Exhibit 10.1
PURCHASE AGREEMENT
THIS AGREEMENT is made as of the
29 th day of December, 2006, by and between
NetBank, Inc. (the “ Company ”), a corporation
organized under the laws of the State of Georgia, with its
principal offices at 1015 Windward Ridge Parkway, Alpharetta,
Georgia 30005 and the purchaser whose name and address is set forth
on the signature page hereof (the “ Purchaser
”).
IN CONSIDERATION of the mutual
covenants contained in this Agreement, the Company and the
Purchaser agree as follows:
SECTION 1.
Authorization of Sale of the
Shares . Subject to
the terms and conditions of this Agreement, the Company has
authorized the issuance and sale of up to 6,800,000 shares (the
“ Shares ”) of common stock, par value $0.01 per
share (the “ Common Stock ”), of the
Company.
SECTION 2.
Agreement to Sell and Purchase
the Shares . At the
Closing (as defined in Section 3), the Company will, subject
to the terms of this Agreement, issue and sell to the Purchaser and
the Purchaser will buy from the Company, upon the terms and
conditions hereinafter set forth, the number of Shares (at the
purchase price) shown below:
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Number of Shares to Be
Purchased
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Price Per
Share In
Dollars
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Aggregate
Price
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$
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3.90
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$
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The Company proposes to enter into
this same form of purchase agreement with certain other investors
(the “ Other Purchasers ”) and expects to
complete sales of the shares of Common Stock to them. The
Purchaser and the Other Purchasers are hereinafter sometimes
collectively referred to as the “ Purchasers ,”
and this Agreement and the purchase agreements executed by the
Other Purchasers are hereinafter sometimes collectively referred to
as the “ Agreements .” The term “
Placement Agent ” shall mean JMP Securities
LLC.
SECTION 3.
Delivery of the Shares at the
Closing . The
completion of the purchase and sale of the Shares (the “
Closing ”) shall occur at the offices of Morrison
& Foerster LLP, 1290 Avenue of the Americas, New York, New
York 10104 as soon as practicable and as agreed to by the
parties hereto, within three business days following the execution
of the Agreements, or on such later date or at such different
location as the parties shall agree in writing, but not prior to
the date that the conditions for Closing set forth below have been
satisfied or waived by the appropriate party (the “
Closing Date ”).
At the Closing, the Purchaser shall
deliver, in immediately available funds, the full amount of the
purchase price for the Shares being purchased hereunder by wire
transfer to an account designated by the Company and the Company
shall deliver to the Purchaser one or more stock certificates
registered in the name of the Purchaser, or in such nominee name(s)
as designated by the Purchaser in writing, representing the number
of Shares set forth in Section 2 above and bearing an
appropriate legend referring to the fact that the Shares were sold
in reliance upon the exemption from registration under the
Securities Act of 1933, as amended (the “ Securities
Act ”), provided by Section 4(2) thereof and
Rule 506 thereunder. At such time as Shares are sold
pursuant to the Registration Statement (as defined below) after it
has become effective, the Company will promptly substitute one or
more replacement certificates without a legend with respect to such
Shares. The name(s) in which the stock certificates are to be
registered are set forth in the Stock Certificate Questionnaire
attached hereto as part of Appendix I .
The Company’s obligation to
complete the purchase and sale of the Shares and deliver such stock
certificate(s) to the Purchaser at the Closing shall be subject to
the following conditions, any one or more of which may be waived by
the Company: (a) receipt by the Company of immediately
available funds in the full amount of the purchase price for the
Shares being purchased hereunder; (b) completion of the
purchases and sales under the Agreements with the Other Purchasers;
and (c) the accuracy of the representations and warranties
made by the Purchasers and the fulfillment of those undertakings of
the Purchasers to be fulfilled prior to the Closing. The
Purchaser’s obligation to accept delivery of such stock
certificate(s) and to pay for the Shares evidenced thereby shall be
subject to the following conditions: (a) each of the
representations and warranties of the Company made herein shall be
true and correct in all material respects as of the Closing Date;
(b) the delivery to the Purchaser by counsel to the Company
and in-house counsel to the Company of legal opinions in forms
reasonably satisfactory to counsel to the Placement Agent;
(c) receipt by the Purchaser of a certificate executed by the
chief executive officer and the chief financial or accounting
officer of the Company, dated as of the Closing Date, to the effect
that the representations and warranties of the Company set forth
herein are true and correct in all material respects as of the
Closing Date and that the Company has complied in all material
respects with all the agreements and satisfied in all material
respects all the conditions herein on its part to be performed or
satisfied on or prior to such Closing Date; (d) the
fulfillment in all material respects of those undertakings of the
Company to be fulfilled prior to the Closing; and (e) the Company
shall have sold Shares at the Closing for an aggregate minimum of
$20 million in gross proceeds. The Purchaser’s
obligations hereunder are expressly not conditioned on the purchase
by any or all of the Other Purchasers of the Shares that they have
agreed to purchase from the Company.
SECTION 4.
Representations, Warranties and
Covenants of the Company. The Company hereby represents and
warrants to, and covenants with, the Purchaser as
follows:
4.1
Organization and
Qualification . The
Company is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation
and the Company is qualified to do business as a foreign
corporation in each jurisdiction in which qualification is
required, except where failure to so qualify would not have a
Material Adverse Effect (as defined herein). The
Company’s subsidiaries (each a “ Subsidiary
”
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and collectively the “
Subsidiaries ”) are listed on Exhibit A to this
Agreement. Each “Significant Subsidiary” of the
Company, as that term is defined in Rule 1-02 of Regulation S-X
under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), is listed on Exhibit A to this
Agreement. Each Significant Subsidiary is a direct or
indirect wholly owned subsidiary of the Company. Each
Significant Subsidiary is duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation
and is qualified to do business as a foreign corporation in each
jurisdiction in which qualification is required, except where
failure to so qualify would not have a Material Adverse
Effect.
4.2
Reporting Company;
Form S-1 . The
Company is not an “ineligible issuer” (as defined in
Rule 405 promulgated under the Securities Act) and is eligible to
register the Shares for resale by the Purchaser on a registration
statement on Form S-1 under the Securities Act. The
Company is subject to the reporting requirements of the Exchange
Act, and has filed all reports required thereby.
4.3
Authorized Capital
Stock . The
authorized, issued and outstanding capital stock of the Company as
of September 30, 2006 is set forth under the heading
“Capitalization” in the confidential Private Placement
Memorandum dated December 19, 2006 prepared by the Company
(including all exhibits, supplements and amendments thereto, the
“ Private Placement Memorandum ”); the issued
and outstanding shares of Common Stock have been duly authorized
and validly issued, are fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws,
and were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase
securities. Except as disclosed in documents or reports (the
“Exchange Act Reports”) filed by the Company with the
Securities and Exchange Commission (the “Commission”)
pursuant to the Exchange Act and the rules and regulations of the
Commission promulgated thereunder (the “1934 Act Rules and
Regulations”), the Company does not have outstanding any
options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell,
shares of its capital stock or any such options, rights,
convertible securities or obligations. With respect to each
of the Significant Subsidiaries (i) all the issued and
outstanding shares of such Subsidiary’s capital stock have
been duly authorized and validly issued, are fully paid and
nonassessable, have been issued in compliance with all federal and
state securities laws, were not issued in violation of or subject
to any preemptive rights or other rights to subscribe for or
purchase securities, and (ii) there are no outstanding options
to purchase, or any preemptive rights or other rights to subscribe
for or to purchase, any securities or obligations convertible into,
or any contracts or commitments to issue or sell, shares of such
Subsidiary’s capital stock or any such options, rights,
convertible securities or obligations.
4.4
Issuance, Sale and Delivery of
the Shares . The
Shares have been duly authorized and, when issued, delivered and
paid for in the manner set forth in this Agreement, will be validly
issued, fully paid and nonassessable. No preemptive rights or
other rights to subscribe for or purchase any shares of Common
Stock of the Company exist with respect to the issuance and sale of
the Shares by the Company pursuant to this Agreement. No
stockholder of the Company has any right (which has not been waived
or has not expired by reason of lapse of time following
notification of the Company’s intention to file the
Registration Statement (as hereinafter defined)) to require the
Company to register the sale of any capital
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stock owned by such stockholder
under the Registration Statement. The issuance and sale of
the Shares will not obligate the Company to issue shares of Common
Stock or other securities to any person (other than the Purchasers)
and will not result in a right of any holder of the Company’s
securities to obligate the Company to repurchase the securities
held by such holder or to adjust the exercise, conversion, exchange
or reset price under such securities. No further approval or
authority of the stockholders or the Board of Directors of the
Company will be required for the issuance and sale of the Shares to
be sold by the Company as contemplated herein.
4.5
Due Execution, Delivery and
Performance of the Agreements . The Company has full legal right,
corporate power and authority to enter into this Agreement and
perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the
Company. This Agreement constitutes a legal, valid and
binding agreement of the Company, enforceable against the Company
in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or
affecting the enforcement of creditors’ rights and the
application of equitable principles relating to the availability of
remedies, and except as rights to indemnity or contribution,
including but not limited to, indemnification provisions set forth
in Section 7.3 of this Agreement may be limited by federal or
state securities law or the public policy underlying such
laws. The execution and performance of this Agreement by the
Company and the consummation of the transactions herein
contemplated will not violate (i) any provision of the certificate
of incorporation or bylaws of the Company or the organizational
documents of any Subsidiary, or (ii) any statute or any
authorization, judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other
governmental agency or body applicable to the Company or any
Significant Subsidiary or any of their respective properties.
No consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental agency
or body is required for the execution and delivery of this
Agreement or the consummation of the transactions contemplated by
this Agreement, except for compliance with the Blue Sky laws and
federal securities laws applicable to the offering of the
Shares. For the purposes of this Agreement the term “
Material Adverse Effect ” shall mean a material
adverse effect on the condition (financial or otherwise),
properties, business, prospects or results of operations of the
Company and its Subsidiaries, taken as a whole.
4.6
Accountants
. Ernst & Young LLP, who
has expressed its opinion with respect to the consolidated
financial statements contained in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2005, which
Form 10-K is attached as an exhibit to, and made a part of the
Private Placement Memorandum, were, as of the date such Form 10-K
was filed with the Commission, registered independent public
accountants as required by the Securities Act and the rules and
regulations promulgated thereunder (the “ 1933 Act Rules
and Regulations ”) and by the rules of the Public
Accounting Oversight Board.
4.7
No Defaults or
Consents . 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 Shares) 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, except
such
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defaults that individually or in the
aggregate would not cause a Material Adverse Effect, 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 Significant 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 Significant
Subsidiaries is a party or by which either the Company or its
Significant 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
Significant Subsidiary or violate any provision of the charter or
by-laws of the Company or any Significant Subsidiary, except for
such consents or waivers which have already been obtained and are
in full force and effect.
4.8
Contracts . The material contracts to which the
Company is a party have been duly and validly authorized, executed
and delivered by the Company and constitute the legal, valid and
binding agreements of the Company, enforceable by and against it in
accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to enforcement of
creditors’ rights generally, and general equitable principles
relating to the availability of remedies, and except as rights to
indemnity or contribution may be limited by federal or state
securities laws and the public policy underlying such
laws.
4.9
No Actions
. Except as otherwise set
forth in the Exchange Act Reports, there are no legal or
governmental actions, suits or proceedings pending or, to the
Company’s knowledge, threatened against the Company or any
Subsidiary before or by any court, regulatory body or
administrative agency or any other governmental agency or body,
domestic, or foreign, which actions, suits or proceedings,
individually or in the aggregate, might reasonably be expected to
have a Material Adverse Effect; and no labor disturbance by the
employees of the Company exists or, to the Company’s
knowledge, is imminent, that might reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any
Subsidiary is a party to or subject to the provisions of any
injunction, judgment, decree or order of any court, regulatory
body, administrative agency or other governmental agency or body
that might have a Material Adverse Effect.
4.10
Properties
. The Company and each
Significant Subsidiary has good and marketable title to all the
properties and assets described as owned by it in the consolidated
financial statements included in the Exchange Act Reports, free and
clear of all liens, mortgages, pledges, or encumbrances of any kind
except (i) those, if any, reflected in such consolidated financial
statements, or (ii) those that are not material in amount and
do not adversely affect the use made and proposed to be made of
such property by the Company or its Significant Subsidiaries,
considered as one entity. The Company and each Subsidiary
holds its leased properties under valid and binding leases, with
such exceptions as are not materially significant in relation to
the business of the Company and its Significant Subsidiaries,
considered as one entity. The Company and any Significant
Subsidiary owns or leases all such properties as are necessary to
its operations as now conducted.
4.11
No Material Adverse
Change . Subsequent
to the dates as of which information is given in the Private
Placement Memorandum, and except as set forth in the Exchange Act
Reports, (i) the Company and its Significant Subsidiaries have
not incurred any
5
material liabilities or obligations,
indirect, or contingent, or entered into any material agreement or
other transaction that is not in the ordinary course of business or
that could reasonably be expected to result in a material reduction
in the future earnings of the Company; (ii) the Company and
its Significant Subsidiaries have not sustained any material loss
or interference with their businesses or properties from fire,
flood, windstorm, accident or other calamity not covered by
insurance; (iii) the Company and its Significant Subsidiaries
have not paid or declared any dividends or other distributions with
respect to their capital stock and none of the Company or any
Significant Subsidiary is in default in the payment of principal or
interest on any outstanding debt obligations; (iv) there has
not been any change in the capital stock of the Company or its
Significant Subsidiaries other than the sale of the Shares
hereunder and shares or options issued pursuant to employee equity
incentive plans or purchase plans approved by the Company’s
Board of Directors, or indebtedness material to the Company or its
Significant Subsidiaries (other than in the ordinary course of
business and any required scheduled payments); and (v) there
has not occurred any event that has caused or could reasonably be
expected to cause a Material Adverse Effect.
4.12
Intellectual Property
. The Company and its
Significant Subsidiaries own, are licensed or otherwise possess
sufficient rights to use, all patents, patent rights, inventions,
know-how (including trade secrets and other unpatented or
unpatentable or confidential information, systems, or procedures),
trademarks, service marks, trade names, copyrights and other
intellectual property rights (collectively, the “
Intellectual Property ”) necessary for the conduct of
their business as described in the Private Placement
Memorandum. To the Company’s knowledge, no claims have
been asserted against the Company or any Significant Subsidiary by
any person with respect to the use of any such Intellectual
Property or challenging or questioning the validity or
effectiveness of any such Intellectual Property.
4.13
Compliance
. None of the Company nor its
Subsidiaries has been advised, nor do any of them have any reason
to believe, that it is not conducting business in compliance with
all applicable laws, rules and regulations of the jurisdictions in
which it is conducting business, including, without limitation, all
applicable local, state and federal environmental laws and
regulations, except where failure to be so in compliance would not
have a Material Adverse Effect.
4.14
Taxes . The Company and its Significant
Subsidiaries have filed on a timely basis (giving effect to
extensions) all required material federal, state and foreign income
and franchise tax returns and have paid or accrued all taxes shown
as due thereon, and the Company has no knowledge of any material
tax deficiency that has been or might be asserted or threatened
against it that could have a Material Adverse Effect. All tax
liabilities accrued through the date hereof have been adequately
provided for on the books of the Company.
4.15
Transfer Taxes
. On the Closing Date, all
stock transfer or other taxes (other than income taxes) that are
required to be paid in connection with the sale and transfer of the
Shares to be sold to the Purchaser hereunder will have been, fully
paid or provided for by the Company and all laws imposing such
taxes will have been fully complied with.
4.16
Investment Company
. The Company is not an
“investment company” or an “affiliated
person” of, or “promoter” or “principal
underwriter” for an
6
investment company, within the
meaning of the Investment Company Act of 1940, as amended, and the
rules and regulations of the Commission promulgated
thereunder.
4.17
Offering Materials
. Each of the Company, its
directors and officers has not distributed and will not distribute
prior to the Closing Date any offering material, including any
“free writing prospectus” (as defined in Rule 405
promulgated under the Securities Act), in connection with the
offering and sale of the Shares other than the Private Placement
Memorandum and associated slide presentation, or any amendment or
supplement with respect to such offering material. The
Company has not in the past nor will it hereafter take any action
independent of the Placement Agent to sell, offer for sale or
solicit offers to buy any securities of the Company that could
result in the initial sale of the Shares not being exempt from the
registration requirements of Section 5 of the Securities
Act.
4.18
Insurance . The Company maintains insurance
underwritten by insurers of recognized financial responsibility, or
self-insurers, of the types and in the amounts that the Company
reasonably believes is adequate for its business, including, but
not limited to, insurance covering all real and personal property
owned or leased by the Company against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against,
with such deductibles as are customary for companies in the same or
similar business, all of which insurance is in full force and
effect.
4.19
Additional Information
. The information contained in
the following documents, which the Placement Agent has furnished to
the Purchaser, or will furnish prior to the Closing, as of the
dates thereof, 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 light of the
circumstances in which they were made not misleading:
(a)
the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31,
2005;
(b)
the Company’s Definitive Proxy
Statement for Annual Meeting of stockholders held on May 2,
2006;
(c)
the Company’s Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 31,
2006, June 30, 2006 and September 30, 2006;
(d)
the Company’s Current Reports
on Form 8-K or Form 8-K/A filed with the Commission on March
28, 2006, October 5, 2006, October 16, 2006 (two Form 8-Ks filed),
October 26, 2006, November 8, 2006, November 9, 2006, November 20,
2006 and December 18, 2006;
(e)
the Private Placement Memorandum,
including all addenda and exhibits thereto, other than this
Agreement and appendices and exhibits hereto; and
(f)
all other documents, if any, filed
by the Company with the Commission since December 31, 2005 pursuant
to the reporting requirements of the Exchange Act.
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The documents incorporated by
reference in the Private Placement Memorandum or attached as
exhibits thereto, 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 Exchange Act, as applicable,
and the 1934 Act Rules and Regulations (together with the 1933 Act
Rule and Regulations, the “Rules and
Regulations”). Since December 1, 2005, the Company has
filed all documents required to be filed by it prior to the date
hereof with the Commission pursuant to the reporting requirements
of the Exchange Act.
4.20
Price of Common Stock
. The Company has not taken,
and will not take, directly or indirectly, any action designed to
cause or result in, or that has constituted or that might
reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of the Common Stock to
facilitate the sale or resale of the Shares.
4.21
Use of Proceeds
. The Company shall use the
proceeds from the sale of the Shares as described under “Use
of Proceeds” in the Private Placement Memorandum.
4.22
Non-Public Information
. The Company has not
disclosed to the Purchaser, whether in the Private Placement
Memorandum or otherwise, information that would constitute material
non-public information as of the Closing Date other than the
existence of the transaction contemplated hereby.
4.23
Use of Purchaser Name
. Except as otherwise required
by applicable law or regulation the Company shall not use the
Purchaser’s name or the name of any of its affiliates in any
advertisement, announcement, press release or other similar public
communication unless it has received the prior written consent of
the Purchaser for the specific use contemplated which consent shall
not be unreasonably withheld.
4.24
Related Party
Transactions . No
transaction has occurred between or among the Company, on the one
hand, and its affiliates, officers or directors on the other hand,
that is required to have been described under applicable securities
laws in its Exchange Act filings and is not so described, as
required, in such filings.
4.25
Off-Balance Sheet
Arrangements .
There is no transaction, arrangement or other relationship between
the Company and an unconsolidated or other off-balance sheet entity
that is required to be disclosed by the Company in its Exchange Act
filings and is not so disclosed, as required or that otherwise
would be reasonably likely to have a Material Adverse Effect.
There are no other material off-balance sheet transactions,
arrangements or other relationships involving the Company that may
create contingencies or liabilities that are not otherwise
disclosed by the Company in its Exchange Act filings.
4.26
Governmental Permits,
Etc . The Company
and each Subsidiary has all franchises, licenses, certificates and
other authorizations from such federal, state or local government
or governmental agency, department or body that are currently
necessary for the operation of the business of the Company as
currently conducted, except where the failure to posses currently
such franchises, licenses, certificates and other authorizations is
not reasonably expected to have a Material Adverse Effect.
Except as otherwise set forth in the Exchange Act Reports, neither
the Company nor any Subsidiary has received any notice of
proceedings relating
8
to the revocation or modification of
any such franchises, licenses, certificates and other
authorizations that, if the subject of an unfavorable decision,
ruling or finding, could reasonably be expected to have a Material
Adverse Effect.
4.27
Financial Statements
. The consolidated financial
statements of the Company and the related notes and schedules
thereto included in its Exchange Act filings fairly present the
financial position, results of operations, stockholders’
equity and cash flows of the Company and its consolidated
Subsidiaries at the dates and for the periods specified
therein. Such financial statements and the related notes and
schedules thereto have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved (except as otherwise noted therein) and all
adjustments necessary for a fair presentation of results for such
periods have been made, and comply as to form in all material
respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at
the time of filing; provided, however, that the unaudited financial
statements are subject to normal year-end audit adjustments (which
are not expected to be material) and do not contain all footnotes
required under generally accepted accounting principles.
4.28
Listing Compliance
. The Company is in compliance
with the requirements of the Nasdaq Global Market for continued
quotation of the Common Stock thereon. Except as otherwise
set forth in the Exchange Act Reports and the Private Placement
Memorandum, 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 Global Market, nor has the Company received any
notification that the Commission or the Nasdaq Global Market is
contemplating terminating such registration or quotation. The
transactions contemplated by this Agreement will not contravene the
rules and regulations of the Nasdaq Global Market. Subject to
the Company’s ability to timely file with the Commission the
Company’s upcoming Annual Report on Form 10-K for the year
ended December 31, 2006 and Quarterly Report on Form 10-Q for the
quarter ended March 31, 2007, the Company will comply with all
requirements of the Nasdaq Global Market with respect to the
issuance of the Shares and shall cause the Shares to be quoted on
the Nasdaq Global Market and listed on any other exchange on which
the Company’s common stock is listed on or before the Closing
Date.
4.29
Internal Accounting
Controls . The
Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with
management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance
with management’s general or specific authorization; and
(iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. The Company has
disclosure controls and procedures (as defined in
Rules 13a–14 and 15d–14 under the Exchange Act)
that are designed to ensure that material information relating to
the Company is made known to the Company’s principal
executive officer and the Company’s principal financial
officer or persons performing similar functions. The Company
is otherwise in
9
compliance in all material respects
with all applicable provisions of the Sarbanes-Oxley Act of 2002,
as amended and the rules and regulations promulgated
thereunder.
4.30
Foreign Corrupt
Practices . Neither
the Company, nor any Significant Subsidiary, nor, to the knowledge
of the Company, any director, officer, agent, employee or other
Person acting on behalf of the Company or any Significant
Subsidiary has, in the course of its actions for, or on behalf of,
the Company, in any manner that would reasonably be expected to
have a Material Adverse Effect, (i) used any corporate funds
for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made
any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds;
(iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or
(iv) made any unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.
4.31
Employee Relations
. Neither the Company nor any
Significant Subsidiary is a party to any collective bargaining
agreement or employs any member of a union. The Company and
each Significant Subsidiary believe that their relations with their
employees are good. Except for the Company’s Chief Risk
Executive, Chief Capital Markets Executive and Chief Strategic
Initiatives Executive (i) no executive officer of the Company (as
defined in Rule 501(f) promulgated under the Securities Act) has
notified the Company that such officer intends to leave the Company
or otherwise terminate such officer’s employment with the
Company, and (ii) no executive officer of the Company is, or is now
expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other agreement or any
restrictive covenant, and the continued employment of each such
executive officer does not subject the Company or any Significant
Subsidiary to any liability with respect to any of the foregoing
matters.
4.32
ERISA . The Company is in compliance in all
material respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
(herein called “ ERISA ”); no “reportable
event” (as defined in ERISA) has occurred with respect to any
“pension plan” (as defined in ERISA) for which the
Company would have any liability; the Company has not incurred and
does not expect to incur liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any
“pension plan”; or (ii) Sections 412 or 4971 of
the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the “
Code ”); and each “Pension Plan” for which
the Company would have liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all
material respects a
