EXHIBIT 10.1
2,581,780 Units
Consisting of 10,327,120 Shares of Common Stock
and Warrants to Purchase 2,581,780 Shares of Common
Stock
STRATEX NETWORKS, INC.
PLACEMENT AGENCY
AGREEMENT
September 20, 2004
CIBC World Markets Corp.
as Placement Agent
417 5 th Avenue, 2 nd Floor
New York, New York 10016
Ladies and Gentlemen:
Stratex Networks, Inc., a Delaware
corporation (the “Company”), proposes, subject to the
terms and conditions contained herein, to issue and sell 2,581,780
Units (the “Units”), consisting of (i) 10,327,120
shares (the “Shares”) of common stock, $0.01 par value
per share (the “Common Stock”) and (ii) warrants to
purchase 2,581,780 shares of Common Stock (the
“Warrants”), directly to certain investors
(collectively, the “Investors”). The Company desires to
engage you as its placement agent (the “Placement
Agent”) in connection with such issuance and sale. The Units
are more fully described in the Registration Statement (as
hereinafter defined).
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”) adopted
by the Securities and Exchange Commission (the
“Commission”) a Registration Statement (as hereinafter
defined) on Form S-3 (No. 333-50820) which became effective as of
December 7, 2000 (the “Effective Date”), including a
base prospectus relating to the Units (the “Base
Prospectus”), and such amendments thereof as may have been
required to the date of this Agreement. Copies of such Registration
Statement (including all amendments thereof) and of the related
Base Prospectus have heretofore been delivered by the Company to
you. The term “Registration Statement” as used in this
Agreement means the initial registration statement (including all
exhibits, financial schedules and all documents and information
deemed to be a part of the Registration Statement through
incorporation by reference or otherwise), as amended to the date of
this Agreement, including the Base Prospectus. If the Company has
filed an abbreviated registration statement to register additional
Units 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. The prospectus supplement relating to the
Units as filed with the
Commission pursuant to and in accordance with
Rule 424(b) under the Securities Act is hereinafter referred to as
the “Prospectus Supplement.” The term
“Prospectus” as used in this Agreement means the Base
Prospectus together with the Prospectus Supplement. As used herein,
the terms “Base Prospectus,” “Prospectus,”
“Registration Statement,” “Rule 462 Registration
Statement,” and “Prospectus Supplement” shall
include any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act on or before the date
of this Agreement, and any reference to any amendment or supplement
to the Registration Statement or the Prospectus shall be deemed to
refer to and include any document filed under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”),
after the date of the Base Prospectus by the Company with the
Commission, that are deemed to be incorporated therein by
reference.
In connection with its obligations
as Placement Agent hereunder, the Company hereby confirms that the
Placement Agent is authorized to distribute the Prospectus (as from
time to time amended or supplemented if the Company furnishes
amendments or supplements thereto to the Placement
Agent).
1. Agreement to Act as Placement
Agent; Delivery and Payment . On the basis of the
representations, warranties and agreements contained in, and
subject to the terms and conditions of, this Agreement:
(a) The Placement Agent agrees to
act as the Company’s exclusive Placement Agent in connection
with the issuance and sale, on a reasonable efforts basis, by the
Company of the Units to the Investors. The Company acknowledges and
agrees that the Placement Agent’s engagement hereunder is not
an agreement by the Placement Agent or any of their affiliates to
underwrite or purchase any securities or otherwise provide any
financing. As compensation for their services hereunder, the
Company agrees to pay on the Closing Date (as defined below) the
Placement Agent by wire transfer of immediately available funds
five percent (5%) of the gross proceeds received by the Company
from the sale of the Units.
(b) Payment of the purchase price
for, and delivery of the Units shall be made at a closing (the
“Closing”) at the offices of Morrison & Foerster
LLP, 755 Page Mill Road, Palo Alto, CA 94304-1018 at 9:00 a.m.,
California time, on the Closing Date to take place on the third or
fourth business day (as permitted under Rule 15c6-1 under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) after the determination of the public offering price
of the Units (such time and date of payment and delivery being
herein called the “Closing Date”). All actions taken at
the Closing shall be deemed to have occurred
simultaneously.
(c) Payment of the purchase price
for the Units shall be made to or upon the order of the Company by
wire transfer in Federal (same day) funds to the Company, upon
delivery the Shares, through the facilities of The Depository Trust
Company and the issuance of certificates for the Warrants, to such
persons, and shall be registered in such name or names and shall be
in such denominations, as the Placement Agent may request at least
two business days before the Closing Date. Payment of the purchase
price for the Units shall be made on the Closing Date by the
Investors directly to the Company or as the Placement Agent shall
otherwise direct.
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(d) The purchases of the Units by
the Investors may be evidenced by the execution of a purchase
agreement substantially in the form attached hereto as Exhibit
A.
(e) 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 consent of the
Placement Agent, solicit or accept offers to purchase shares of its
Common Stock (other than pursuant to the exercise of options under
existing employee benefit plans, purchases under the
Company’s employee stock purchase plan or warrants to
purchase shares of Common Stock that are outstanding at the date
hereof) otherwise than through the Placement Agent.
2. Representations and Warranties
of the Company . The Company represents and warrants to the
Placement Agent as of the date hereof and as of the Closing Date,
as follows:
(a) The Company meets the
requirements for use of Form S-3 under the Securities Act. On the
Effective Date, the Registration Statement complied, and on the
date of the Prospectus, the date any post-effective amendment to
the Registration Statement becomes effective, the date any
supplement or amendment to the Prospectus is filed with the
Commission and the Closing Date, the Registration Statement and the
Prospectus (and any amendment thereof or supplement thereto) will
comply, in all material respects, with the requirements of the
Securities Act and the Rules and the Exchange Act and the rules and
regulations of the Commission thereunder. The Registration
Statement did not, as of the Effective Date, 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 not misleading; and on the Effective Date and
the other dates referred to above neither the Registration
Statement nor the Prospectus, nor any amendment thereof or
supplement thereto, will contain any untrue statement of a material
fact or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. If applicable, when any preliminary prospectus was
first filed with the Commission (whether filed as part of the
Registration Statement or any amendment thereto or pursuant to Rule
424(a) of the Rules) and when any amendment thereof or supplement
thereto was first filed with the Commission, such preliminary
prospectus as amended or supplemented complied in all material
respects with the applicable provisions of the Securities Act and
the Rules and did 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 not
misleading. If applicable, each preliminary prospectus and the
Prospectus delivered to the Placement Agent for use in connection
with this offering was identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T. If Rule 434 is used, the
Company will comply with the requirements of Rule 434 and the
Prospectus shall not be “materially different,” as such
term is used in Rule 434, from the prospectus included in the
Registration Statement at the time it became effective.
Notwithstanding the foregoing, none of the representations and
warranties in this Section 2(a) shall apply to statements in, or
omissions from, the Registration Statement or the Prospectus made
in reliance upon, and in conformity with, information herein or
otherwise furnished in writing by the Placement Agent specifically
for inclusion in the Registration Statement or the Prospectus. With
respect to the preceding sentence, the Company acknowledges that
the only information furnished in writing by the Placement Agent
for use in the Registration Statement or the Prospectus is the
statements contained in the tenth paragraph under the caption
“Plan of Distribution” in the Prospectus
Supplement.
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(b) 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 Company’ knowledge, are threatened
under the Securities Act. Any required filing of the Prospectus and
any supplement thereto pursuant to Rule 424(b) of the Rules has
been or will be made in the manner and within the time period
required by such Rule 424(b).
(c) The documents incorporated by
reference in the Registration Statement and the Prospectus, at the
time they became effective or were filed with the Commission, as
the case may be, complied in all material respects with 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 an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, and any further documents so filed
and incorporated by reference in the Registration Statement and 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 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 light of the
circumstances under which they are made, not misleading.
(d) The financial statements of the
Company (including all notes and schedules thereto) included or
incorporated by reference in the Registration Statement and
Prospectus present fairly the financial position of the Company and
its consolidated subsidiaries at the dates indicated and the
statement of operations, stockholders’ equity and cash flows
of the Company and its consolidated subsidiaries for the periods
specified (subject, in the case of unaudited statements, to normal
year-end audit adjustments which are not expected to be material in
amount); and such financial statements and related schedules and
notes thereto, and the unaudited financial information filed with
the Commission as part of the Registration Statement, have been
prepared in conformity with generally accepted accounting
principles, consistently applied throughout the periods
involved.
(e) Deloitte & Touche LLP, whose
reports are filed with the Commission as a part of the Registration
Statement, are and, during the periods covered by their reports,
were independent public accountants as required by the Securities
Act and the Rules and Rule 3600T of the Public Company Accounting
Oversight Board.
(f) The Company and each of its
subsidiaries, including each entity (corporation, partnership,
joint venture, association or other business organization)
controlled directly or indirectly by the Company, is duly
organized, validly existing and in good standing under the laws of
their respective jurisdictions of incorporation or organization.
Each subsidiary of the Company that constitutes, and any group of
subsidiaries of the Company that together
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constitute, a “significant
subsidiary” of the Company, as that term is defined in Rule
1-02(w) of Regulation S-X under the Act, if any, are listed on
Schedule I attached hereto (the “Significant
Subsidiaries”). The Company and each of its subsidiaries is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the
business conducted by it or location of the assets or properties
owned, leased or licensed by it requires such qualification, except
for such jurisdictions where the failure to so qualify individually
or in the aggregate would not reasonably be expected to have a
material adverse effect on the assets, properties, condition,
financial or otherwise, or in the results of operations, business
affairs or business prospects of the Company and its subsidiaries
considered as a whole (a “Material Adverse Effect”);
and to the Company’s knowledge, no proceeding has been
instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification.
(g) The Company and each of its
subsidiaries has all requisite corporate power and authority, and
all necessary authorizations, approvals, consents, orders,
licenses, certificates and permits of and from all governmental or
regulatory bodies or any other person or entity (collectively, the
“Permits”), to own, lease and license its assets and
properties and conduct its business, all of which are valid and in
full force and effect, except where the lack of such Permits,
individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. The Company and each of its
subsidiaries has fulfilled and performed in all material respects
all of its material obligations with respect to such Permits and no
event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any
other material impairment of the rights of the Company thereunder.
Except as may be required under the Securities Act and state and
foreign Blue Sky laws, no other Permits are required to enter into,
deliver and perform this Agreement and to issue and sell the
Units.
(h) The Company and each of its
subsidiaries owns or possesses, or can acquire on reasonable market
terms, adequate rights to use all patents, patent rights,
inventions, trademarks, trademark applications, trade names,
service marks, copyrights, copyright applications, licenses,
know-how and other similar rights and proprietary knowledge
(collectively, “Intangibles”) necessary for the conduct
of its business. Neither the Company nor any of its subsidiaries
has received any notice of, or is not aware of, any infringement of
or conflict with asserted rights of others with respect to any
Intangibles. To the knowledge of the Company, each current and
former employee of and consultant to the Company has executed the
Company’s standard form of agreement containing
confidentiality and invention assignment provisions, except where
the failure of current or former employees or consultants to so
execute such agreements would not individually or in the aggregate
have a Material Adverse Effect, and, to knowledge of the Company,
each current and former supplier and customer of the Company has
executed the Company’s standard form of non-disclosure
agreement, except where the failure of current or former suppliers
or customers to execute such agreements would not individually or
in the aggregate have a Material Adverse Effect.
(i) The Company and each of its
subsidiaries has good and marketable title in fee simple to all
real property, and good and marketable title to all other property
owned by it, in each case free and clear of all liens,
encumbrances, claims, security interests and defects, except such
as do not materially affect the value of such property and do not
materially interfere
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with the use made or proposed to be made of such
property by the Company and its subsidiaries. All property held
under lease by the Company and its subsidiaries is held by them
under valid, existing and enforceable leases, free and clear of all
liens, encumbrances, claims, security interests and defects, except
such as are not material and do not materially interfere with the
use made or proposed to be made of such property by the Company and
its subsidiaries. Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, (i) there has not been any Material Adverse Effect;
(ii) neither the Company nor any of its subsidiaries has sustained
any loss or interference with its assets, businesses or properties
(whether owned or leased) from fire, explosion, earthquake, flood
or other calamity, whether or not covered by insurance, or from any
labor dispute or any court or legislative or other governmental
action, order or decree which would reasonably be expected to have
a Material Adverse Effect; and (iii) except as disclosed in the
Prospectus, since the date of the latest balance sheet included or
incorporated by reference in the Registration Statement and the
Prospectus, neither the Company nor its subsidiaries has (A) issued
any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, except such liabilities or
obligations incurred in the ordinary course of business, (B)
entered into any transaction not in the ordinary course of business
or (C) declared or paid any dividend or made any distribution on
any shares of its stock or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or otherwise acquire any
shares of its capital stock.
(j) There is no document, contract
or other agreement required to be described in the Registration
Statement or Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed as required
by the Securities Act or Rules. Each description of a contract,
document or other agreement in the Registration Statement and the
Prospectus accurately reflects in all material respects the terms
of the underlying contract, document or other agreement. Each
contract, document or other agreement described in the Registration
Statement and Prospectus or listed in the Exhibits to the
Registration Statement or incorporated by reference is in full
force and effect and is valid and enforceable by and against the
Company or its subsidiary, as the case may be, in accordance with
its terms. Neither the Company nor any of its subsidiaries, if a
subsidiary is a party, nor to the Company’s knowledge, any
other party is in default in the observance or performance of any
term or obligation to be performed by it under any such agreement,
and no event has occurred which with notice or lapse of time or
both would constitute such a default, in any such case which
default or event, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect. 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 its subsidiary, if a subsidiary is a party thereto,
of any other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which Company or its properties
or business or a subsidiary or its properties or business may be
bound or affected which default or event, individually or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect.
(k) Neither the Company nor any of
its subsidiaries is in violation of any term or provision of (i) in
the case of the Company, its Second Restated Certificate of
Incorporation, and in the case of each of the Company’s
subsidiaries, its charter or in either case, their respective
by-laws or (ii) of any franchise, license, permit, judgment,
decree, order, statute, rule or regulation, except, with respect to
subsection (ii), where the consequences of such violation,
individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.
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(l) Neither the execution, delivery
and performance of this Agreement by the Company nor the
consummation of any of the transactions contemplated hereby
(including, without limitation, the issuance and sale by the
Company of the Units) will give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with
or result in the breach of any term or provision of, or constitute
a default (or an event which with notice or lapse of time or both
would constitute a default) under, or require any consent or waiver
under, or result in the execution or imposition of any lien, charge
or encumbrance upon any properties or assets of the Company or its
subsidiaries pursuant to the terms of, any indenture, mortgage,
deed of trust or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which either the
Company or its subsidiaries or any of their properties or
businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation applicable to the
Company or any of its subsidiaries or violate any provision of, in
the case of the Company, its Second Restated Certificate of
Incorporation, and in the case of each of the Company’s
subsidiaries, its charter or in either case, their respective
by-laws, except for such consents or waivers which have already
been obtained and are in full force and effect.
(m) As of August 31, 2004, the
authorized capital stock of the Company consisted of (i)
150,000,000 shares of Common Stock, 84,289,082 shares of which were
issued and outstanding, and (ii) 5,000,000 shares of Preferred
Stock, par value $.01 per share, 200,000 of which were designated
Series A Junior Participating Preferred Stock, none of which were
issued and outstanding. All of the issued and outstanding shares of
Common Stock have been duly and validly issued and are fully paid
and nonassessable. There are no statutory preemptive or other
similar rights to subscribe for or to purchase or acquire any
shares of Common Stock of the Company or any of its subsidiaries or
any such rights pursuant to, in the case of the Company, its Second
Restated Certificate of Incorporation, and in the case of each of
the Company’s subsidiaries, its charter or in either case,
their respective by-laws, or any agreement or instrument to or by
which the Company or any of its subsidiaries is a party or bound.
The Units, when delivered by the Company pursuant to this
Agreement, will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any
preemptive or other similar right. The certificates evidencing the
Shares and the certificates evidencing the Warrants are in due and
proper legal form and have been duly authorized for issuance by the
Company. Except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other right
calling for the issuance of, and there is no commitment, plan or
arrangement to issue, any share of stock of the Company or any of
its subsidiaries or any security convertible into, or exercisable
or exchangeable for, such stock. The Common Stock and the Units
conform in all material respects to all statements in relation
thereto contained in the Registration Statement and the Prospectus.
All outstanding shares of capital stock of each of the
Company’s subsidiaries have been duly authorized and validly
issued, and are fully paid and nonassessable and are owned directly
by the Company or by another wholly-owned subsidiary of the Company
free and clear of any security interests, liens, encumbrances,
equities or claims, other than those described in the
Prospectus.
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(n) No holder of any security of the
Company has any right, which has not been waived, to have any
security owned by such holder included in the Registration
Statement or to demand registration of any security owned by such
holder for a period of 90 days after the date of this Agreement.
Each director and executive officer of the Company listed on
Schedule II has delivered to the Placement Agent his or her
enforceable written lock-up agreement in the form attached to this
Agreement as Exhibit B hereto (“Lock-Up
Agreement”).
(o) All necessary corporate action
has been duly and validly taken by the Company to authorize the
execution, delivery and performance of this Agreement and the
issuance and sale of the Units by the Company and the reservation
for issuance, and issuance of the shares to be issued upon exercise
of the Warrants. This Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes
and will constitute legal, valid and binding obligations of the
Company enforceable against the Company in accordance with their
respective terms, except as rights to indemnity under Section 6 of
the Agreement may be limited by applicable law and the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally and by general
equitable principles.
(p) Neither the Company nor any of
its subsidiaries is involved in any labor dispute nor, to the
knowledge of the Company, is any such dispute threatened, which
dispute would reasonably be expected to have a Material Adverse
Effect. The Company is not aware of any existing or imminent labor
disturbance by the employees of any of its principal suppliers or
contractors which would reasonably be expected to have a Material
Adverse Effect. The Company is not aware of any threatened or
pending litigation between the Company or its subsidiaries and any
of its executive officers which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect. The
Company is not aware that any of its executive officers presently
intends to terminate his, her or their employment with the Company,
nor does the Company have a present intention to terminate the
employment of any such executive officer.
(q) No transaction has occurred
between or among the Company and any of its officers or directors,
stockholders or any affiliate or affiliates of any such officer or
director or stockholder that is required to be described in and is
not described in the Registration Statement and the
Prospectus.
(r) The Company has not taken, nor
will it take, directly or indirectly, any action designed to or
which might reasonably be 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 the
Common Stock or any security of the Company to facilitate the sale
or resale of any of the Shares or the Warrants.
(s) The Company and each of its
subsidiaries has filed all Federal, state, local and foreign tax
returns which are required to be filed through the date hereof,
which returns are true and correct in all material respects or has
received timely extensions thereof, and has paid all taxes shown on
such returns and all assessments received by it to the extent that
the same are material and have become due. There are no tax audits
or investigations pending, which if adversely determined would
reasonably be expected to have a Material Adverse Effect; nor are
there any material proposed additional tax assessments against the
Company or any of its subsidiaries.
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(t) The Company has filed a
Notification Form: Listing of Additional Shares with respect to the
Shares and the Common Stock issuable upon exercise of the Warrants
for quotation on the National Association of Securities Dealers
Automated Quotation (“Nasdaq”) National Market
System.
(u) The Company has taken no action
designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or the
quotation of the Common Stock on the Nasdaq National Market, nor
has the Company received any notification that the Commission or
the Nasdaq National Market is contemplating terminating such
registration or quotation.
(v) The books, records and accounts
of the Company and its subsidiaries accurately and fairly reflect,
in reasonable detail, the transactions in, and dispositions of, the
assets of, and the results of operations of, the Company and its
subsidiaries. The Company and each of its subsidiaries 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
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(w) The Company and its subsidiaries
are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are customary
in the businesses in which they are engaged or propose to engage
after giving effect to the transactions described in the
Prospectus; all policies of insurance and fidelity or surety bonds
insuring the Company or any of its subsidiaries or the
Company’s or its subsidiaries’ respective businesses,
assets, employees, officers and directors are in full force and
effect; the Company and each of its subsidiaries are in compliance
with the terms of such policies and instruments in all material
respects; and neither the Company nor any subsidiary of the Company
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 is not materially greater
than the current cost. Neither the Company nor any of its
subsidiaries has been denied any insurance coverage which it has
sought or for which it has applied.
(x) Each approval, consent, order,
authorization, designation, declaration or filing of, by or with
any regulatory, administrative or other governmental body necessary
in connection with the execution and delivery by the Company of
this Agreement and the consummation of the transactions herein
contemplated required to be obtained or performed by the Company
(except such additional steps as may be necessary to qualify the
Units under the state securities or Blue Sky laws) has been
obtained or made and is in full force and effect.
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(y) There are no affiliations with
the National Association of Securities Dealers, Inc. (the
“NASD”) among the Company’s officers, directors
or, to the best of the knowledge of the Company, any five percent
or greater stockholder of the Company, except as set forth in the
Registration Statement or otherwise disclosed in writing to the
Placement Agent.
(z) The Company satisfies the
eligibility requirements for the use of a registration statement on
Form S-3 pursuant to the standards for Form S-3 prior to October
21, 1992 in connection with the offering of the Units as
contemplated hereby, and otherwise meets the requirements for
exemption from filing as set forth in Rule 2710(b)(7)(C)(i) of the
NASD Manual with respect to the offering of the Units as
contemplated hereby.
(aa) (i) Each of the Company and
each of its subsidiaries is in compliance in all material respects
with all rules, laws and regulation relating to the use, treatment,
storage and disposal of toxic substances and protection of health
or the environment (“Environmental Law”) which are
applicable to its business; (ii) neither the Company nor its
subsidiaries has received any notice from any governmental
authority or third party of an asserted claim under Environmental
Laws; (iii) each of the Company and each of its subsidiaries has
received all permits, licenses or other approvals required of it
under applicable Environmental Laws to conduct its business and is
in compliance with all terms and conditions of any such permit,
license or approval; (iv) to the Company’s knowledge, no
facts currently exist that will require the Company or any of its
subsidiaries to make future material capital expenditures to comply
with Environmental Laws; and (v) no property which is or has been
owned, leased or occupied by the Company or its subsidiaries has
been designated as a Superfund site pursuant to the Comprehensive
Environmental Response, Compensation of Liability Act of 1980, as
amended (42 U.S.C. Section 9601, et. seq.) (“CERCLA”)
or otherwise designated as a contaminated site under applicable
state or local law. Neither the Company nor any of its subsidiaries
has been named as a “potentially responsible party”
under CERCLA.
(bb) In the ordinary course of its
business, the Company periodically reviews the effect of
Environmental Laws on the business, operations and properties of
the Company and its subsidiaries, in the course of which the
Company identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or
compliance with Environmental Laws, or any permit, license or
approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such
review, the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse
Effect.
(cc) The Company is not and, after
giving effect to the offering and sale of the Units and the
application of proceeds thereof as described in the Prospectus,
will not be an “investment company” within the meaning
of the Investment Company Act of 1940, as amended (the
“Investment Company Act”).
(dd) The Company or, to the best its
knowledge after reasonable investigation, any other person
associated with or acting on behalf of the Company including,
without limitation, any director, officer, agent or employee of the
Company or its subsidiaries,
10
has not, directly or indirectly, while acting on
behalf of the Company or its subsidiaries (i) used any corporate
funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns
from corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any other
unlawful payment.
(ee) Except as described in the
Prospectus, the Company has not sold or issued any shares of Common
Stock during the six-month period preceding the date of the
Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act, other than shares issued
pursuant to employee benefit plans, qualified stock options plans
or other employee compensation plans or pursuant to outstanding
options, rights or warrants.
(ff) The operations of the Company
and its subsidiaries are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act
of 1970, as amended, the money laundering statutes of all
jurisdictions, the rules and regulations thereunder and any related
or similar rules, regulations or guidelines, issued, administered
or enforced by any governmental agency (collectively, the
“Money Laundering Laws”) and no action, suit or
proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Company or any of it
subsidiaries with respect to the Money Laundering Laws is pending,
or to the best knowledge of the Company, threatened.
(gg) Neither the Company nor any of
its subsidiaries nor, to the knowledge of the Company, any
director, officer, agent, employee or affiliate of the Company or
any of its subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other person or entity, for
the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
(hh) Neither the Company nor any of
its ERISA Affiliates are a party to or bound by, contribute to or
maintain, or at any time contributed to or maintained any
“employee benefit plan,” within the meaning of Section
3(3) of ERISA. For purposes of this Section 2(hh),
“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended, and “ERISA Affiliate” means
any entity which, together with the Company or any subsidiary,
would be treated as a single employer under Section 414 of the
Internal Revenue Code of 1986, as amended.
(ii) None of the Company or its
directors and officers has distributed and will not distribute
prior to the later of (i) the Closing Date, and (ii) completion of
the distribution of the Units, any offering material in connection
with the offering and sale of the Units other than the Prospectus
and other materials, if any, permitted by the Securities
Act.
11
(jj) The Company has established and
maintains disclosure controls and procedures (as such term is
defined in Rule 13a-15 under the Exchange Act), which (i) are
designed to ensure that material information relating to the
Company is made known to the Company’s principal executive
officer and its principal financial officer by others within those
entities, particularly during the periods in which the periodic
reports required under the Exchange Act are being prepared; (ii)
provide for the periodic evaluation of the effectiveness of such
disclosure controls and procedures as of the end of each of the
Company’s quarterly and annual fiscal periods; and (iii) are
effective in all material respects to perform the functions for
which they were established. Based on the evaluation of its
disclosure controls and procedures, the Company is not aware of (i)
any significant deficiency in the design or operation of internal
controls which could adversely affect the Company’s ability
to record, process, summarize and report financial data or any
material weaknesses in internal controls; or (ii) any fraud,
whether or not material, that involves management or other
employees who have a significant role in the Company’s
internal controls. Since the date of the most recent evaluation of
such disclosure controls and procedures, there have been no changes
that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over
financial reporting, including any corrective actions with regard
to significant deficiencies and material weaknesses.
(kk) There are no material
off-balance sheet arrangements (as defined in Item 303 of
Regulation S-K) that have or are reasonably likely to have a
material current or future effect on the Company’s financial
condition, revenues or expenses, changes in financial condition,
results of operations, liquidity, capital expenditures or capital
resources.
(ll) The Company’s Board of
Directors has validly appointed an audit committee whose
composition satisfies the requirements of Rule 4350(d)(2) of the
Rules of the NASD and the Board of Directors and/or the audit
committee has adopted a charter that satisfies the requirements of
Rule 4350(d)(1) of the NASD Rules. The audit committee has reviewed
the adequacy of its charter within the past twelve
months.
(mm) The chief executive officer and
the chief financial officer of the Company have made all
certifications required by the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”) and any related rules and
regulations promulgated by the Commission, and the statements
contained in any such certification are complete and correct. The
Company is otherwise in compliance in all material respects with
all applicable effective provisions of the Sarbanes-Oxley Act and
is actively taking reasonable steps to ensure that it will be in
compliance with other applicable provisions of the Sarbanes-Oxley
Act upon the effectiveness of such provisions.
(nn) The Company is not a party to
any contract, agreement or understanding with any person that would
give rise to a valid claim against the Company or the Placement
Agent for a brokerage commission, finder’s fee or like
payment in connection with the offering and sale of the
Units.
3. Representations of the
Placement Agent.
(a) The Placement Agent is a member
in good standing of the NASD and has, and at all times while taking
any actions constituting an offer or sale of the Units had, all
governmental licenses (including both federal and state broker
dealer licenses) required to act as placement agent for the
Units.
12
(b) The Placement Agent has
complied, in all material respects, with all applicable Federal and
state laws and applicable rules of the NASD in connection with its
activities as placement agent for the Units.
4. Conditions of the Placement
Agent’s Obligations . The obligations of the Placement
Agent are subject to each of the following terms and
conditions:
(a) The Prospectus shall have been
timely filed with the Commission in accordance with Section 5(a) of
this Agreement.
(b) No order preventing or
suspending the use of any preliminary prospectus or the Prospectus
shall have been or shall be in effect and no order suspending the
effectiveness of the Registration Statement shall be in effect and
no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional
information on the part of the Commission (to be included in the
Registration Statement or the Prospectus or otherwise) shall have
been complied with to the satisfaction of the Commission and the
Placement Agent. If the Company has elected to rely upon Rule 430A,
Rule 430A information previously omitted from the effective
Registration Statement pursuant to Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b)
within the prescribed time period and the Company shall have
provided evidence satisfactory to the Placement Agent of such
timely filing, or a post-effective amendment providing such
information shall have been promptly filed and declared effective
in accordance with the requirements of Rule 430A. If the Company
has elected to rely upon Rule 434, a term sheet shall have been
transmitted to the Commission for filing pursuant to Rule 424(b)
within the prescribed time period.
(c) The representations and
warranties of the Company contained in this Agreement and in the
certificates delivered pursuant to Section 4(d) shall in all
material respects be true and correct when made and on and as of
the Closing Date as if made on such date. The Company shall have
performed all covenants and agreements and satisfied all the
conditions contained in this Agreement required to be performed or
satisfied by it at or before the Closing Date.
(d) The Placement Agent shall have
received on the Closing Date a certificate, addressed to the
Placement Agent and dated the Closing Date, of the chief executive
officer and the chief financial officer or chief accounting officer
of the Company to the effect that: (i) the representations,
warranties and agreements of the Company in this Agreement were
true and correct when made and are true and correct as of the
Closing Date; (ii) the Company has performed all covenants and
agreements and satisfied all conditions contained herein; (iii)
they have carefully examined the Registration Statement and the
Prospectus and, in their opinion (A) as of the Effective Date, the
Registration Statement did not, and as of its date, the Prospectus
did not, include any untrue statement of a material fact and did
not omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (B)
since the Effective Date no
13
event has occurred which should have been set
forth in a supplement or otherwise required an amendment to the
Registration Statement or the Prospectus; and (iv) no stop order
suspending the effectiveness of the Registration Statement has been
issued and, to their knowledge, no proceedings for that purpose
have been instituted or are pending under the Securities
Act.
(e) The Placement Agent shall have
received, at the time this Agreement is executed and on the Closing
Date a signed letter from Deloitte & Touche LLP addressed to
the Placement Agent and dated, respectively, the date of this
Agreement and the Closing Date, in form and substance reasonably
satisfactory to the Placement Agent containing statements and
information of the type ordinarily included in accountants’
“comfort letters” to underwriters with respect to the
financial statements and certain financial information contained in
the Registration Statement and the Prospectus.
(f) The Placement Agent shall have
received on the Closing Date from Morrison & Foerster LLP,
counsel for the Company, an opinion, addressed to the Placement
Agent and dated the Closing Date, stating in effect the matters set
forth on Exhibit C attached hereto.
(g) All proceedings taken in
connection with the sale of the Units as herein contemplated shall
be reasonably satisfactory in form and substance to the Placement
Agent, and the Placement Agent shall have received from Cooley
Godward LLP, a favorable opinion, addressed to the Placement Agent
and dated the Closing Date, covering such matters as are
customarily covered in transactions of this type, and the Company
shall have furnished to Cooley Godward LLP such documents as they
may reasonably request for the purpose of enabling them to pass
upon such matters.
(h) The Placement Agent shall have
received copies of the Lock-up Agreements executed by each person
listed on Schedule II hereto.
(i) The Shares shall have been
approved for quotation on the Nasdaq National Market, subject only
to official Notice of Issuance.
(j) The Company shall have furnished
or caused to be furnished to the Placement Agent such further
certificates or documents as the Placement Agent shall have
reasonably requested.
5. Covenants of the
Company.
(a) The Company covenants and agrees
as follows:
(i) The Company shall prepare the
Prospectus in a form approved by the Placement Agent and file such
Prospectus pursuant to Rule 424(b) under the Securities Act not
later than the Commission’s close of business on the second
business day following the execution and delivery of this
Agreement, or, if applicable, such earlier time as may be required
by the Rules.
(ii) The Company shall promptly
advise the Placement Agent in writing (A) when any post-effective
amendment to the Registration Statement shall have
14
become effective or any supplement to the
Prospectus shall have been filed, (B) of any request by the
Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information, (C) of the issuance
by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of any order preventing or suspending
the use of any preliminary prospectus or the institution or
threatening of any proceeding for that purpose and (D) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Units for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Company shall not file any amendment of the
Registration Statement or supplement to the Prospectus or any
document incorporated by reference in the Registration Statement
unless the Company has furnished the Placement Agent a copy for its
review prior to filing and shall not file any such proposed
amendment or supplement to which the Placement Agent reasonably
object. The Company shall use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon
as possible the withdrawal thereof.
(iii) If, at any time when a
prospectus relating to the Units is required to be delivered under
the Securities Act and the Rules, any event occurs as a result of
which the Prospectus as then amended or supplemented would include
any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light
of the circumstances under which they were made not misleading, or
if it shall be necessary to amend or supplement the Prospectus to
comply with the Securities Act or the Rules, the Company promptly
shall prepare and file with the Commission, subject to the second
sentence of paragraph (ii) of this Section 5(a), an amendment or
supplement which shall correct such statement or omission or an
amendment which shall effect such compliance.
(iv) The Company shall make
generally available to its security holders and to the Placement
Agent as soon as practicable an earnings statement which shall
satisfy the provisions of Section 11(a) of the Securities Act or
Rule 158 of the Rules.
(v) The Company shall furnish to the
Placement Agent and counsel for the Placement Agent, without
charge, signed copies of the Registration Statement (including all
exhibits thereto and amendments thereof) and, so long as delivery
of a prospectus by an underwriter or dealer may be required by the
Securities Act or the Rules, as many copies of any preliminary
prospectus and the Prospectus and any amendments thereof and
supplements thereto as the Placement Agent may reasonably request.
If applicable, the copies of the Registration Statement and
Prospectus and each amendment and supplement thereto furnished to
the Placement Agent will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.
(vi) The Company shall cooperate
with the Placement Agent and its counsel in endeavoring to qualify
the Units for offer and sale in connection with the offering under
the laws of such jurisdictions as the Placement Agent may designate
and shall maintain such qualifications in effect so long as
required for the distribution of the Units; provided, however, that
the Company shall not be required in connection therewith, as a
condition thereof, to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction
or subject itself to taxation as doing business in any
jurisdiction.
15
(vii) The Company, during the period
when the Prospectus is required to be delivered under the
Securities Act and the Rules or the Exchange Act, will file all
reports and other documents required to be filed with the
Commission pursuant to Section 13, 14 or 15 of the Exchange Act
within the time periods required by the Exchange Act and the
regulations promulgated thereunder.
(viii) Without the prior written
consent of CIBC World Markets Corp., for a period of 90 days after
the date of this Agreement (the “Lock-Up Period”), the
Company and each of its individual directors and executive officers
shall not issue, sell or register with the Commission (other than
on Form S-8 or on any successor form), or otherwise dispose of,
directly or indirectly, any equity securities of the Company (or
any securities convertible into, exercisable for or exchangeable
for equity securities of the Company), except for (A) the issuance
of the Units pursuant to the Registration Statement and Prospectus,
(B) the issuance of shares pursuant to the Company’s existing
employee or director benefit plans as described in the Registration
Statement and the Prospectus, provided that in the event that
during the Lock-Up Period any such shares are issued to any person
identified on Schedule II hereto, such shares shall be subject to
the Lock-Up Agreement executed by such person, and (C) the issuance
of any equity securities of the Company (or any securities
convertible into, exercisable for or exchangeable for equity
securities of the Company) in connection with an acquisition, a
merger, a consolidation or a sale of assets or in connection with a
strategic investment, partnership or joint venture, provided that
prior to the issuance of such securities, each recipient of such
securities signs an agreement substantially in the form attached
hereto as Exhibit B prohibiting the offer, sale, assignment,
transfer, encumbrance, contract to sell, pledge or other
disposition of such securities for the remainder of the Lock-Up
Period without the prior written consent of CIBC World Markets
Corp.
(ix) On or before completion of this
offering, the Company shall make all filings required under
applicable securities laws and by the Nasdaq National Market
(including any required registration under the Exchange
Act).
(x) Prior to the Closing Date, the
Company will issue no press release or other communications
directly or indirectly and hold
