Exhibit 1.2
EXECUTION COPY
Sonic Automotive, Inc.
$150,000,000 aggregate principal
amount of
5% Convertible Senior Notes due October 1,
2029
Underwriting Agreement
September 17, 2009
J.P. Morgan Securities
Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
As Representatives of the
several Underwriters
listed
in Schedule 1
hereto
c/o J.P. Morgan Securities Inc.
383 Madison Avenue
New York, New York 10179
Ladies and Gentlemen:
Sonic Automotive, Inc., a Delaware
corporation (the “Company”), proposes to issue and sell
to the several Underwriters listed in Schedule 1 hereto (the
“Underwriters”), for whom you are acting as
representatives (the “Representatives”), $150,000,000
aggregate principal amount of its 5% Convertible Senior Notes due
2029 (the “Underwritten Securities”) and, at the option
of the Underwriters, up to an additional $22,500,000 principal
amount of its 5% Convertible Senior Notes Due 2029 (the
“Option Securities”) if and to the extent that the
Underwriters shall have determined to exercise the option to
purchase such 5% Convertible Senior Notes due 2029 granted to the
Underwriters in Section 2 hereof. The Underwritten Securities
and the Option Securities are herein referred to as the
“Securities.” The Securities are convertible into
shares (the “Underlying Shares”) of Class A common
stock of the Company, par value $0.01 per share (the “Common
Stock”). The Securities will be issued pursuant to an
indenture, to be dated as of September 23, 2009, between the
Company and U.S. Bank National Association, as Trustee (the
“Base Indenture”) and to be amended by a supplemental
indenture to be dated as of September 23, 2009 (the
“Supplemental Indenture” and, together with the Base
Indenture, the “Indenture”). The Common Stock and Class
B common stock of the Company, par value $0.10 per share, are
referred to herein as the “Stock.”
The Company hereby confirms its
agreement with the several Underwriters concerning the purchase and
sale of the Securities, as follows:
1. Registration Statement .
The Company has prepared and filed with the Securities and Exchange
Commission (the “Commission”) under the Securities Act
of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the “Securities
Act”), a registration statement (File No. 333-161519 and
333-161519-01 through 333-161519-277), including a prospectus,
registering shares of Common Stock, preferred stock, warrants, debt
securities and guarantees. Such registration statement, as amended
at the time it became effective, including the information, if any,
deemed pursuant
to Rule 430A, 430B or 430C under the Securities
Act to be part of the registration statement at the time of its
effectiveness (“Rule 430 Information”), is referred to
herein as the “Registration Statement”; and as used
herein, the term “Preliminary Prospectus” means any
preliminary prospectus supplement relating to the Securities filed
with the Commission pursuant to Rule 424(b) under the Securities
Act that amends or supplements the Base Prospectus (as hereinafter
defined) and the prospectus included in the Registration Statement
at the time of its effectiveness that omits Rule 430 Information
(the “Base Prospectus”), and the term
“Prospectus” means the prospectus supplement and the
Base Prospectus in the form first used (or made available upon
request of purchasers pursuant to Rule 173 under the Securities
Act) in connection with confirmation of sales of the Securities Any
reference in this Agreement to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act, as
of the effective date of the Registration Statement or the date of
such Preliminary Prospectus or the Prospectus, as the case may be,
and any reference to “amend”, “amendment”
or “supplement” with respect to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any documents filed after such date
under the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder (collectively,
the “Exchange Act”) that are deemed to be incorporated
by reference therein. Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Registration
Statement and the Prospectus.
At or prior to the Applicable Time
(as defined below), the Company had prepared the following
information (collectively with the pricing information set forth on
Annex C, the “Pricing Disclosure Package”): a
Preliminary Prospectus dated September 14, 2009 and each
“free-writing prospectus” (as defined pursuant to Rule
405 under the Securities Act) listed on Annex B hereto.
“Applicable Time” means
9:00 A.M., New York City time, on September 23,
2009.
2. Purchase of the Securities by
the Underwriters .
(a) The Company agrees to issue and
sell the Underwritten Securities to the several Underwriters as
provided in this Agreement, and each Underwriter, on the basis of
the representations, warranties and agreements set forth herein and
subject to the conditions set forth herein, agrees, severally and
not jointly, to purchase from the Company the respective principal
amount of Underwritten Securities set forth opposite such
Underwriter’s name in Schedule 1 hereto at a price equal to
96.83396% of the principal amount thereof (the “Purchase
Price”) plus accrued interest, if any, from
September 23, 2009 to the Closing Date (as defined
below).
In addition, the Company agrees to
issue and sell the Option Securities to the several Underwriters as
provided in this Agreement, and the Underwriters, on the basis of
the representations, warranties and agreements set forth herein and
subject to the conditions set forth herein, shall have the option
to purchase, severally and not jointly, from the Company the Option
Securities at the Purchase Price plus accrued interest, if any,
from the Closing Date to the date of payment and
delivery.
If any Option Securities are to be
purchased, the principal amount of Option Securities to be
purchased by each Underwriter shall be the principal amount of
Option Securities which bears the same ratio to the aggregate
principal amount of Option Securities being purchased as the
principal amount of Underwritten Securities set forth opposite the
name of such Underwriter in Schedule 1 hereto (or such principal
amount increased as set forth in Section 10 hereof) bears to
the aggregate principal amount of Underwritten Securities being
purchased from the Company by the several Underwriters, subject,
however, to such adjustments to eliminate Securities in
denominations other than $1,000 as the Representatives in their
sole discretion shall make.
The Underwriters may exercise the
option to purchase Option Securities at any time in whole, or from
time to time in part, on or before the thirtieth day following the
date of the Prospectus, by written notice from the Representatives
to the Company. Such notice shall set forth the aggregate principal
amount of Option Securities as to which the option is being
exercised and the date and time when the Option Securities are to
be delivered and paid for, which may be the same date and time as
the Closing Date (as hereinafter defined) but shall not be earlier
than the Closing Date or later than the tenth full business day (as
hereinafter defined) after the date of such notice (unless such
time and date are postponed in accordance with the provisions of
Section 10 hereof). Any such notice shall be given at least
one business day prior to the date and time of delivery specified
therein.
(b) The Company understands that the
Underwriters intend to make a public offering of the Securities as
soon after the effectiveness of this Agreement as in the judgment
of the Representatives is advisable, and initially to offer the
Securities on the terms set forth in the Prospectus. The Company
acknowledges and agrees that the Underwriters may offer and sell
Securities to or through any affiliate of an Underwriter and that
any such affiliate may offer and sell Securities purchased by it or
through any Underwriter.
(c) Payment for the Securities shall
be made by wire transfer in immediately available funds to an
account with U.S. Bank National Association as Escrow Agent
pursuant to the Escrow Agreement (each as defined below) in the
case of the Underwritten Securities, at the offices of Fried,
Frank, Harris, Shriver & Jacobson LLP at 10:00 A.M., New
York City time, on September 23, 2009, or at such other time
or place on the same or such other date, not later than the fifth
business day thereafter, as the Representatives and the Company may
agree upon in writing or, in the case of the Option Securities, on
the date and at the time and place specified by the Representatives
in the written notice of the Underwriters’ election to
purchase such Option Securities. The time and date of such payment
for the Underwritten Securities is referred to herein as the
“Closing Date”, and the time and date for such payment
for the Option Securities, if other than the Closing Date, is
herein referred to as the “Additional Closing
Date”.
Payment for the Securities to be
purchased on the Closing Date or the Additional Closing Date, as
the case may be, shall be made against delivery to the
Representatives for the respective accounts of the several
Underwriters of the Securities to be purchased on the Closing Date
or the Additional Closing Date, as the case may be, of one or more
global notes representing the Securities (collectively, the
“Global Note”), with any transfer taxes payable in
connection with the sale of such Securities duly paid by the
Company. Delivery of the Securities shall be made through the
facilities of The Depository Trust Company (“DTC”)
unless the Representatives shall otherwise instruct. The Global
Note will be made available for inspection and packaging by the
Representatives at the office of DTC or its designated custodian
not later than 1:00 P.M., New York City time, on the business day
prior to the Closing Date or the Additional Closing Date, as the
case may be.
(d) The Company acknowledges and
agrees that the Underwriters are acting solely in the capacity of
an arm’s length contractual counterparty to the Company with
respect to the offering of Securities contemplated hereby
(including in connection with determining the terms of the
offering) and not as a financial advisor or a fiduciary to, or an
agent of, the Company or any other person. Additionally, neither
the Representatives nor any other Underwriter is advising the
Company or any other person as to any legal, tax, investment,
accounting or regulatory matters in any jurisdiction. The Company
shall consult with its own advisors concerning such matters and
shall be responsible for making its own independent investigation
and appraisal of the transactions contemplated hereby, and the
Underwriters shall have no responsibility or liability to the
Company with respect thereto. Any review by the Underwriters of the
Company, the transactions contemplated hereby or other matters
relating to such
transactions will be performed solely for the
benefit of the Underwriters and shall not be on behalf of the
Company.
3. Representations and Warranties
of the Company . The Company represents and warrants to each
Underwriter as of the Applicable Time and as of the Closing Date
that:
(a) Preliminary Prospectus.
No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus included in the Pricing Disclosure Package, at the time
of filing thereof, complied in all material respects with the
Securities Act, and no Preliminary Prospectus, at the time of
filing thereof, contained any 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;
provided that the Company makes no representation and
warranty with respect to any statements or omissions made in
reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Underwriter
through the Representatives expressly for use in any Preliminary
Prospectus, it being understood and agreed that the only such
information furnished by any Underwriter consists of the
information described as such in Section 7(b)
hereof.
(b) Pricing Disclosure
Package . The Pricing Disclosure Package as of the Applicable
Time did not, and as of the Closing Date and as of the Additional
Closing Date, as the case may be, will not, contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company
makes no representation and warranty with respect to any statements
or omissions made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in
writing by such Underwriter through the Representatives expressly
for use in such Pricing Disclosure Package, it being understood and
agreed that the only such information furnished by any Underwriter
consists of the information described as such in Section 7(b)
hereof. No statement of material fact included in the Prospectus
has been omitted from the Pricing Disclosure Package and no
statement of material fact included in the Pricing Disclosure
Package that is required to be included in the Prospectus has been
omitted therefrom.
(c) Issuer Free Writing
Prospectus. Other than the Registration Statement, the
Preliminary Prospectus and the Prospectus, the Company (including
its agents and representatives, other than the Underwriters in
their capacity as such) has not prepared, used, authorized,
approved or referred to and will not prepare, use, authorize,
approve or refer to any “written communication” (as
defined in Rule 405 under the Securities Act) that constitutes an
offer to sell or solicitation of an offer to buy the Securities
(each such communication by the Company or its agents and
representatives (other than a communication referred to in clause
(i) below, but including a communication referred to in clause
(ii) below) an “Issuer Free Writing Prospectus”)
other than (i) any document not constituting a prospectus
pursuant to Section 2(a)(10)(a) of the Securities Act or Rule
134 under the Securities Act or (ii) the documents listed on
Annex B hereto, each electronic road show and any other written
communications approved in writing in advance by the
Representatives. Each such Issuer Free Writing Prospectus complied
in all material respects with the Securities Act, has been or will
be (within the time period specified in Rule 433) filed in
accordance with the Securities Act (to the extent required thereby)
and, when taken together with the Preliminary Prospectus filed
prior to the first use of such Issuer Free Writing Prospectus, did
not, and as of the Closing Date and as of the Additional Closing
Date, as the case may be, will not, contain any untrue statement of
a material fact or omit to state a
material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that
the Company makes no representation and warranty with respect to
any statements or omissions made in each such Issuer Free Writing
Prospectus or Preliminary Prospectus in reliance upon and in
conformity with information relating to any Underwriter furnished
to the Company in writing by such Underwriter through the
Representatives expressly for use in such Issuer Free Writing
Prospectus or Preliminary Prospectus, it being understood and
agreed that the only such information furnished by any Underwriter
consists of the information described as such in Section 7(b)
hereof.
(d) Registration Statement and
Prospectus. The Registration Statement has been declared
effective by the Commission. No order suspending the effectiveness
of the Registration Statement has been issued by the Commission,
and no proceeding for that purpose or pursuant to Section 8A
of the Securities Act against the Company or related to the
offering of the Securities has been initiated or, to the
Company’s knowledge, threatened by the Commission; as of the
applicable effective date of the Registration Statement and any
post-effective amendment thereto, the Registration Statement and
any such post-effective amendment complied and will comply in all
material respects with the Securities Act and the Trust Indenture
Act, as amended, and the rules and regulations of the Commission
thereunder (collectively, the “Trust Indenture Act”),
and did not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein not
misleading; and as of the date of the Prospectus and any amendment
or supplement thereto and as of the Closing Date and as of the
Additional Closing Date, as the case may be, the Prospectus will
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided that the Company makes no representation and
warranty with respect to (i) that part of the Registration
Statement that constitutes the Statement of Eligibility and
Qualification (Form T-1) of the Trustee under the Trust Indenture
Act or (ii) any statements or omissions made in reliance upon
and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly for use in the Registration Statement and
the Prospectus and any amendment or supplement thereto, it being
understood and agreed that the only such information furnished by
any Underwriter consists of the information described as such in
Section 7(b) hereof.
(e) Incorporated Documents.
The documents incorporated by reference in the Registration
Statement, the Prospectus and the Pricing Disclosure Package, when
they were filed with the Commission complied in all material
respects to the requirements of the Exchange Act, and, when read
together, none of such documents contained any untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; and any further documents so filed and incorporated by
reference in the Registration Statement, the Prospectus or the
Pricing Disclosure Package, when such documents are filed with the
Commission, will comply in all material respects to the
requirements of the Exchange Act and, when read together, will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that the Company
makes no representation and warranty with respect to any statements
or omissions made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in
writing by such Underwriter through the Representatives expressly
for use in the Registration Statement, the Pricing Disclosure
Package or the Prospectus and any amendment or
supplement thereto, it being
understood and agreed that the only such information furnished by
any Underwriter consists of the information described as such in
Section 7(b) hereof.
(f) Financial Statements. The
financial statements (including the related notes thereto) of the
Company and its consolidated subsidiaries included or incorporated
by reference in the Registration Statement, the Pricing Disclosure
Package and the Prospectus comply in all material respects with the
applicable requirements of the Securities Act and the Exchange Act,
as applicable, and present fairly in all material respects the
financial position of the Company and its consolidated subsidiaries
as of the dates indicated and the results of their operations and
the changes in their cash flows for the periods specified; such
financial statements have been prepared in conformity with
generally accepted accounting principles in the United States
applied on a consistent basis throughout the periods covered
thereby except as otherwise noted therein, and any supporting
schedules included or incorporated by reference in the Registration
Statement present fairly in all material respects the information
required to be stated therein; and the other financial information
of the Company and its consolidated subsidiaries included or
incorporated by reference in the Registration Statement, the
Pricing Disclosure Package and the Prospectus has been derived from
the accounting records of the Company and its consolidated
subsidiaries and presents fairly in all material respects the
information shown thereby.
(g) No Material Adverse
Change. Since the date of the most recent financial statements
of the Company included or incorporated by reference in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, (i) there has not been any change in the capital
stock (other than the issuance of shares of Common Stock upon
exercise of stock options and warrants described as outstanding in,
and the grant of options and awards under existing equity incentive
plans described in, the Registration Statement, the Pricing
Disclosure Package and the Prospectus and documents incorporated by
reference therein), material change in the short-term or long-term
debt of the Company or any of its subsidiaries, 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, or any material
adverse change, or any development involving a prospective material
adverse change, in or affecting, individually or in the aggregate,
the business, properties, management, financial position,
stockholders’ equity, results of operations or prospects of
the Company and its subsidiaries taken as a whole;
(ii) neither the Company nor any of its subsidiaries has
entered into any transaction or agreement (other than those in the
ordinary course of business) that is material to the Company and
its subsidiaries taken as a whole or incurred any liability or
obligation, direct or contingent, that is material to the Company
and its subsidiaries taken as a whole; and (iii) neither the
Company nor any of its subsidiaries has sustained any loss or
interference with its business that is material to the Company and
its subsidiaries taken as a whole and that is either 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 governmental or regulatory
authority, except in each case as otherwise disclosed or
incorporated by reference into the Registration Statement, the
Pricing Disclosure Package and the Prospectus.
(h) Organization and Good
Standing. The Company and each of its subsidiaries have been
duly organized and are validly existing and in good standing under
the laws of their respective jurisdictions of organization, are
duly qualified to do business and are in good standing in each
jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires
such qualification, and have all power and authority necessary to
own or hold their respective properties and to conduct the
businesses in which they are engaged, 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 on the business,
properties, management, financial position, stockholders’
equity, results of operations or prospects of the Company and its
subsidiaries taken as a whole or on the performance by the Company
of its obligations under this Agreement (a “Material Adverse
Effect”). The Company does not own or control, directly or
indirectly, any Significant Subsidiary other than the subsidiaries
listed in Exhibit 21 to the Company’s 10-K for the year
2008.
(i) Capitalization. The
Company has an authorized capital stock as set forth in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus under the heading “Capitalization”; all the
outstanding shares of capital stock of the Company have been and,
in the case of the shares of Common Stock initially issuable upon
conversion of the Securities, will be upon issuance in accordance
with the Indenture duly authorized and validly issued and are and,
in the case of the shares of Common Stock initially issuable upon
conversion of the Securities, will be upon issuance in accordance
with the Indenture fully paid and non-assessable and are and, in
the case of the shares of Common Stock initially issuable upon
conversion of the Securities, will be upon issuance in accordance
with the Indenture not subject to any pre-emptive or similar
rights; except as described in or expressly contemplated by the
Registration Statement, Pricing Disclosure Package and the
Prospectus, there are no outstanding rights (including, without
limitation, pre-emptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of
capital stock or other equity interest in the Company, or any
contract, commitment, agreement, understanding or arrangement of
any kind relating to the issuance of any capital stock of the
Company, any such convertible or exchangeable securities or any
such rights, warrants or options (other than those issued or
issuable under the Company Stock Plans or otherwise disclosed in
the Registration Statement, Pricing Disclosure Package and the
Prospectus); the capital stock of the Company conforms in all
material respects to the description thereof contained in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus; and all the outstanding shares of capital stock or
other equity interests of each subsidiary owned, directly or
indirectly, by the Company have been duly and validly authorized
and issued, are fully paid and non-assessable and are owned
directly or indirectly by the Company, free and clear of any lien,
charge, encumbrance, security interest, restriction on voting or
transfer or any other claim of any third party, except as disclosed
in the Registration Statement, Pricing Disclosure Package and the
Prospectus.
(j) Stock Options. With
respect to the stock options (the “Stock Options”)
granted pursuant to the stock-based compensation plans of the
Company and its subsidiaries (the “Company Stock
Plans”), (i) each such grant was made in material
compliance with the terms of the Company Stock Plans, the Exchange
Act and all other applicable laws and regulatory rules or
requirements, including the rules of the New York Stock Exchange
and any other exchange on which Company securities are traded, and
(ii) each such grant has been properly accounted for in
accordance with GAAP in the financial statements (including the
related notes) of the Company and disclosed in the Company’s
filings with the Commission in accordance with the Exchange Act and
all other applicable laws. The Company has not knowingly granted,
and there is no and has been no policy or practice of the Company
of granting, Stock Options prior to the release or other public
announcement of material information regarding the Company or its
subsidiaries or their results of operations or prospects in a
manner designed to manipulate the exercise price of Stock
Options.
(k) Due Authorization. The
Company has full right, power and authority to execute and deliver
this Agreement, the Indenture and the Securities and to perform its
obligations hereunder; and all action required to be taken for the
due and proper authorization, execution and
delivery by it of this Agreement and
the consummation by it of the sale of the Securities contemplated
hereby has been duly and validly taken.
(l) The Indenture. The Base
Indenture has been and, when amended and supplemented by the
Supplemental Indenture, will be, duly qualified under the Trust
Indenture Act. The Indenture has been duly authorized by the
Company and, when duly executed and delivered in accordance with
its terms by each of the parties thereto, will constitute a valid
and legally binding agreement of the Company enforceable against
the Company in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors’ rights generally or by equitable
principles relating to enforceability (collectively, the
“Enforceability Exceptions”).
(m) Underwriting Agreement.
This Agreement has been duly authorized, executed and delivered by
the Company.
(n) The Securities. The
Securities to be issued and sold by the Company hereunder have been
duly authorized by the Company and, when duly executed,
authenticated, issued and delivered as provided for in the
Indenture and paid for as provided herein, will be duly and validly
issued and outstanding, will constitute valid and legally binding
obligations of the Company enforceable against the Company in
accordance with their terms, subject to the Enforceability
Exceptions, will be entitled to the benefits of the Indenture and
will conform in all material respects to the descriptions thereof
in the Registration Statement, the Pricing Disclosure Package and
the Prospectus.
(o) The Underlying
Securities. Upon issuance and delivery of the Securities in
accordance with this Agreement and the Indenture, the Securities
will be convertible at the option of the holder thereof in
accordance with the terms of the Indenture; the Underlying
Securities reserved for issuance upon conversion of the Securities
have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the
Indenture, will be validly issued, fully paid and nonassessable,
and the issuance of the Underlying Securities will not be subject
to any preemptive or similar rights.
(p) The Escrow Agreement. The
escrow securities account agreement by and among the Company and
U.S. Bank National Association, as Escrow Agent (the “Escrow
Agent”), to be dated as of the Closing Date (the
“Escrow Agreement”), has been duly authorized by the
Company and, when executed and delivered by the Company, will
constitute a legal, valid and binding instrument enforceable
against the Company in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting
creditors’ rights and to general equity principles; the
Escrow Agreement will conform in all material respects to the
description thereof in the Pricing Disclosure Package and the
Prospectus.
(q) No Violation or Default.
Neither the Company nor any of its subsidiaries is (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 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 or
any of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject; or
(iii) in violation of any applicable law or statute or any
applicable judgment, order, rule or regulation of any court
or
governmental or regulatory
authority, except, in the case of clauses (ii) and
(iii) above, for any such default or violation that would not,
individually or in the aggregate, have a Material Adverse
Effect.
(r) No Conflicts. The
execution, delivery and performance by the Company of the Escrow
Agreement, the issuance and sale of the Securities and the
consummation of the transactions herein will not (i) conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries
pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, (ii) result
in any violation of the provisions of the charter or by-laws or
similar organizational documents of the Company or any of its
subsidiaries or (iii) result in the violation of any
applicable law or statute or any applicable judgment, order, rule
or regulation of any court or governmental or regulatory authority,
except, in the case of clauses (i) and (iii) above, for
any such conflict, breach, violation, default, lien, charge or
encumbrance that would not, individually or in the aggregate, have
a Material Adverse Effect.
(s) No Consents Required. No
consent, approval, authorization, order, license, registration or
qualification of or with any court or governmental or regulatory
authority is required for the execution, delivery and performance
by the Company of this Agreement, the issuance and sale of the
Securities (including the issuance of the Underlying Securities
upon conversion thereof) and the consummation of the transactions
contemplated, except for those which have been obtained, for the
registration of the Securities under the Securities Act, the
qualification of the Indenture under the Trust Indenture Act and
such consents, approvals, authorizations, orders and registrations
or qualifications as may be required by the Financial Industry
Regulatory Authority, Inc. (“FINRA”) and under
applicable state securities laws in connection with the purchase
and distribution of the Securities by the Underwriters.
(t) Legal Proceedings. Except
as described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, there are no legal, governmental or
regulatory investigations (as to which the Company has been given
notice), actions, suits or proceedings pending to which the Company
or any of its subsidiaries is a party or to which any property of
the Company or any of its subsidiaries is subject that,
individually or in the aggregate, if determined adversely to the
Company or any of its subsidiaries, could reasonably be expected to
have a Material Adverse Effect; no such investigations (without
giving effect to the notice qualifier set forth above), actions,
suits or proceedings are, to the knowledge of the Company,
threatened or contemplated; and (i) there are no current or
pending legal, governmental or regulatory actions, suits or
proceedings that are required under the Securities Act to be
described in the Registration Statement, the Pricing Disclosure
Package or the Prospectus that are not so described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus and (ii) there are no statutes, regulations or
contracts or other documents that are required under the Securities
Act to be filed as exhibits to the Registration Statement or
described in the Registration Statement, the Pricing Disclosure
Package or the Prospectus that are not so filed as exhibits to the
Registration Statement or described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus.
(u) Independent Accountants .
Ernst and Young LLP and Deloitte & Touche LLP, who have
certified certain financial statements of the Company and its
subsidiaries are or were independent registered public accounting
firms with respect to the Company and its subsidiaries
within the applicable rules and
regulations adopted by the Commission and the Public Company
Accounting Oversight Board (United States) and as required by the
Securities Act.
(v) Title to Real and Personal
Property . The Company and its subsidiaries have good and
marketable title in fee simple (in the case of real property) to,
or have valid and marketable rights to lease or otherwise use, all
items of real and personal property and assets that are material to
the respective businesses of the Company and its subsidiaries, in
each case free and clear of all liens, encumbrances, claims and
defects and imperfections of title except those that (i) do
not materially interfere with the use made and proposed to be made
of such property by the Company and its subsidiaries,
(ii) would not, individually or in the aggregate, have a
Material Adverse Effect or (iii) are described in the
Registration Statement, Pricing Disclosure Package and
Prospectus.
(w) Title to Intellectual
Property . The Company and its subsidiaries own or possess
adequate rights to use all material patents, patent applications,
trademarks, 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)
necessary for the conduct of their respective businesses as
currently conducted and as currently proposed to be conducted
except as would not reasonably be expected to have a Material
Adverse Effect. The conduct of the respective businesses of the
Company and its subsidiaries will not conflict with any of the
foregoing rights of others except as would not, individually or in
the aggregate, have a Material Adverse Effect. Neither the Company
nor its subsidiaries has received a notice of infringement with
respect any of these rights. The Company and its subsidiaries have
not received any notice of any claim of infringement,
misappropriation or conflict with any such rights of others in
connection with its patents, patent rights, licenses, inventions,
trademarks, service marks, trade names, copyrights and know-how,
which could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.
(x) No Undisclosed
Relationships . No relationship, direct or indirect, exists
between or among the Company or any of its subsidiaries, on the one
hand, and the directors, officers, stockholders, customers or
suppliers of the Company or any of its subsidiaries, on the other,
that is required by the Securities Act to be described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus and that is not so described in such
documents.
(y) Investment Company Act .
The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof
as described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, will not be required to register as an
“investment company” or an entity
“controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the “Investment Company
Act”).
(z) Taxes. The Company and
its subsidiaries have paid all federal, state, local and foreign
taxes and filed (taking into account applicable extensions) all tax
returns required to be paid or filed through the date hereof
(except those being disputed in good faith and for which adequate
reserve has been established and maintained); and except as
otherwise disclosed in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, there is no material tax
deficiency that has been, or could reasonably be expected to be,
asserted against the Company or any of its subsidiaries or any of
their respective properties or assets.
(aa) Licenses and Permits.
The Company and its subsidiaries possess all licenses,
certificates, 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 their respective
properties or the conduct of their respective businesses as
described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, except where the failure to possess or
make the same would not, individually or in the aggregate, have a
Material Adverse Effect; and except as described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, neither the Company nor any of its subsidiaries has
received notice of any revocation or modification of any such
license, certificate, permit or authorization or has any reason to
believe that any such license, certificate, permit or authorization
will not be renewed in the ordinary course except where any such
revocation, modification or non-renewal would not, individually or
in the aggregate, have a Material Adverse Effect.
(bb) No Labor Disputes. No
labor disturbance by or dispute with employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company,
is contemplated or threatened, and the Company is not aware of any
existing or imminent labor disturbance by, or dispute with, the
employees of any of its or its subsidiaries’ principal
suppliers or contractors, except as would not, individually or in
the aggregate, have a Material Adverse Effect.
(cc) Environmental Matters.
Except as described in the Registration Statement, the Pricing
Disclosure Package and the Prospectus and except for matters that
would not, individually or in the aggregate, have a Material
Adverse Effect, (i) the Company and its subsidiaries
(a) are in compliance with any and all applicable federal,
state, local and foreign laws, rules, regulations, requirements,
decisions, judgments, decrees, orders and the common law relating
to pollution or the protection of the environment, natural
resources or human health or safety, including those relating to
the generation, storage, treatment, use, handling, transportation,
Release or threat of Release of Hazardous Materials (collectively,
“Environmental Laws”), (b) have received and are
in compliance with all permits, licenses, certificates or other
authorizations or approvals required of them under applicable
Environmental Laws to conduct their respective businesses,
(c) have not received notice of any actual or potential
liability under or relating to, or actual or potential violation
of, any Environmental Laws, including for the investigation or
remediation of any Release or threat of Release of Hazardous
Materials, and have no knowledge of any event or condition that
would reasonably be expected to result in any such notice and
(d) are not a party to any order, decree or agreement that
imposes any obligation or liability under any Environmental Law;
(ii) there are no costs or liabilities associated with
Environmental Laws of or relating to the Company or its
subsidiaries; (iii) there are no proceedings that are pending,
or that are known to be contemplated, against the Company or any of
its subsidiaries under any Environmental Laws in which a
governmental entity is also a party; (iv) the Company and its
subsidiaries are not aware of any facts or issues regarding
compliance with Environmental Laws, or liabilities or other
obligations under Environmental Laws, including the Release or
threat of Release of Hazardous Materials; and (v) none of the
Company and its subsidiaries anticipates capital
