EQUITY UNDERWRITING
AGREEMENT
Jefferies &
Company, Inc.
As Representative of the several Underwriters
520 Madison Avenue
New York, New York 10022
Solutia Inc., a
Delaware corporation (the “ Company ”), proposes
to sell to the several underwriters (the “
Underwriters ”) named in Schedule I hereto
for whom Jefferies & Company, Inc. is acting as representative
(the “ Representative ”), an aggregate of
20,564,891 shares of the Company’s common stock, $0.01 par
value (the “ Common Stock ”); and the
stockholders of the Company named in Schedule II
(collectively, the “ Selling Stockholders ”),
severally and not jointly, propose to sell to the several
Underwriters an aggregate of 7,260,109 shares of Common Stock. The
20,564,891 shares of Common Stock to be sold by the Company and the
7,260,109 shares of Common Stock to be sold by the Selling
Stockholders are collectively called the “ Firm Shares
”. In addition, the Company has granted to the several
Underwriters an option to purchase up to an additional 4,173,750
shares of Common Stock as provided in Section 2 (the
“ Option Shares ”). The Firm Shares and the
Option Shares (to the extent the aforementioned option is
exercised) are herein collectively called the “ Shares
”.
In consideration
of the mutual agreements contained herein and of the interests of
the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1.
Representations and
Warranties of the Company and the Selling Stockholders
.
A.
The Company represents and warrants to each Underwriter and the
Selling Stockholders, as of the date hereof and as of the Closing
Date and the Option Closing Date, as the case may be (as such dates
are hereinafter defined), that:
(a) A
registration statement on Form S-3 (File No. 333-151980) with
respect to the Shares, including a form of prospectus (the “
Base Prospectus ”), has been prepared by the Company
in
conformity with
the requirements of the Securities Act of 1933, as amended (the
“ Act ”), and the rules and regulations (the
“ Rules and Regulations ”) of the Securities and
Exchange Commission (the “ Commission ”)
thereunder and has been filed with the Commission. The Company and
the transactions contemplated by this Agreement meet the
requirements and comply with the conditions for the use of Form
S-3. The registration statement meets the requirements of Rule
415(a)(1)(x) under the Act and complies in all material respects
with said rule. Copies of such registration statement, including
any amendments thereto, the Base Prospectus (meeting in all
material respects the requirements of the Rules and Regulations)
contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, have heretofore been
delivered by the Company to the Underwriters. Such registration
statement, including any amendments thereto, together with any
registration statement filed by the Company pursuant to Rule 462(b)
under the Act, is herein referred to as the “ Registration
Statement ,” which term shall be deemed to include all
information omitted therefrom in reliance upon Rules 430A,
430B or 430C under the Act and contained in the Prospectus referred
to below. The Registration Statement has been declared effective
under the Act and no post-effective amendment to the Registration
Statement has been filed as of the date of this Agreement. The
Company has prepared a prospectus supplement (the “
Prospectus Supplement ”) to the Base Prospectus
setting forth the terms of the offering, sale and plan of
distribution of the Shares. “ Prospectus ” means
the Base Prospectus together with the final Prospectus Supplement
first filed with the Commission pursuant to and within the time
limits described in Rule 424(b) under the Act and in accordance
with Section 4.A.(a) hereof. Any preliminary Prospectus
Supplement relating to the Shares prior to the date hereof is
herein referred to as a “ Preliminary Prospectus
.” Any reference herein to the Registration Statement, to any
Preliminary Prospectus, to the Prospectus or to any amendment or
supplement to any of the foregoing documents shall be deemed to
refer to and include any documents incorporated by reference
therein and, in the case of any reference herein to the Prospectus,
also shall be deemed to include any documents incorporated by
reference therein, and any supplements or amendments thereto, filed
with the Commission after the date of filing of the Prospectus
under Rule 424(b) under the Act, and prior to the termination of
the offering of the Shares by the Representative.
(b) As
of the Applicable Time, the Closing Date and the Option Closing
Date (each as defined below), as the case may be, neither
(i) the General Use Free Writing Prospectus(es) (as defined
below) issued at or prior to the Applicable Time, the Statutory
Prospectus (as defined below) and the information included on
Schedule III hereto, all considered together
(collectively, the “ General Disclosure Package
”), nor (ii) any individual Limited Use Free Writing
Prospectus (as defined below), when considered together with the
General Disclosure Package, included or will include any untrue
statement of a material fact or omitted or will omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided , however , that the Company
makes no representations or warranties as to information contained
in or omitted from any Issuer Free Writing Prospectus, in reliance
upon, and in conformity with, (x) written information
furnished to the Company or the Underwriters by the Selling
Stockholders, specifically for use therein, or (y) written
information furnished to the Company by any Underwriter through the
Representative, specifically for use therein, it being understood
and agreed that the only such information furnished to the Company
by any Underwriter is that described in Section 13
herein. As used in this subsection and elsewhere in this
Agreement:
“
Applicable Time ” means 7:00 pm (New York City time)
on the date of this Agreement or such other time as agreed to by
the Company and the Representative.
“
Statutory Prospectus ” means the Base Prospectus, as
amended and supplemented immediately prior to the Applicable Time,
including any document incorporated by reference therein and any
prospectus supplement deemed to be a part thereof.
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“
Issuer Free Writing Prospectus ” means any
“issuer free writing prospectus,” as defined in
Rule 433 under the Act, relating to the Shares in the form
filed or required to be filed with the Commission or, if not
required to be filed, in the form retained in the Company’s
records pursuant to Rule 433(g) under the Act.
“
General Use Free Writing Prospectus ” means any Issuer
Free Writing Prospectus that is identified on
Schedule IV to this Agreement.
“
Limited Use Free Writing Prospectus ” means any Issuer
Free Writing Prospectus that is not a General Use Free Writing
Prospectus.
(c) The
Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its
properties and conduct its business as described in the
Registration Statement, the General Disclosure Package and the
Prospectus. The Company has no significant subsidiaries (as such
term is defined in Rule 1-02 of Regulation S-X
promulgated by the Commission) other than as listed in
Schedule V hereto (collectively, the “
Subsidiaries ”). Each of the Subsidiaries has been
duly organized and is validly existing as an entity in good
standing under the laws of the jurisdiction of its incorporation or
organization, with all requisite power and authority to own or
lease its properties and conduct its business as described in the
Registration Statement, the General Disclosure Package and the
Prospectus except to the extent that the failure to be so qualified
or be in good standing would not, individually or in the aggregate,
have a Material Adverse Effect (as defined below). The Company and
each of the Subsidiaries are duly qualified to transact business in
all jurisdictions in which the conduct of their business requires
such qualification, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material
Adverse Effect. The outstanding shares of capital stock or
ownership interests of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and non-assessable
and to the extent shown in Schedule V hereto are owned
by the Company or another Subsidiary free and clear of all liens,
encumbrances and equities and claims; and no options, warrants or
other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into shares of capital
stock or ownership interests in the Subsidiaries are
outstanding.
(d) The
outstanding shares of Common Stock of the Company (including the
Shares owned by Selling Stockholders) have been duly authorized and
validly issued and are fully paid and non-assessable; the Shares to
be issued and sold by the Company have been duly authorized and
when issued and paid for as contemplated herein will be validly
issued, fully paid and non-assessable; and no preemptive rights of
stockholders exist with respect to any of the Shares or the issue
and sale thereof. Neither the filing of the Registration Statement
nor the offering or sale of the Shares as contemplated by this
Agreement gives rise to any rights, other than those which have
been waived or satisfied, for or relating to the registration of
any shares of Common Stock.
(e) The
information set forth under the caption
“Capitalization” in the Registration Statement and the
Prospectus (and any similar section or information contained in the
General Disclosure Package) is true and correct in all material
respects. All of the Shares conform to the description thereof
contained in the Registration Statement, the General Disclosure
Package and the Prospectus.
(f) The
Commission has not issued an order preventing or suspending the use
of any Preliminary Prospectus, any Issuer Free Writing Prospectus
or the Prospectus relating to the proposed offering of the Shares,
and no proceeding for that purpose or pursuant to Section 8A
of the Act has been instituted or, to the Company’s
knowledge, threatened by the Commission. The Registration Statement
contains, and the Prospectus and any amendments or supplements
thereto will contain, all statements which are required to be
stated therein by, and will conform to, the requirements of the Act
and the Rules and
3
Regulations.
The documents incorporated, or to be incorporated, by reference in
the Prospectus, at the time filed with the Commission conformed or
will conform, in all respects to the requirements of the Securities
Exchange Act of 1934, as amended (“ Exchange Act
”) or the Act, as applicable, and the rules and regulations
of the Commission thereunder. The Registration Statement does not
and any amendment filed after the date hereof will not contain, any
untrue statement of a material fact and do not omit, and will not
omit, to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. The
Prospectus and any amendments and supplements thereto do not
contain, and will not contain, any untrue statement of a material
fact, and do not omit, and will not omit, to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
provided , however , that the Company makes no
representations or warranties as to information contained in or
omitted from the Registration Statement or the Prospectus, or any
such amendment or supplement, in reliance upon, and in conformity
with, (i) written information furnished to the Company or the
Underwriters by the Selling Stockholders, specifically for use
therein, or (ii) written information furnished to the Company
by any Underwriter through the Representative, specifically for use
therein, it being understood and agreed that the only such
information furnished to the Company by any Underwriter is that
described in Section 13 herein.
(g) Each
Issuer Free Writing Prospectus, as of its issue date and at all
subsequent times through the completion of the public offer and
sale of the Shares or until any earlier date that the Company
notified or notifies the Underwriters did not, does not and will
not include any information that conflicted, conflicts or will
conflict with the information contained in the Registration
Statement or the Prospectus, including any document incorporated by
reference therein that has not been superseded or modified. The
foregoing does not apply to statements or omissions from any Issuer
Free Writing Prospectus based upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representative specifically for use therein, it being understood
and agreed that the only such information is that described in
Section 13 herein.
(h) The
Company has not, directly or indirectly, distributed and will not
distribute any offering material in connection with the offering
and sale of the Shares other than any Preliminary Prospectus, the
Prospectus, any Permitted Free Writing Prospectus (as defined
below) and other materials, if any, permitted under the Act and
consistent with Section 4.A.(b) below. The Company will
file with the Commission all Issuer Free Writing Prospectuses in
the time required under Rule 433(d) under the Act.
(i)
(i) At the earliest time after the filing of the Registration
Statement that the Company or another offering participant made a
bona fide offer (within the meaning of Rule 164(h)(2)
under the Act) of the Shares and (ii) as of the date hereof
(with such date being used as the determination date for purposes
of this clause (ii)), the Company was not and is not, and shall not
be as of the Closing Date and the Option Closing Date, as the case
may be, an “ineligible issuer” (as defined in
Rule 405 under the Act, without taking into account any
determination by the Commission pursuant to Rule 405 under the
Act that it is not necessary that the Company be considered an
ineligible issuer), including, without limitation, for purposes of
Rules 164 and 433 under the Act with respect to the offering
of the Shares as contemplated by the Registration
Statement.
(j) The
financial statements of the Company and its consolidated
Subsidiaries, together with related notes and schedules as set
forth or incorporated by reference in the Registration Statement,
the General Disclosure Package and the Prospectus, present fairly
the financial position and the results of operations and cash flows
of the Company and the consolidated Subsidiaries, at the indicated
dates and for the indicated periods. Such financial statements and
related schedules have been prepared in accordance with generally
accepted principles of accounting (“ GAAP ”),
consistently applied throughout the periods involved, except as
disclosed therein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The
summary and selected consolidated financial and statistical data
included or
4
incorporated by
reference in the Registration Statement, the General Disclosure
Package and the Prospectus presents fairly in all material respects
the information shown therein and such data has been compiled on a
basis consistent with the financial statements presented therein
and the books and records of the Company. The pro forma financial
statements and other pro forma financial information included in
the Registration Statement, the General Disclosure Package and the
Prospectus present fairly the information shown therein, have been
prepared in accordance with the Commission’s rules and
guidelines with respect to pro forma financial statements, have
been properly compiled on the pro forma bases described therein,
and, in the opinion of the Company, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions or circumstances
referred to therein. All disclosures contained in the Registration
Statement, the General Disclosure Package and the Prospectus
regarding “non-GAAP financial measures” (as such term
is defined by the Rules and Regulations) comply with
Regulation G of the Exchange Act and Item 10 of
Regulation S-K under the Act, to the extent applicable. The
Company and the Subsidiaries do not have any material liabilities
or obligations, direct or contingent (including any off-balance
sheet obligations or any “variable interest entities”
within the meaning of Financial Accounting Standards Board
Interpretation No. 46), not disclosed in the Registration
Statement, the General Disclosure Package and the Prospectus. There
are no financial statements (historical or pro forma) that are
required to be included in the Registration Statement, the General
Disclosure Package or the Prospectus that are not included as
required.
(k) Deloitte
& Touche LLP, who have certified certain of the financial
statements filed with the Commission as part of, or incorporated by
reference in, the Registration Statement, the General Disclosure
Package and the Prospectus, is an independent registered public
accounting firm with respect to the Company and the Subsidiaries
within the meaning of the Act and the applicable Rules and
Regulations and the Public Company Accounting Oversight Board
(United States) (the “ PCAOB ”).
(l) Except
as disclosed in the Registration Statement, the General Disclosure
Package and the Prospectus, neither the Company nor any of the
Subsidiaries is aware of (i) any material weakness in its
internal control over financial reporting or (ii) change in
internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the
Company’s internal control over financial
reporting.
(m) Solely
to the extent that the Sarbanes-Oxley Act of 2002, as amended, and
the rules and regulations promulgated by the Commission and the New
York Stock Exchange thereunder (the “ Sarbanes-Oxley
Act ”) has been applicable to the Company, there is and
has been no failure on the part of the Company to comply in all
material respects with any provision of the Sarbanes-Oxley Act. The
Company has taken all necessary actions to ensure that it is in
compliance with all provisions of the Sarbanes-Oxley Act that are
in effect and with which the Company is required to
comply.
(n) There
is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of
the Subsidiaries before any court or administrative agency or
otherwise which if determined adversely to the Company or any of
the Subsidiaries would either (i) have, individually or in the
aggregate, a material adverse effect on the earnings, business,
management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company and of the
Subsidiaries taken as a whole or (ii) prevent the consummation
of the transactions contemplated hereby (the occurrence of any such
effect or any such prevention described in the foregoing clauses
(i) and (ii) being referred to as a “ Material
Adverse Effect ”), except as set forth in the
Registration Statement, the General Disclosure Package and the
Prospectus.
(o) The
Company and the Subsidiaries have good and marketable title to all
of the properties and assets reflected in the consolidated
financial statements hereinabove described or described in the
Registration Statement, the General Disclosure Package and the
Prospectus, subject to no lien, mortgage,
5
pledge, charge
or encumbrance of any kind except those reflected in such financial
statements or described in the Registration Statement, the General
Disclosure Package and the Prospectus or which are not material in
amount. The Company and the Subsidiaries occupy their leased
properties under valid and binding leases conforming in all
material respects to the description thereof set forth in the
Registration Statement, the General Disclosure Package and the
Prospectus.
(p) The
Company and the Subsidiaries have filed all federal, state, local
and foreign tax returns which have been required to be filed and
have paid all taxes indicated by such returns and all assessments
received by them or any of them to the extent that such taxes have
become due and are not being contested in good faith and for which
an adequate reserve for accrual has been established in accordance
with GAAP, except as would not have a Material Adverse Effect. All
material tax liabilities have been adequately provided for in the
financial statements of the Company and its consolidated
Subsidiaries, and the Company does not know of any actual or
proposed additional material tax assessments.
(q) Since
the respective dates as of which information is given in the
Registration Statement, the General Disclosure Package and the
Prospectus, as each may be amended or supplemented, there has not
been any Material Adverse Effect, whether or not occurring in the
ordinary course of business, and there has not been any material
transaction entered into or any material transaction that is
probable of being entered into by the Company or the Subsidiaries,
other than transactions in the ordinary course of business and
changes and transactions described in the Registration Statement,
the General Disclosure Package and the Prospectus, as each may be
amended or supplemented. The Company and the Subsidiaries have no
material contingent obligations which are not disclosed in the
financial statements of the Company and its consolidated
Subsidiaries which are included in the Registration Statement, the
General Disclosure Package and the Prospectus. Except as disclosed
in the General Disclosure Package and the Prospectus, there are no
outstanding guarantees or other contingent obligations of the
Company or any Subsidiary that could reasonably be expected to have
a Material Adverse Effect.
(r) Neither
the Company nor any of the Subsidiaries is or with the giving of
notice or lapse of time or both, will be, (i) in violation of
its certificate or articles of incorporation, by-laws, certificate
of formation, limited liability agreement, partnership agreement or
other organizational documents or (ii) in violation of or in
default under any agreement, lease, contract, indenture or other
instrument or obligation to which it is a party or by which it, or
any of its properties, is bound and, solely with respect to this
clause (ii), which violation or default would, individually or in
the aggregate, have a Material Adverse Effect. The execution and
delivery of this Agreement and the fulfillment of the terms hereof
by the Company and, to the Company’s knowledge, the
consummation of the transactions herein contemplated will not
conflict with or result in a breach of (i) any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which
the Company or any Subsidiary is a party or by which the Company or
any Subsidiary or any of their respective properties is bound,
(ii) the certificate or articles of incorporation or by-laws
of the Company or (iii) any law, order, rule or regulation
judgment, order, writ or decree applicable to the Company or any
Subsidiary of any court or of any government, regulatory body or
administrative agency or other governmental body having
jurisdiction, except with respect to clauses (i) and
(iii) to the extent that such conflict, breach or default
would not, individually or in the aggregate, have a Material
Adverse Effect.
(s) The
execution and delivery of, and the performance by the Company of
its obligations under, this Agreement has been duly and validly
authorized by all necessary corporate action on the part of the
Company, and this Agreement has been duly executed and delivered by
the Company.
(t) Each
approval, consent, order, authorization, designation, declaration
or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of
the transactions herein
6
contemplated
(except such additional steps as may be required by the Commission,
the Financial Industry Regulatory Authority (“ FINRA
”) or such additional steps as may be necessary to qualify
the Shares for public offering by the Underwriters under state
securities or Blue Sky laws) has been obtained or made and is in
full force and effect.
(u) The
Company and each of the Subsidiaries hold all material licenses,
certificates and permits from governmental authorities which are
necessary to the conduct of their businesses; the Company and the
Subsidiaries each own or possess the right to use all patents,
patent rights, trademarks, trade names, service marks, service
names, copyrights, license rights, know-how (including trade
secrets and other unpatented and unpatentable proprietary or
confidential information, systems or procedures) and other
intellectual property rights (“ Intellectual Property
”) necessary to carry on their business in all material
respects; neither the Company nor any of the Subsidiaries has
infringed, and none of the Company or the Subsidiaries have
received notice of conflict with, any Intellectual Property of any
other person or entity. The Company has taken all reasonable steps
necessary to secure interests in such Intellectual Property from
its contractors. There are no outstanding options, licenses or
agreements of any kind relating to the Intellectual Property of the
Company that are required to be described in the Registration
Statement, the General Disclosure Package and the Prospectus and
are not described in all material respects. The Company is not a
party to or bound by any options, licenses or agreements with
respect to the Intellectual Property of any other person or entity
that are required to be set forth in the Prospectus and are not
described in all material respects. None of the technology employed
by the Company has been obtained or is being used by the Company in
violation of any material contractual obligation binding on the
Company or any of its officers, directors or employees or otherwise
in violation of the rights of any persons; the Company has not
received any written or oral communications alleging that the
company has violated, infringed or conflicted with, or, by
conducting its business as set forth in the Registration Statement,
the General Disclosure Package and the Prospectus, would violate,
infringe or conflict with, any of the Intellectual Property of any
other person or entity, except to the extent such violation,
infringement or conflict would not, individually or in the
aggregate, have a Material Adverse Effect.
(v) Neither
the Company, nor to the Company’s knowledge, any of its
affiliates, has taken or may take, directly or indirectly, any
action designed to cause or result in, or which has constituted or
which might reasonably be expected to constitute, the stabilization
or manipulation of the price of the shares of Common Stock to
facilitate the sale or resale of the Shares. The Company
acknowledges that the Underwriters may engage in passive market
making transactions in the Shares on the New York Stock Exchange in
accordance with Regulation M under the Exchange
Act.
(w) Neither
the Company nor any Subsidiary is or, after giving effect to the
offering and sale of the Shares contemplated hereunder and the
application of the net proceeds from such sale as described in the
General Disclosure Package and the Prospectus, will be an
“investment company” within the meaning of such term
under the Investment Company Act of 1940 as amended (the “
1940 Act ”), and the rules and regulations of the
Commission thereunder.
(x) The
Company and each of the Subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with
management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to
maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any
differences.
(y) The
Company has established and maintains “disclosure controls
and procedures” (as defined in Rules 13a-14(c) and
15d-14(c) under the Exchange Act); the Company’s
“disclosure controls
7
and
procedures” are reasonably designed to ensure that all
information (both financial and non-financial) required to be
disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and
regulations of the Exchange Act, and that all such information is
accumulated and communicated to the Company’s management as
appropriate to allow timely decisions regarding required disclosure
and to make the certifications of the Chief Executive Officer and
Chief Financial Officer of the Company required under the Exchange
Act with respect to such reports.
(z) The
statistical and market-related data included in the Registration
Statement, the General Disclosure Package and the Prospectus are
based on or derived from sources which the Company reasonably and
in good faith believes are reliable and accurate, and such data
agree with the sources from which they are derived.
(aa) The
operations of the Company and its Subsidiaries 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, applicable
money laundering statutes and applicable rules and regulations
thereunder (collectively, the “ Money Laundering Laws
”), and no action, suit or proceeding by or before any court
or governmental agency, authority or body or any arbitrator
involving the Company or any or its subsidiaries with respect to
the Money Laundering Laws is pending or, to the Company’s
knowledge, threatened.
(bb) Neither
the Company nor any of its Subsidiaries, nor to the Company’s
knowledge, any director, officer, agent, employee or affiliate of
the Company or any of its Subsidiaries is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control
of the U.S. Treasury Department (“ OFAC ”); and
the Company will not directly or indirectly use the proceeds of the
offering, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other person
or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by
OFAC.
(cc) The
Company and each of the Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as the Company
reasonably deems adequate for the conduct of their respective
businesses and the value of their respective properties and as is
customary for companies engaged in similar businesses in similar
industries.
(dd) Except
as disclosed in the Registration Statement, the General Disclosure
Package and the Prospectus, the Company and each Subsidiary is in
compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974,
as amended, including the regulations and published interpretations
thereunder (“ ERISA ”); no “reportable
event” (as defined in ERISA) has occurred with respect to any
“pension plan” (as defined in ERISA) for which the
Company and each Subsidiary would have any liability; the Company
and each Subsidiary has not incurred and does not expect to incur
liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any “pension plan”
or (ii) Sections 412 or 4971 of the Internal Revenue Code
of 1986, as amended, including the regulations and published
interpretations thereunder (the “ Code ”); and
each “pension plan” for which the Company or any
Subsidiary would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such
qualification.
(ee) Neither
the Company nor any of the Subsidiaries is in violation of any
statute, rule, regulation, decision or order of any governmental
agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or
relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances (collectively,
“ Environmental Laws ”),
8
owns or
operates any real property contaminated with any substance that is
subject to Environmental Laws, is liable for any off-site disposal
or contamination pursuant to any Environmental Laws, or is subject
to any claim relating to any Environmental Laws, which violation,
contamination, liability or claim would, individually or in the
aggregate, have a Material Adverse Effect; and the Company is not
aware of any pending investigation which could reasonably be
expected to lead to such a claim.
(ff) The
Shares have been approved for listing subject to notice of issuance
on the New York Stock Exchange.
(gg) There
are no relationships or related-party transactions involving the
Company or any of the Subsidiaries or any other person required to
be described in the Prospectus which have not been described as
required.
(hh) Neither
the Company nor any of the Subsidiaries has made any contribution
or other payment to any official of, or candidate for, any federal,
state or foreign office in violation of any law which violation is
required to be disclosed in the Prospectus.
(ii) There
is no document, contract or other agreement required to be
described in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement which is not
described or filed as required by the Act or the Rules and
Regulations. Each description of a contract, document or other
agreement in the Registration Statement and the Prospectus
accurately reflects in all material respects the terms of the
underlying contract, document or other agreement.
(jj) Except
for this Agreement, neither the Company nor any of its Subsidiaries
is a party to any contract, agreement or understanding with any
person that would give rise to a valid claim against the Company or
any Underwriter for a brokerage commission, finder’s fee or
like payment in connection with the offering and sale of the
Shares.
(kk) The
Fifth Amended Joint Plan of Reorganization under Chapter 11 of
the United States Bankruptcy Code (the “ Plan of
Reorganization ”) of the Company and its subsidiaries
named therein (collectively, the “ Reorganizing
Debtors ”) was confirmed by order of the United States
Bankruptcy Court for the Southern District of New York entered on
November 29, 2007, and no party has appealed such confirmation
order or moved for revocation or reconsideration thereof. The
Effective Date (as defined in the Plan of Reorganization) occurred
on February 28, 2008 . Except as provided in the Plan of
Reorganization, all Claims (as defined in the Plan of
Reorganization) against the Reorganizing Debtors have been
discharged in full. Except as provided in the Plan of
Reorganization, all Equity Interests (as defined in the Plan of
Reorganization) of the Company have been cancelled or discharged in
full. Neither the Company nor any of its Subsidiaries is currently,
or has in the past been, in default in any material respect, and no
event has occurred which, with notice or lapse of time or both,
would constitute such a default, in the due performance or
observance of any material term, covenant or condition contained in
the Plan of Reorganization. There is no legal or governmental
proceeding relating to the Plan of Reorganization to which the
Company or any of its Subsidiaries is a party or of which any
property or assets of the Company or any of its Subsidiaries is the
subject; and to the best of the Company’s knowledge, no such
proceedings are threatened or contemplated by any governmental
authorities or threatened by others.
B.
The Selling Stockholders, severally and not jointly, represent and
warrant to each Underwriter and the Company, as of the date hereof
and as of the Closing Date (as such date is hereinafter defined),
that:
9
(a) The
execution and delivery of, and the performance by the Selling
Stockholders of their obligations under, this Agreement has been
duly and validly authorized by all necessary corporate action on
the part of the Selling Stockholders, and this Agreement has been
duly executed and delivered by the Selling Stockholders.
(b) The
Selling Stockholders have, and on the Closing Date will have, good
and valid title to, or a valid “security entitlement”
within the meaning of Section 8-501 of the New York Uniform
Commercial Code in respect of, all of the Firm Shares which may be
sold by such Selling Stockholders pursuant to this Agreement on
such date, free and clear of all security interests, claims, liens,
equities or other encumbrances and the legal right and power and
all authorization and approval required by law, to enter into this
Agreement and to sell, transfer and deliver all of the Firm Shares
which may be sold by such Selling Stockholders pursuant to this
Agreement or a security entitlement in respect of such Firm
Shares.
(c) Upon
payment for the Firm Shares to be sold by the Selling Stockholders
pursuant to this Agreement, delivery of such Firm Shares, as
directed by the Representative, to Cede & Co. (“
Cede ”) or such other nominee as may be designated by
The Depository Trust Company (“ DTC ”),
registration of such Firm Shares in the name of Cede or such other
nominee and the crediting of such Firm Shares on the books of DTC
to a securities account of the Representative on behalf of the
several Underwriters (assuming that neither DTC nor such
Representative has notice of any adverse claim (within the meaning
of Section 8-105 of the New York Uniform Commercial Code (the
“ UCC ”)) to such Firm Shares and the
Underwriters acquired the interest in the Firm Shares they have
purchased under this Agreement in good faith), (A) DTC shall
be a “protected purchaser” of such Firm Shares within
the meaning of Section 8-303 of the UCC, (B) under
Section 8-501 of the UCC, the Underwriters will acquire a
valid security entitlement in respect of such Firm Shares and
(C) no action based on any “adverse claim”, within
the meaning of Section 8-102 of the UCC, to such Firm Shares
may be asserted against any Underwriter with respect to such
security entitlement; for purposes of this representation, the
Selling Stockholders may assume that when such payment, delivery
and crediting occur, (x) such Firm Shares will have been
registered in the name of Cede or another nominee designated by
DTC, in each case on the Company’s share registry in
accordance with its certificate of incorporation, bylaws and
applicable law, (y) DTC will be registered as a
“clearing corporation” within the meaning of
Section 8-102 of the UCC and (z) appropriate entries to
the account of the Representative on behalf of the several
Underwriters on the records of DTC will have been made pursuant to
the UCC.
(d) The
execution and delivery by such Selling Stockholders of, and the
performance by such Selling Stockholders of their obligations
under, this Agreement will not contravene or conflict with any
provision of applicable law, or the limited liability company
agreement or other organizational documents of such Selling
Stockholders or any other agreement or instrument to which such
Selling Stockholders are a party or by which they are bound or
under which they are entitled to any right or benefit that is
material to the Selling Stockholders or that could adversely affect
the Selling Stockholders’ ability to fulfill their
obligations hereunder, or any judgment, order, decree or regulation
applicable to such Selling Stockholders of any court, regulatory
body, administrative agency, governmental body or arbitrator having
jurisdiction over such Selling Stockholders. No consent, approval,
authorization or other order of, or registration or filing with,
any court or other governmental authority or agency, is required
for the consummation by such Selling Stockholders of the
transactions contemplated in this Agreement, except such as have
been obtained or made and are in full force and effect under the
Act and the Exchange Act, and applicable state securities or blue
sky laws or the rules and regulations of FINRA.
(e) The
Selling Stockholders (i) do not have any registration or other
similar rights to have any equity or debt securities registered for
sale by the Company under the Registration Statement or included in
the offering contemplated by this Agreement, (ii) do not have
any preemptive right, co-sale right
10
or right of
first refusal or other similar right to purchase any of the Shares
that are to be sold by the Company or any of the other Selling
Stockholders to the Underwriters pursuant to this Agreement, except
for such rights as such Selling Stockholders have waived prior to
the date hereof and as have been described in the Registration
Statement, the General Disclosure Package and the Prospectus, and
(iii) do not own any warrants, options or similar rights to
acquire, and do not have any right or arrangement to acquire, any
capital stock, right, warrants, options or other securities from
the Company, other than those described in the Registration
Statement, the General Disclosure Package and the Prospectus
.
(f) Except
for such consents, approvals and waivers which have been obtained
by the Selling Stockholders on or prior to the date of this
Agreement, no consent, approval or waiver is required under any
instrument or agreement to which the Selling Stockholders are a
party or by which they are bound or under which they are entitled
to any right or benefit, in connection with the offering, sale or
purchase by the Underwriters of any of the Firm Shares which may be
sold by the Selling Stockholders under this Agreement or the
consummation by the Selling Stockholders of any of the other
transactions contemplated hereby, except to the extent that the
failure to obtain such consent, approval or waiver would not
materially adversely affect such Selling Stockholder’s
ability to fulfill its obligations hereunder or under any other
transaction contemplated hereby.
(g)
(i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, 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 not misleading, (ii) the General
Disclosure Package does not, and at the time of each sale of the
Firm Shares in connection with the offering when the Prospectus is
not yet available to prospective purchasers and at the Closing
Date, the General Disclosure Package, as then amended or
supplemented by the Company, if applicable, will not, contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading,
(iii) each broadly available road show, if any, when
considered together with the General Disclosure Package, does not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading and (iv) the Prospectus does not contain and, as
amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this
Section 1.B.(g) shall only apply to statements or
omissions in the Registration Statement, the General Disclosure
Package, any broadly available road show or the Prospectus based
upon information relating to the Selling Stockholders furnished by
or on behalf of the Selling Stockholders in writing expressly for
use therein. The Selling Stockholders confirm as accurate the
number of Firm Shares set forth opposite the Selling
Stockholders’ names in the Prospectus under the caption
“Selling Stockholders” (both prior to and after giving
effect to the sale of the Firm Shares).
(h) The
Selling Stockholders have not taken, directly or indirectly, any
action designed to or that might be reasonably expected to cause or
result in stabilization or manipulation of the price of the Common
Stock or any other reference security, whether to facilitate the
sale or resale of the Firm Shares or otherwise, and has taken no
action which would directly or indirectly violate any provision of
Regulation M.
(i) There
are no transfer taxes or other similar fees or charges under
federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and
delivery of this Agreement or the sale by the Selling Stockholders
of the Firm Shares.
(j) The
Selling Stockholders have not distributed and will not distribute,
prior to the later of (i) the expiration or termination of the
option granted to the Underwriters under Section 2 and
(ii) the completion of the Underwriters’ distribution of
the Firm Shares, any offering material in connection with
the
11
offering and
sale of the Firm Shares other than the Registration Statement, a
preliminary prospectus, the General Disclosure Package, or the
Prospectus.
(k) The
Firm Shares being offered and sold by the Selling Stockholders
hereunder were acquired by the Selling Stockholders pursuant to the
Company’s emergence from Chapter 11 proceedings pursuant
to the Plan of Reorganization, and such Selling Stockholders will
not take a contrary position in any filing or application made with
any governmental agency or body or any court having jurisdiction
over such Selling Stockholders.
Any
certificate signed by the Selling Stockholders and
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