company’s and each Subsidiary’s right to own, use, or
hold for use any of the Intellectual Property as owned, used or
held for use in the conduct of its business as currently conducted.
The Company and each Subsidiary has at all times complied with all
applicable laws relating to privacy, data protection, and the
collection and use of personal information collected, used, or held
for use by the Company or any Subsidiary in the conduct of the
Company’s or any Subsidiary’s business. No claims have
been asserted or threatened against the Company or any Subsidiary
alleging a violation of any person’s privacy or personal
information or data rights and the consummation of the transactions
contemplated hereby will not breach or otherwise cause any
violation of any law related to privacy, data protection, or the
collection and use of personal information collected, used, or held
for use by the Company or any Subsidiary in the conduct of the
Company’s or any Subsidiary’s business. The Company and
each Subsidiary takes reasonable measures to ensure that such
information is protected against unauthorized access, use,
modification, or other misuse.
8
(x) The
Company and each Subsidiary has good and marketable title in fee
simple to, or have valid rights to lease or otherwise use, all
items of real or personal property which are material to the
business of the Company and any Subsidiary, free and clear of all
liens, encumbrances, security interests, claims and defects that do
not, singularly or in the aggregate, materially affect the value of
such property and do not interfere with the use made and proposed
to be made of such property by the Company or any Subsidiary; and
all of the leases and subleases material to the business of the
Company or any Subsidiary, and under which the Company or any
Subsidiary holds properties described in the General Disclosure
Package and the Prospectus, are in full force and effect, and
neither the Company nor any Subsidiary has received any notice of
any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company or any Subsidiary under any of
the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or any Subsidiary to the
continued possession of the leased or subleased premises under any
such lease or sublease.
(y) No labor
disturbance by the employees of the Company or any Subsidiary
exists or, to the best of the Company’s knowledge, is
imminent, and the Company has no actual knowledge of any existing
or imminent labor disturbance by the employees of any of its or any
Subsidiary’s principal suppliers, manufacturers, customers or
contractors, that could reasonably be expected, singularly or in
the aggregate, to have a Material Adverse Effect. The Company is
not aware that any key employee or significant group of employees
of the Company or any Subsidiary plans to terminate employment with
the Company or any Subsidiary.
(z) No
‘‘prohibited transaction’’ (as defined in
Section 406 of the Employee Retirement Income Security Act of 1974,
as amended, including the regulations and published interpretations
thereunder (‘‘ ERISA ’’), or Section
4975 of the Internal Revenue Code of 1986, as amended from time to
time (the ‘‘ Code ’’)) or
‘‘accumulated funding deficiency’’ (as
defined in Section 302 of ERISA) or any of the events set forth in
Section 4043(b) of ERISA (other than events with respect to which
the thirty (30)-day notice requirement under Section 4043 of ERISA
has been waived) has occurred or could reasonably be expected to
occur with respect to any employee benefit plan of the Company or
any Subsidiary which could, singularly or in the aggregate, have a
Material Adverse Effect. Each employee benefit plan of the Company
or any Subsidiary is in compliance in all material respects with
applicable law, including ERISA and the Code. The Company and each
Subsidiary has not incurred and could not reasonably be expected to
incur liability under Title IV of ERISA with respect to the
termination of, or withdrawal from, any pension plan (as defined in
ERISA). Each pension plan for which the Company or any Subsidiary
would have any liability that is intended to be qualified under
Section 401(a) of the Code is in material compliance with the
Code.
(aa) The
Company and each Subsidiary is in compliance with all foreign,
federal, state and local rules, laws and regulations relating to
the use, treatment, storage and disposal of hazardous or toxic
substances or waste and protection of health and safety or the
environment which are applicable to its businesses (‘‘
Environmental Laws ’’), except where the failure
to comply would not, singularly or in the aggregate, have a
Material Adverse Effect. There has been no storage, generation,
transportation, handling, treatment, disposal, discharge, emission,
or other release of any kind of toxic or other wastes or other
hazardous substances regulated by Environmental Laws
(‘‘ Hazardous Substances ’’) by or
caused by the Company or any Subsidiary (or, to the Company’s
knowledge and without independent investigation, any other entity
for whose acts or omissions the Company or any Subsidiary is or may
otherwise be liable) upon any of the property now or previously
owned or leased by the Company or any Subsidiary, or upon any other
property, in violation of any law, statute, ordinance, rule,
regulation, order, judgment, decree or permit or which would, under
any law, statute, ordinance, rule (including rule of common law),
regulation, order, judgment, decree or permit, give rise to any
liability, except for any violation or liability which would not
have, singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Effect; to the Company’s
actual knowledge and without independent investigation, there has
been no disposal, discharge, emission or other release of any kind
onto such property or into the environment surrounding such
property of any Hazardous
9
Substance, except for
any such disposal, discharge, emission, or other release in
violation of Environmental Laws which would not have, singularly or
in the aggregate with all such discharges and other releases, a
Material Adverse Effect.
(bb) The
Company and each Subsidiary (i) has timely filed all necessary
federal, state, local and foreign tax returns, and all such returns
were true, complete and correct, (ii) has paid all federal, state,
local and foreign taxes, assessments, governmental or other charges
due and payable for which it is liable, including, without
limitation, all sales and use taxes and all taxes which the Company
or any Subsidiary is obligated to withhold from amounts owing to
employees, creditors and third parties, and (iii) does not have any
tax deficiency or claims outstanding or assessed or, to the best of
its knowledge, proposed against any of them, except those, in each
of the cases described in clauses (i), (ii) and (iii) of this
paragraph (bb) , that would not, singularly or in the
aggregate, have a Material Adverse Effect. The Company and each
Subsidiary has not engaged in any transaction which is a corporate
tax shelter or which could be characterized as such by the Internal
Revenue Service or any other taxing authority. The accruals and
reserves on the books and records of the Company in respect of tax
liabilities for any taxable period not yet finally determined are
adequate to meet any assessments and related liabilities for any
such period, and since December 31, 2005, the Company and each
Subsidiary has not incurred any liability for taxes other than in
the ordinary course.
(cc) The
Company and each Subsidiary carries, or is covered by, insurance
provided by recognized, financially sound and reputable
institutions with policies in such amounts and covering such risks
as is adequate for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar
businesses in similar industries. The Company has no reason to
believe that it or any Subsidiary will not be able (i) to renew its
existing insurance coverage as and when such policies expire or
(ii) to obtain comparable coverage from similar institutions as may
be necessary or appropriate to conduct its business as now
conducted and at a cost that would not result in a Material Adverse
Effect. Neither the Company nor any Subsidiary has been denied any
insurance coverage that it has sought or for which it has
applied.
(dd) The
Company and each Subsidiary maintains a system of internal
accounting and other controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management’s general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain
accountability for assets; (iii) access to assets is permitted only
in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. Except
as described in the General Disclosure Package, since the end of
the Company’s most recent audited fiscal year, there as been
(A) no material weakness in the Company’s internal control
over financial reporting (whether or not remediated) and (B) no
change in the Company’s internal control over financial
reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over
financial reporting.
(ee) The
minute books of the Company and each Subsidiary have been made
available to the Placement Agents and counsel for the Placement
Agents, and such books (i) contain a complete summary of all
meetings and actions of the board of directors (including each
board committee) and shareholders of the Company and each
Subsidiary (or analogous governing bodies and interest holders, as
applicable), since January 1, 2004 through the date of the latest
meeting and action, and (ii) accurately, in all material respects,
reflect all transactions referred to in such minutes.
(ff) There is
no franchise, lease, contract, agreement or document required by
the Securities Act or by the Rules and Regulations to be described
in the General Disclosure Package and in the Prospectus or a
document incorporated by reference therein or to be filed as an
exhibit to the Registration Statement or a document incorporated by
reference therein which is not described or filed therein as
required; and all descriptions of any such franchises, leases,
contracts, agreements
10
or documents contained
in the Registration Statement or in a document incorporated by
reference therein are accurate and complete descriptions of such
documents in all material respects. Other than as described in the
General Disclosure Package, no such franchise, lease, contract or
agreement has been suspended or terminated for convenience or
default by the Company or any Subsidiary or any of the other
parties thereto, and neither the Company nor any Subsidiary has
received notice nor does the Company have any other knowledge of
any such pending or threatened suspension or termination, except
for such pending or threatened suspensions or terminations that
would not reasonably be expected to, singularly or in the
aggregate, have a Material Adverse Effect.
(gg) No
relationship, direct or indirect, exists between or among the
Company and any Subsidiary on the one hand, and the directors,
officers, stockholders (or analogous interest holders), customers
or suppliers of the Company or any Subsidiary or any of their
affiliates on the other hand, which is required to be described in
the General Disclosure Package and the Prospectus or a document
incorporated by reference therein and which is not so
described.
(hh) No
person or entity has the right to require registration of shares of
Common Stock or other securities of the Company or any Subsidiary
because of the filing or effectiveness of the Registration
Statement or otherwise, except for persons and entities who have
expressly waived such right in writing or who have been given
timely and proper written notice and have failed to exercise such
right within the time or times required under the terms and
conditions of such right. Except as described in the General
Disclosure Package, there are no persons with registration rights
or similar rights to have any securities registered by the Company
or any Subsidiary under the Securities Act.
(ii) Neither
the Company nor any Subsidiary owns any ‘‘margin
securities’’ as that term is defined in Regulation U of
the Board of Governors of the Federal Reserve System (the
‘‘ Federal Reserve Board ’’), and
none of the proceeds of the sale of the Units will be used,
directly or indirectly, for the purpose of purchasing or carrying
any margin security, for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of
the Units to be considered a ‘‘purpose
credit’’ within the meanings of Regulation T, U or X of
the Federal Reserve Board.
(jj) Except
for this Agreement, neither the Company nor any Subsidiary is a
party to any contract, agreement or understanding with any person
that would give rise to a valid claim against the Company or any
Placement Agent for a brokerage commission, finder’s fee or
like payment in connection with the offering and sale of the Units
or any transaction contemplated by this Agreement, the Registration
Statement, the General Disclosure Package or the
Prospectus.
(kk) No
forward-looking statement (within the me
