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Exhibit 10.1 At Market Issuance Sales Agreement
January 12, 2009 Wm Smith & Co.
1700 Lincoln Street, Suite 2545
Denver CO 80203 Ladies and Gentlemen:
Novavax Inc., a Delaware corporation
(the " Company "), confirms its agreement (this "
Agreement ") with Wm Smith & Co., a Colorado Corporation
(" Wm Smith "), as follows:
1. Issuance and Sale of
Shares . The Company agrees that, from time to time during the
term of this Agreement, on the terms and subject to the conditions
set forth herein, it may issue and sell through Wm Smith, acting as
agent and/or principal, up to $25,000,000 of shares (the "
Shares ") of the Company’s common stock, par value
$0.01 per share (the " Common Stock "). Notwithstanding
anything to the contrary contained herein, the parties hereto agree
that compliance with the limitations set forth in this
Section 1 on the number of Shares issued and sold under this
Agreement shall be the sole responsibility of the Company and that
Wm Smith shall have no obligation in connection with such
compliance. The issuance and sale of Shares through Wm Smith will
be effected pursuant to the Registration Statement (as defined
below) filed by the Company and declared effective by the
Securities and Exchange Commission (the " Commission "),
although nothing in this Agreement shall be construed as requiring
the Company to use the Registration Statement to issue Common Stock
or Preferred Stock. The Company has
filed, in accordance with the provisions of the Securities Act of
1933, as amended, and the rules and regulations thereunder
(collectively, the " Securities Act "), with the Commission
a registration statement on Form S-3 (File No. 333-138893),
including a base prospectus, with respect to equity and other
offerings, including the Shares, and which incorporates by
reference documents that the Company has filed or will file in
accordance with the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder
(collectively, the " Exchange Act "). The Company will
prepare a prospectus supplement (the " Prospectus Supplement
") to the base prospectus included as part of such registration
statement. The Company will furnish to Wm Smith, for use by Wm
Smith, copies of the prospectus included as part of such
registration statement, as supplemented by the Prospectus
Supplement, relating to the Shares. Except where the context
otherwise requires, such registration statement, as amended when it
became effective, including all documents filed as part thereof or
incorporated by reference therein, and including any information
contained in a Prospectus (as defined below) subsequently filed
with the Commission pursuant to Rule 424(b) under the Securities
Act and also including any other registration statement filed
pursuant to Rule 462(b) under the Securities Act, collectively, are
herein called the " Registration Statement ," and the base
prospectus, including all documents incorporated therein by
reference, included in
the Registration Statement, as it may be supplemented by the
Prospectus Supplement, in the form in which such prospectus and/or
Prospectus Supplement have most recently been filed by the Company
with the Commission pursuant to Rule 424(b) under the Securities
Act is herein called the " Prospectus ." Any reference
herein to the Registration Statement, the Prospectus or any
amendment or supplement thereto shall be deemed to refer to and
include the documents incorporated by reference therein, and any
reference herein to the terms "amend," "amendment" or "supplement"
with respect to the Registration Statement or the Prospectus shall
be deemed to refer to and include the filing after the execution
hereof of any document with the Commission deemed to be
incorporated by reference therein. For purposes of this Agreement,
all references to the Registration Statement, the Prospectus or to
any amendment or supplement thereto shall be deemed to include any
copy filed with the Commission pursuant to its Electronic Data
Gathering Analysis and Retrieval System (" EDGAR ").
2. Placements . Each
time that the Company wishes to issue and sell Shares hereunder
(each, a " Placement "), it will notify Wm Smith by email
notice (or other method mutually agreed to in writing by the
Parties) of the number of Shares (the " Placement Shares ")
to be issued, the type of Shares, the time period during which
sales are requested to be made, any limitation on the number of
Shares that may be sold in any one day and any minimum price below
which sales may not be made (a " Placement Notice "), the
form of which is attached hereto as Schedule 1. The Placement
Notice shall originate from any of the individuals from the Company
set forth on Schedule 3 (with a copy to each of the other
individuals from the Company listed on such schedule), and shall be
addressed to each of the individuals from Wm Smith set forth on
Schedule 3, as such Schedule 3 may be amended from time
to time. The Placement Notice shall be effective unless and until
(i) Wm Smith declines to accept the terms contained therein as
a result of any suspension or limitation of trading in the
Placement Shares or in securities generally on the Exchange or any
occurrence or event that causes a material adverse change in the
operation or prospects of the Company, (ii) the entire amount
of the Placement Shares have been sold, (iii) the Company
suspends or terminates the Placement Notice or (iv) the
Agreement has been terminated under the provisions of
Section 12. The amount of any discount, commission or other
compensation to be paid by the Company to Wm Smith in connection
with the sale of the Placement Shares shall be calculated in
accordance with the terms set forth in Schedule 2. It is
expressly acknowledged and agreed that neither the Company nor Wm
Smith will have any obligation whatsoever with respect to a
Placement or any Placement Shares unless and until the Company
delivers a Placement Notice to Wm Smith and Wm Smith does not
decline such Placement Notice pursuant to the terms set forth
above, and then only upon the terms specified therein and herein.
In the event of a conflict between the terms of this Agreement and
the terms of a Placement Notice, the terms of the Placement Notice
will control. 3. Sale of
Placement Shares by Wm Smith . Subject to the terms and
conditions herein set forth, upon the Company’s issuance of a
Placement Notice, and unless the sale of the Placement Shares
described therein has been declined, suspended, or otherwise
terminated in accordance with the terms of this Agreement, Wm Smith
will use its commercially reasonable efforts consistent with its
normal trading and sales practices to sell such Placement Shares up
to the amount specified, and otherwise in accordance with the terms
of such Placement Notice. Wm Smith will provide written
confirmation to the Company no later than the opening of the
Trading Day (as defined below) immediately following the Trading
Day on which it has made sales of Placement Shares hereunder
setting forth the number of Placement Shares sold on such
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day, the compensation payable by the Company to Wm Smith
pursuant to Section 2 with respect to such sales, and the Net
Proceeds (as defined below) payable to the Company. Wm Smith may
sell Placement Shares by any method permitted by law deemed to be
an "at the market" offering as defined in Rule 415 of the
Securities Act, including without limitation sales made directly on
NASDAQ Capital Market (the " Exchange "), on any other
existing trading market for the Common Stock or to or through a
market maker. Wm Smith may also sell Placement Shares in privately
negotiated transactions, subject to approval by the Company. The
Company acknowledges and agrees that (i) there can be no assurance
that Wm Smith will be successful in selling Placement Shares, and
(ii) Wm Smith will incur no liability or obligation to the
Company or any other person or entity if it does not sell Placement
Shares for any reason other than a failure by Wm Smith to use its
commercially reasonable efforts consistent with its normal trading
and sales practices to sell such Placement Shares as required under
this Section 3. For the purposes hereof, " Trading Day
" means any day on which Common Stock is purchased and sold on the
principal market on which the Common Stock is listed or quoted.
4. Suspension of Sales .
The Company or Wm Smith may, upon notice to the other party in
writing (including by email correspondence to each of the
individuals of the other Party set forth on Schedule 3, if
receipt of such correspondence is actually acknowledged by any of
the individuals to whom the notice is sent, other than via
auto-reply) or by telephone (confirmed immediately by verifiable
facsimile transmission or email correspondence to each of the
individuals of the other Party set forth on Schedule 3),
suspend any sale of Placement Shares; provided, however, that such
suspension shall not affect or impair either party’s
obligations with respect to any Placement Shares sold hereunder
prior to the receipt of such notice. Each of the Parties agrees
that no such notice under this Section 4 shall be effective
against the other unless it is made to one of the individuals named
on Schedule 3 hereto, as such Schedule may be amended from
time to time. 5.
Settlement .
(a)
Settlement of Placement Shares . Unless otherwise specified
in the applicable Placement Notice, settlement for sales of
Placement Shares will occur on the third (3rd) Trading Day (or such
earlier day as is industry practice for regular-way trading) (each,
a " Settlement Date ") following the respective Point of
Sale (as defined below). The amount of proceeds to be delivered to
the Company on a Settlement Date against receipt of the Placement
Shares sold (the " Net Proceeds ") will be equal to the
aggregate sales price received by Wm Smith at which such Placement
Shares were sold, after deduction for (i) Wm Smith’s
commission, discount or other compensation for such sales payable
by the Company pursuant to Section 2 hereof, (ii) any
other amounts due and payable by the Company to Wm Smith hereunder
pursuant to Section 7(g) (Expenses) hereof, and (iii) any
transaction fees imposed by any governmental or self-regulatory
organization in respect of such sales.
(b)
Delivery of Placement Shares . On or before each Settlement
Date, the Company will, or will cause its transfer agent to,
electronically transfer the Placement Shares being sold by
crediting Wm Smith’s or its designee’s account at The
Depository Trust Company through its Deposit and Withdrawal at
Custodian System (" DWAC ") or by such other means of
delivery as may be mutually agreed upon by the parties hereto which
in all cases shall be freely tradeable, transferable, registered
shares in good deliverable form. On each Settlement Date,
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Wm Smith will deliver the related Net Proceeds in same day funds
to an account designated by the Company on, or prior to, the
Settlement Date. Wm Smith will be responsible for obtaining DWAC
instructions or instructions for delivery by other means with
regard to the transfer of Placement Shares being sold. The Company
agrees that if the Company, or its transfer agent (if applicable),
defaults in its obligation to deliver Placement Shares on a
Settlement Date, the Company agrees that in addition to and in no
way limiting the rights and obligations set forth in Section 10(a)
(Indemnification and Contribution) hereto, it will (i) hold Wm
Smith harmless against any loss, claim, damage, or expense
(including reasonable legal fees and expenses), as incurred,
arising out of or in connection with such default by the Company
and (ii) pay to Wm Smith any commission, discount, or other
compensation to which it would otherwise have been entitled absent
such default. 6.
Representations and Warranties of the Company . The Company
represents and warrants to, and agrees with, Wm Smith that as of
the date of this Agreement and as of each Representation Date (as
defined in Section 7(m) below) on which a certificate is required
to be delivered pursuant to Section 7(m) of this Agreement, as the
case may be, except as may be disclosed in the Registration
Statement or a Disclosure Schedule delivered in connection
herewith:
(a)
Registration Statement and Prospectus . The Company and,
assuming no act or omission on the part of Wm Smith that would make
such statement untrue, the transactions contemplated by this
Agreement meet the requirements for and comply with the conditions
for the use of Form S-3 under the Securities Act. The Registration
Statement has been filed with the Commission and has been declared
effective under the Securities Act. The Prospectus Supplement will
name Wm Smith as an underwriter, acting as principal and/or agent,
that the Company might engage in the section entitled "Plan of
Distribution." The Company has not received, and has no notice of,
any order of the Commission preventing or suspending the use of the
Registration Statement, or threatening or instituting proceedings
for that purpose. The Registration Statement and the offer and sale
of Shares as contemplated hereby meet the requirements of
Rule 415 under the Act and comply in all material respects
with said Rule. Any statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement have been so described or filed. Copies of
the Registration Statement, the Prospectus, and any such amendments
or supplements and all documents incorporated by reference therein
that were filed with the Commission on or prior to the date of this
Agreement have been delivered, or are available through EDGAR, to
Wm Smith and their counsel. The Company has not distributed and,
prior to the later to occur of each Settlement Date and completion
of the distribution of the Placement Shares, will not distribute
any offering material in connection with the offering or sale of
the Placement Shares other than the Registration Statement and the
Prospectus and any Issuer Free Writing Prospectus (as defined
below) to which Wm Smith has consented. The Common Stock is
currently listed on the NASDAQ Global Market under the trading
symbol "NVAX". Except as disclosed in the Registration Statement,
the Company has not, in the 12 months preceding the date
hereof, received notice from the Exchange to the effect that the
Company is not in compliance with the listing or maintenance
requirements. The Company has no reason to believe that it will not
in the foreseeable future continue to be in compliance with all
such listing and maintenance requirements.
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(b)
No Misstatement or Omission . The Registration Statement,
when it became or becomes effective, and the Prospectus, and any
amendment or supplement thereto, on the date of such Prospectus or
amendment or supplement, conformed or will conform in all material
respects with the requirements of the Securities Act. At each
Settlement Date, the Registration Statement and the Prospectus, as
of such date, will conform in all material respects with the
requirements of the Act. The Registration Statement, when it became
or becomes effective, did not, or 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 not misleading. The Prospectus and any amendment or
supplement thereto, on the date thereof and at each Point of Sale,
did not or will not include an untrue statement of a material fact
or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading. The documents incorporated by reference in the
Prospectus or any Prospectus Supplement did not, and any further
documents filed and incorporated by reference therein will not,
when filed with the Commission, contain an untrue statement of a
material fact or omit to state a material fact required to be
stated in such document or necessary to make the statements in such
document, in light of the circumstances under which they were made,
not misleading. The foregoing shall not apply to statements in, or
omissions from, any such document made in reliance upon, and in
conformity with, information furnished to the Company by Wm Smith
specifically for use in the preparation thereof. " Point of
Sale " means, for a Placement, the time at which an acquiror of
Placement Shares entered into a contract, binding upon such
acquiror, to acquire such Shares.
(c)
Conformity with Securities Act and Exchange Act . The
documents incorporated by reference in the Registration Statement,
the Prospectus or any amendment or supplement thereto, when such
documents were or are filed with the Commission under the
Securities Act or the Exchange Act or became or become effective
under the Securities Act, as the case may be, conformed or will
conform in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable.
(d)
>Financial Information . The consolidated financial
statements and the related notes thereto included or incorporated
by reference in the Registration Statement and the Prospectus
comply with the applicable requirements of the Act and the Exchange
Act, as applicable, and present fairly, the financial position of
the Company as of the dates indicated and the results of its
operations and the changes in its consolidated cash flows for the
periods specified; such financial statements have been prepared in
conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods covered thereby (except
(i) as may be otherwise indicated in such financial statements
or the notes thereto or (ii) in the case of unaudited interim
financial statements, to the extent that they may not include
footnotes or may be condensed or summary statements), and the other
financial information included or incorporated by reference in the
Registration Statement and the Prospectus has been derived from the
accounting records of the Company and presents fairly the
information shown thereby. Any pro forma financial statements or
data included or incorporated by reference in the Registration
Statement and the Prospectus comply with the requirements of
Regulation S-X of the Securities Act, including, without
limitation, Article 11 thereof, and the assumptions used in
the preparation of such pro forma financial statements and data are
reasonable, the pro forma adjustments used therein are appropriate
to give effect to the circumstances referred to therein and the pro
forma adjustments have been properly applied to the historical
amounts in the
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compilation of those statements and data. No other financial
statements or schedules of the Company or any other entity are
required by the Act to be included in the Registration Statement or
the Prospectus. Except as set forth on Schedule 4, all
disclosures contained in the Registration Statement, the Pricing
Disclosure Materials and the Prospectus regarding "non-GAAP
financial measures" (as such term is defined by Item 10 of
Regulation S-K under the Act) comply with Regulation G of
the Exchange Act and Item 10 of Regulation S-K under the
Act, to the extent applicable. The Company does not have any
material liabilities or obligations, direct or contingent
(including any off-balance sheet obligations and any "variable
interest entities" within the meaning of Financial Accounting
Standards Board Interpretation No. 46), not disclosed in the
Registration Statement, the Pricing Disclosure Materials and the
Prospectus.
(e)
Conformity with EDGAR Filing . The Prospectus delivered to
Wm Smith for use in connection with the sale of the Placement
Shares pursuant to this Agreement will be identical to the versions
of the Prospectus created to be transmitted to the Commission for
filing via EDGAR, except to the extent permitted by
Regulation S-T.
(f)
Organization . The Company is, and will be, duly organized,
validly existing as a corporation and in good standing under the
laws of its jurisdiction of organization. The Company is, and will
be, duly licensed or qualified as a foreign corporation for
transaction of business and in good standing under the laws of each
other jurisdiction in which its ownership or lease of property or
the conduct of its businesses requires such license or
qualification, and has all corporate power and authority necessary
to own or hold its properties and to conduct its business as
described in the Registration Statement and the Prospectus, except
where the failure to be so qualified or in good standing or have
such power or authority would not, individually or in the
aggregate, have a material adverse effect or would reasonably be
expected to have a material adverse effect on or affecting the
business, properties, management, consolidated financial position,
stockholders’ equity or results of operations of the Company
(a " Material Adverse Effect ").
(g)
Subsidiaries . The Company has no active subsidiaries.
(h)
No Violation or Default . The Company is not (i) in
violation of its charter or by-laws or similar organizational
documents; (ii) in default, and no event has occurred that,
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 or other agreement or instrument to which the
Company is a party or by which the Company is bound or to which any
of the property or assets of the Company is subject; or
(iii) in violation of any law or statute or any judgment,
order, rule or regulation of any court or arbitrator or
governmental or regulatory authority, except, in the case of each
of clauses (ii) and (iii) above, for any such violation
or default that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. To the
Company’s knowledge, no other party under any material
contract or other agreement to which it is a party is in default in
any respect thereunder where such default would have a Material
Adverse Effect.
(i)
No Material Adverse Change . Except as set forth in or
otherwise contemplated by the Registration Statement (exclusive of
any amendment thereof) or the Prospectus (exclusive of any
supplement thereto), since the date of the most recent
financial
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statements of the Company included or incorporated by reference
in the Registration Statement and the Prospectus and prior to each
Settlement Date, (i) there has not been and will not have been
any change in the capital stock of the Company (except for changes
in the number of outstanding shares of Common Stock of the Company
due to the issuance of shares upon the exercise or conversion of
securities exercisable for, or convertible into, shares of Common
Stock outstanding on the date hereof) or long-term debt of the
Company or any dividend or distribution of any kind declared, set
aside for payment, paid or made by the Company on any class of
capital stock, that has resulted in or that would reasonably be
expected to result in a Material Adverse Effect to the Company
taken as a whole; (ii) other than this Agreement, the Company
has not entered and will not enter into any transaction or
agreement, not in the ordinary course of business, that is material
to the Company taken as a whole or incurred and will not incur any
liability or obligation, direct or contingent, not in the ordinary
course of business, that is material to the Company taken as a
whole; (iii) there has not been any material adverse change in the
business, properties, management, financial position,
stockholders’ equity, or results of operations of the
Company, taken as a whole; and (iv) the Company has not sustained
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 disturbance or dispute or any action,
order or decree of any court or arbitrator or governmental or
regulatory authority.
(j)
Capitalization . The issued and outstanding shares of
capital stock of the Company have been validly issued, are fully
paid and nonassessable and, other than as disclosed in or
contemplated by the Registration Statement or the Prospectus, are
not subject to any preemptive rights, rights of first refusal or
similar rights. The Company has an authorized, issued and
outstanding capitalization as set forth in the Registration
Statement and the Prospectus as of the dates referred to therein
(other than the grant of additional options under the
Company’s existing stock option plans, or changes in the
number of outstanding shares of Common Stock of the Company due to
the issuance of shares upon the exercise or conversion of
securities exercisable for, or convertible into, shares of Common
Stock outstanding on the date hereof) and such authorized capital
stock conforms to the description thereof set forth in the
Registration Statement and the Prospectus. The description of the
securities of the Company in the Registration Statement and the
Prospectus is complete and accurate in all material respects.
Except as disclosed in or contemplated by the Registration
Statement or the Prospectus, as of the date referred to therein,
the Company does not have outstanding any options to purchase, or
any rights or warrants to subscribe for, or any securities or
obligations convertible into, or exchangeable for, or any contracts
or commitments to issue or sell, any shares of capital stock or
other securities.
(k)
Authorization; Enforceability . The Company has full legal
right, 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 and is a legal,
valid and binding agreement of the Company enforceable in
accordance with its terms, except to the extent that
(i) enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable
principles and (ii) the indemnification and contribution
provisions of Section 10 hereof may be limited by federal or
state securities laws and public policy considerations in respect
thereof.
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(l)
Authorization of Placement Shares . The Placement Shares,
when issued and delivered pursuant to the terms approved by the
Board of Directors or a duly designated committee thereof, against
payment therefor as provided herein, will be duly and validly
authorized and issued and fully paid and nonassessable, free and
clear of any pledge, lien, encumbrance, security interest or other
claim, including any statutory or contractual preemptive rights,
resale rights, rights of first refusal or other similar rights, and
will be registered pursuant to Section 12 of the Exchange Act.
The Placement Shares, when issued, will conform in all material
respects to the description thereof set forth in or incorporated
into the Prospectus.
(m)
No Consents Required . No consent, approval, authorization,
order, registration or qualification of or with any court or
arbitrator or governmental or regulatory authority is required for
the execution, delivery and performance by the Company this
Agreement, the issuance and sale by the Company of the Placement
Shares, except for the registration of the Placement Shares under
the Act and such consents, approvals, authorizations, orders and
registrations or qualifications as may be required under applicable
state securities laws or by the by-laws and rules of the Financial
Industry Regulatory Authority (" FINRA ") or the Exchange in
connection with the sale of the Placement Shares by Wm Smith.
(n)
No Preferential Rights . Except as set forth in the
Registration Statement and the Prospectus, (i) no person, as
such term is defined in Rule 1-02 of Regulation S-X
promulgated under the Securities Act (each, a " Person "),
has the right, contractual or otherwise, to cause the Company to
issue or sell to such Person any shares of Common Stock or shares
of any other capital stock or other securities of the Company,
(ii) no Person has any preemptive rights, resale rights,
rights of first refusal, or any other rights (whether pursuant to a
"poison pill" provision or otherwise) to purchase any shares of
Common Stock or shares of any other capital stock or other
securities of the Company, (iii) no Person has the right to
act as an underwriter or as a financial advisor to the Company in
connection with the offer and sale of the Shares, and (iv) no
Person has the right, contractual or otherwise, to require the
Company to register under the Securities Act any shares of Common
Stock or shares of any other capital stock or other securities of
the Company, or to include any such shares or other securities in
the Registration Statement or the offering contemplated thereby,
whether as a result of the filing or effectiveness of the
Registration Statement or the sale of the Placement Shares as
contemplated thereby or otherwise.
(o)
Independent Public Accountant . Ernst & Young LLP, whose
report on the consolidated financial statements of the Company is
filed with the Commission as part of the Registration Statement and
the Prospectus for the period ended December 31, 2005, and
Grant Thornton LLP (the " Accountant "), whose report on the
consolidated financial statements of the Company is filed with the
Commission as part of the Prospectus for the periods ended December
31, 2006 and December 31, 2007, are and, during the periods
covered by their respective reports, were independent public
accountants within the meaning of the Securities Act and the Public
Company Accounting Oversight Board (United States). To the
Company’s knowledge, after due and careful inquiry, the
Accountant is not in violation of the auditor independence
requirements of the Sarbanes-Oxley Act of 2002 (the "
Sarbanes-Oxley Act ") with respect to the Company.
(p)
Enforceability of Agreements . To the knowledge of the
Company, all agreements between the Company and third parties
expressly referenced in the Prospectus are
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legal, valid and binding obligations of the Company enforceable
in accordance with their respective terms, except to the extent
that (i) enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable
principles and (ii) the indemnification provisions of certain
agreements may be limited be federal or state securities laws or
public policy considerations in respect thereof and except for any
unenforceability that, individually or in the aggregate, would not
unreasonably be expected to have a Material Adverse Effect.
(q)
No Litigation . Except as set forth in the Registration
Statement or the Prospectus, there are no legal, governmental or
regulatory actions, suits or proceedings pending, nor, to the
Company’s knowledge, any legal, governmental or regulatory
investigations, to which the Company is a party or to which any
property of the Company is the subject that, individually or in the
aggregate, if determined adversely to the Company, would reasonably
be expected to have a Material Adverse Effect or materially and
adversely affect the ability of the Company to perform its
obligations under this Agreement; to the Company’s knowledge,
no such actions, suits or proceedings are threatened or
contemplated by any governmental or regulatory authority or
threatened by others; and (i) there are no current or pending
legal, governmental or regulatory investigations, actions, suits or
proceedings that are required under the Act to be described in the
Prospectus that are not so described; and (ii) there are no
contracts or other documents that are required under the Act to be
filed as exhibits to the Registration Statement that are not so
filed.
(r)
Licenses and Permits . Except as set forth in the
Registration Statement or the Prospectus, the Company possesses or
has obtained, and at each Settlement Date will possess and will
have obtained, all licenses, certificates, consents, orders,
approvals, permits and other authorizations issued by, and have
made all declarations and filings with, the appropriate federal,
state, local or foreign governmental or regulatory authorities that
are necessary for the ownership or lease of its properties or the
conduct of its business as described in the Registration Statement
and the Prospectus (the " Permits "), except where the
failure to possess, obtain or make the same would not, individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as disclosed in the Registration Statement
or the Prospectus, the Company has not received written notice of
any proceeding relating to revocation or modification of any such
Permit and does not have any reason to believe that such Permit
will not be renewed in the ordinary course, except where the
failure to obtain any such renewal would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect.
(s)
Market Capitalization . As of the close of trading on the
Exchange on the Trading Day immediately prior to the date of this
Agreement and the Trading Day immediately prior to the date of each
Placement Notice (i) the aggregate market value of the
outstanding voting and non-voting common equity (as defined in
Securities Act Rule 405) of the Company held by persons other
than affiliates of the Company (pursuant to Securities Act
Rule 144, those that directly, or indirectly through one or
more intermediaries, control, or are controlled by, or are under
common control with, the Company) (the " Non-Affiliate
Shares "), was equal to or greater than $75 million (calculated
by multiplying (x) the price at which the common equity of the
Company was last sold on the Exchange on the Trading Day
immediately prior to the date of this Agreement times (y) the
number of Non-Affiliate Shares); or (ii) the aggregate market
value of securities sold by or on behalf of the Company as set
forth on Schedule 5 during the previous
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12 calendar months, including the Placement Shares, is no more
than one-third the aggregate market value of the Non-Affiliate
Shares.
(t)
No Material Defaults . The Company has not defaulted on any
installment on indebtedness for borrowed money or on any rental on
one or more long-term leases, which defaults, individually or in
the aggregate, could reasonably be expected to have a Material
Adverse Effect. The Company has not filed a report pursuant to
Section 13(a) or 15(d) of the Exchange Act since the filing of its
last Annual Report on Form 10-K, indicating that it (i) has
failed to pay any dividend or sinking fund installment on preferred
stock or (ii) has defaulted on any installment on indebtedness
for borrowed money or on any rental on one or more long-term
leases, which defaults, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(u)
Certain Market Activities . Neither the Company, nor any of
its respective directors, officers or controlling persons has
taken, directly or indirectly, any action designed, or that has
constituted or might reasonably be expected to cause or result in,
under the Exchange Act or otherwise, the stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Placement Shares.
(v)
Broker/Dealer Relationships . Neither the Company nor any of
its related entities (i) is required to register as a "broker"
or "dealer" in accordance with the provisions of the Exchange Act
or (ii) directly or indirectly through one or more
intermediaries, controls or is a "person associated with a member"
or "associated person of a member" (within the meaning of Article I
of the NASD Manual administered by FINRA).
(w)
No Reliance . The Company has not relied upon Wm Smith or
legal counsel for Wm Smith for any legal, tax or accounting advice
in connection with the offering and sale of the Placement Shares.
(x)
Taxes . The Company has filed all federal, state, local and
foreign tax returns which have been required to be filed and paid
all taxes shown thereon through the date hereof, to the extent that
such taxes have become due and are not being contested in good
faith. Except as otherwise disclosed in or contemplated by the
Registration Statement or the Prospectus, no tax deficiency has
been determined adversely to the Company which has had, or would
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. The Company has no knowledge of any
federal, state or other governmental tax deficiency, penalty or
assessment which has been or might be asserted or threatened
against it which could have a Material Adverse Effect.
(y)
Title to Real and Personal Property . Except as set forth in
the Registration Statement or the Prospectus, the Company has good
and valid title in fee simple to all items of real property and
good and valid title to all personal property described in the
Registration Statement or Prospectus as being owned by it that are
material to the business of the Company, in each case free and
clear of all liens, encumbrances and claims, except those that
(i) do not materially interfere with the use made and proposed
to be made of such property by the Company or (ii) would not
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. Any real property described in the
Registration Statement or
10
Prospectus as being leased by the Company is held by it under
valid, existing and enforceable leases, except those that
(A) do not materially interfere with the use made or proposed
to be made of such property by the Company or (B) would not be
reasonably expected, individually or in the aggregate, to have a
Material Adverse Effect.
(z)
Intellectual Property . Except as set forth in the
Registration Statement or the Prospectus, the Company owns or
possesses adequate enforceable rights to use all patents, patent
applications, trademarks (both registered and unregistered),
service marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses and know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) (collectively, the
" Intellectual Property "), necessary for the conduct of its
business as conducted as of the date hereof, except to the extent
that the failure to own or possess adequate rights to use such
Intellectual Property would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; the
Company has not received any written notice of any claim of
infringement or conflict which asserted Intellectual Property
rights of others, which infringement or conflict, if the subject of
an unfavorable decision, would result in a Material Adverse Effect;
the Company has conducted reasonable searches of the United States
patents of record and to the Company’s knowledge none of the
Company’s patents or patent applications interfere with any
other United States patents; the Company has conducted an
infringement search and determined that, to the Company’s
knowledge, no valid and enforceable patent held by any third party
is infringed by the activities of the Company; there are no
pending, or to the Company’s knowledge, threatened judicial
proceedings or interference proceedings challenging the
Company’s rights in or to or the validity of the scope of any
of the Company’s patents, patent applications or proprietary
information; to the Company’s knowledge no other entity or
individual has any right or claim in any of the Company’s
patents, patent applications or any patent to be issued therefrom
by virtue of any contract, license or other agreement entered into
between such entity or individual and the Company or by any
non-contractual obligation, other than by written licenses granted
by the Company; the Company has not received any written notice of
any claim challenging the rights of the Company in or to any
Intellectual Property owned, licensed or optioned by the Company
which claim, if the subject of an unfavorable decision would result
in an Material Adverse Effect.
(aa)
Compliance Program . The Company has established and
administers a compliance program applicable to the Company, to
assist the Company and the directors, officers and employees of the
Company in complying with applicable regulatory guidelines.
(bb)
Environmental Laws . Except as set forth in the Registration
Statement or the Prospectus, the Company (i) is in compliance
with any and all applicable federal, state, local and foreign laws,
rules, regulations, decisions and orders relating to the protection
of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (collectively, "
Environmental Laws "); (ii) has received and is in
compliance with all permits, licenses or other approvals required
of them under applicable Environmental Laws to conduct their
respective businesses as described in the Registration Statement
and the Prospectus; and (iii) has not received notice of any
actual or potential liability for the investigation or remediation
of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, except, in the case of any of
clauses (i), (ii) or (iii) above, for
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any such failure to comply or failure to receive required
permits, licenses, other approvals or liability as would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(cc)
Disclosure Controls . The Company maintains systems of
internal accounting controls sufficient to provide reasonable
assurance 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 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. The
Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15 and 15d-15) for the
Company and designed such disclosure controls and procedures to
ensure that material information relating to the Company is made
known to the certifying officers by others within those entities,
particularly during the period in which the Company’s Annual
Report on Form 10-K or Quarterly Report on Form 10-Q, as the case
may be, is being prepared. The Company’s certifying officers
have evaluated the effectiveness of the Company’s controls
and procedures as of a date within 90 days prior to the filing
date of the Form 10-K for the fiscal year ended December 31,
2007 (such date, the " Evaluation Date "). The Company
presented in its Form 10-K for the fiscal year ended
December 31, 2007 the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures
based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no significant changes in the
Company’s internal controls (as such term is defined in Item
307(b) of Regulation S-K under the Act) or, to the
Company’s knowledge, in other factors that could
significantly affect the Company’s internal controls.
(dd)
Sarbanes-Oxley . To the knowledge of the Company, there is
and has been no failure on the part of the Company and any of the
Company’s directors or officers, in their capacities as such,
to comply with any applicable provisions of the Sarbanes-Oxley Act
and the rules and regulations promulgated thereunder. Each of the
principal executive officer and the principal financial officer of
the Company (or each former principal executive officer of the
Company and each former principal financial officer of the Company
as applicable) has made all certifications required by
Sections 302 and 906 of the Sarbanes-Oxley Act with respect to
all reports, schedules, forms, statements and other documents
required to be filed by it or furnished by it to the Commission.
For purposes of the preceding sentence, "principal executive
officer" and "principal financial officer" shall have the meanings
given to such terms in the Sarbanes-Oxley Act.
(ee)
Finder’s Fees . The Company has not incurred any
liability for any finder’s fees, brokerage commissions or
similar payments in connection with the transactions herein
contemplated, except as may otherwise exist with respect to Wm
Smith pursuant to this Agreement.
(ff)
Labor Disputes . No labor disturbance by or dispute with
employees of the Company exists or, to the knowledge of the
Company, is threatened which would reasonably be expected to result
in a Material Adverse Effect
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(gg)
Investment Company Act . The Company, after giving effect to
the offering and sale of the Placement Shares, will not be an
"investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act
of 1940, as amended (the " Investment Company Act ").
(hh)
Operations . The operations of the Company are and have been
conducted at all times in compliance with applicable financial
record keeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions to which the Company is
subject, 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 "), except as would not reasonably be expected
to result in a Material Adverse Effect; and no action, suit or
proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Company with respect to the
Money Laundering Laws is pending or, to the knowledge of the
Company, threatened.
(ii)
Off-Balance Sheet Arrangements . There are no transactions,
arrangements and other relationships between and/or among the
Company, and/or, to the knowledge of the Company, any of its
affiliates and any unconsolidated entity, including, but not
limited to, any structural finance, special purpose or limited
purpose entity (each, an " Off Balance Sheet Transaction ")
that could reasonably be expected to affect materially the
Company’s liquidity or the availability of or requirements
for its capital resources, including those Off Balance Sheet
Transactions described in the Commission’s Statement about
Management’s Discussion and Analysis of Financial Conditions
and Results of Operations (Release Nos. 33-8056; 34-45321; FR-61),
required to be described in the Prospectus which have not been
described as required.
(jj)
Underwriter
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