Exhibit 1.1
EXECUTION VERSION
Lithia Motors, Inc.
4,000,000 Shares of Class A
Common Stock
Underwriting Agreement
October 8, 2009
J.P. Morgan Securities
Inc.
As Representative 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:
Lithia Motors, Inc., an Oregon
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
representative (the “Representative”), an aggregate of
4,000,000 shares of Class A Common Stock, no par value
(“Class A Common Stock”), of the Company (the
“Underwritten Shares”) and, at the option of the
Underwriters, up to an additional 600,000 shares of Class A
Common Stock of the Company (the “Option Shares”). The
Underwritten Shares and the Option Shares are herein referred to as
the “Shares”. The shares of Class A Common Stock
to be outstanding after giving effect to the sale of the Shares are
referred to herein as the “Stock”.
The Company hereby confirms its
agreement with the several Underwriters concerning the purchase and
sale of the Shares, 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. 333-161593), including a prospectus,
relating to the Shares. 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 each
prospectus included in such registration statement (and any
amendments or supplements thereto) before effectiveness, any
prospectus filed with the Commission pursuant to Rule 424(a) under
the Securities Act and the prospectus included in the Registration
Statement at the time of its effectiveness that omits Rule 430
Information, and the term “Prospectus” means the
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 Shares. If the Company
has filed an abbreviated registration statement pursuant to Rule
462(b) under the Securities Act (the “Rule 462 Registration
Statement”), then any reference herein to the term
“Registration Statement” shall be deemed to include
such Rule 462 Registration Statement. 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, the “Pricing Disclosure
Package”): a Preliminary Prospectus dated October 5,
2009 and each “free-writing prospectus” (as defined
pursuant to Rule 405 under the Securities Act) listed on Annex A
hereto.
“Applicable Time” means
5:00 P.M., New York City time, on October 8, 2009.
2.
Purchase of the Shares by the Underwriters .
(a) The
Company agrees to issue and sell the Underwritten Shares 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 at a price
per share (the “Purchase Price”) of $9.475 from the
Company the respective number of Underwritten Shares set forth
opposite such Underwriter’s name in Schedule 1
hereto.
In addition, the Company agrees to
issue and sell the Option Shares 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
Shares at the Purchase Price less an amount per share equal to any
dividends or distributions declared by the Company and payable on
the Underwritten Shares but not payable on the Option
Shares.
If any Option Shares are to be
purchased, the number of Option Shares to be purchased by each
Underwriter shall be the number of Option Shares which bears the
same ratio to the aggregate number of Option Shares being purchased
as the number of Underwritten Shares set forth opposite the name of
such Underwriter in Schedule 1 hereto (or such number increased as
set forth in Section 10 hereof) bears to the aggregate number
of Underwritten Shares being purchased from the Company by the
several Underwriters, subject, however, to such adjustments to
eliminate any fractional Shares as the Representative in its sole
discretion shall make.
The Underwriters may exercise the
option to purchase Option Shares 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 Representative to the
Company. Such notice shall set forth the aggregate number of Option
Shares as to which the option is being exercised and the date and
time when the Option Shares 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 two business days 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 Shares as soon after the effectiveness of this
Agreement as in the judgment of the Representative is advisable,
and initially to offer the Shares on the terms set forth in the
Prospectus. The Company acknowledges and agrees that the
Underwriters may offer and sell Shares to or through any affiliate
of an Underwriter.
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(c) Payment
for the Shares shall be made by wire transfer in immediately
available funds to the account specified by the Company to the
Representative in the case of the Underwritten Shares, at the
offices of Cravath, Swaine & Moore LLP, 825 Eighth Avenue,
New York, NY 10019, at 10:00 A.M., New York City time, on
October 15, 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 Representative and the Company may agree upon in
writing or, in the case of the Option Shares, on the date and at
the time and place specified by the Representative in the written
notice of the Underwriters’ election to purchase such Option
Shares. The time and date of such payment for the Underwritten
Shares is referred to herein as the “Closing Date”, and
the time and date for such payment for the Option Shares, if other
than the Closing Date, is herein referred to as the
“Additional Closing Date”.
Payment for the Shares to be
purchased on the Closing Date or the Additional Closing Date, as
the case may be, shall be made against delivery to the
Representative for the respective accounts of the several
Underwriters of the Shares to be purchased on such date with any
transfer taxes payable in connection with the sale of such Shares
duly paid by the Company. Delivery of the Shares shall be made
through the facilities of The Depository Trust Company
(“DTC”) unless the Representative shall otherwise
instruct. The certificates for the Shares will be made available
for inspection and packaging by the Representative 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 Shares
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 Representative 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 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 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 Representative 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.
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(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 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 Representative 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.
(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 Shares (each such communication by the Company or its
agents and representatives (other than a communication referred to
in clause (i) 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 A hereto, each electronic
road show and any other written communications approved in writing
in advance by the Representative. 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 Representative 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 Shares has been initiated or, to the knowledge of the Company,
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 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 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
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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
Representative 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 conformed in all material respects to the
requirements of the Exchange Act, and none of such documents
contained any untrue statement of a material fact or omitted 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 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 conform in all material respects to the
requirements of the Exchange Act and 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.
(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 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, and any supporting
schedules included or incorporated by reference in the Registration
Statement present fairly the information required to be stated
therein; and the other financial information 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 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), short-term debt 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 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 (whether or not 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, except as disclosed in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus; and (iii) neither the Company nor any of its
subsidiaries has
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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 arbitrator or governmental or
regulatory authority, except in each case as otherwise disclosed in
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, as applicable, in good standing under the laws of
their respective jurisdictions of organization, are duly qualified
to do business and are, as applicable, 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
subsidiaries listed in Schedule 2 to this Agreement are the only
significant subsidiaries of the Company.
(i)
Capitalization. The Company has an
authorized capitalization 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 duly and validly
authorized and issued and are fully paid and non-assessable and are
not subject to any pre-emptive or similar rights; except as
described in or expressly contemplated by the 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 of its subsidiaries, or any contract, commitment,
agreement, understanding or arrangement of any kind relating to the
issuance of any capital stock of the Company or any such
subsidiary, any such convertible or exchangeable securities or any
such rights, warrants or options; 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.
(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 Stock Option
intended to qualify as an “incentive stock option”
under Section 422 of the Code so qualifies, (ii) each
grant of a Stock Option was duly authorized no later than the date
on which the grant of such Stock Option was by its terms to be
effective (the “Grant Date”) by all necessary corporate
action, including, as applicable, approval by the board of
directors of the Company (or a duly constituted and authorized
committee thereof) and any required stockholder approval by the
necessary number of votes or written consents, and the award
agreement governing such grant (if any) was duly executed and
delivered by each party thereto, (iii) each such grant was
made in accordance with the terms of the Company Stock Plans, the
Exchange Act and all other applicable laws and regulatory rules or
requirements, including
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the rules of the New York Stock
Exchange (the “Exchange”) and any other exchange on
which Company securities are traded, and (iv) each such grant
was 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, or otherwise coordinating the grant of Stock Options with, the
release or other public announcement of material information
regarding the Company or its subsidiaries or their results of
operations or prospects.
(k)
Due Authorization. The Company has full right,
power and authority to execute and deliver this Agreement 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
transactions contemplated hereby has been duly and validly
taken.
(l)
Underwriting Agreement. This Agreement has
been duly authorized, executed and delivered by the
Company.
(m)
The Shares. The Shares to be issued and sold by
the Company hereunder have been duly authorized by the Company and,
when issued and delivered and paid for as provided herein, will be
duly and validly issued, will be fully paid and nonassessable and
will conform to the descriptions thereof in the Registration
Statement, the Pricing Disclosure Package and the Prospectus; and
the issuance of the Shares is not subject to any preemptive or
similar rights.
(n)
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 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 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 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 clauses (ii) and
(iii) above, for any such default or violation that would not,
individually or in the aggregate, have a Material Adverse
Effect.
(o)
No Conflicts. The execution, delivery and
performance by the Company of this Agreement, the issuance and sale
of the Shares and the consummation of the transactions contemplated
by this Agreement 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 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
clauses (i) and (iii) above, for any such conflict,
breach, violation or default that would not, individually or in the
aggregate, have a Material Adverse Effect.
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(p)
No Consents Required. No consent, approval,
authorization, order, license, 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 of this Agreement, the issuance and sale of the
Shares and the consummation of the transactions contemplated by
this Agreement, except for the registration of the Shares under the
Securities 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 Shares by the
Underwriters.
(q)
Legal Proceedings. Except as described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, there are no legal, governmental or regulatory
investigations, actions, suits or proceedings pending to which the
Company or any of its subsidiaries is or may be a party or to which
any property of the Company or any of its subsidiaries is or may be
the 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; to the
knowledge of the Company, no such investigations, 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
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.
(r)
Independent Accountants . KPMG LLP, who
have certified certain financial statements of the Company and its
subsidiaries, is an independent registered public accounting firm
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.
(s)
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 or (ii) could not reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect.
(t)
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 proposed
to be conducted, and the conduct of their respective businesses
will not conflict in any material respect with any such rights of
others. The Company and its subsidiaries have not received any
notice of any claim of infringement, misappropriation or
conflict
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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 to result in a Material Adverse
Effect.
(u)
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 and the Prospectus and that is not so described in such
documents and in the Pricing Disclosure Package.
(v)
Investment Company Act
. The Company is not and, after giving effect to the
offering and sale of the Shares 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”).
(w)
Taxes. The Company and
its subsidiaries have paid all material federal, state, local and
foreign taxes and filed all tax returns required to be paid or
filed through the date hereof (after consideration of any
applicable extensions and except such taxes that are being disputed
in good faith and for which an adequate reserve has been
established); 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 in writing against the Company or any of
its subsidiaries or any of their respective properties or
assets.
(x)
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 such
revocation, modification or failure to renew would not,
individually or in the aggregate, have a Material Adverse
Effect.
(y)
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, contractors or customers, except as would not have a
Material Adverse Effect.
(z)
Compliance with and Liability under
Environmental Laws. (i) The Company and its
subsidiaries (a) are, and at all prior times were, 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 (as it relates to exposure to Hazardous
Materials),
9
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,
(d) are not conducting or paying for, in whole or in part, any
investigation, remediation or other corrective action pursuant to
any Environmental Law at any location, and (e) are not a party
to any order, decree or agreement that imposes any obligation or
liability under any Environmental Law, and (ii) there are no
costs or liabilities associated with Environmental Laws of or
relating to the Company or its subsidiaries, except in the case of
each of (i) and (ii) above, for any such matter, as would
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Except as described in the
Registration Statement, the Pricing Disclosure Package and the
Prospectus, (a) 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, other than such proceedings
regarding which it is reasonably believed no monetary sanctions of
$100,000 or more will be imposed, (b) 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, that could reasonably be
expected to have a material effect on the capital expenditures,
earnings or competitive position of the Company and its
subsidiaries, and (c) none of the Company and its subsidiaries
anticipates material capital expenditures relating to any
Environmental Laws.
(aa)
Hazardous Materials . There has been no storage,
generation, transportation, use, handling, treatment, Release or
threat of Release of Hazardous Materials by, relating to or caused
by the Company or any of its subsidiaries (or, to the knowledge of
the Company and its subsidiaries, any other entity (including any
predecessor) for whose acts or omissions the Company or any of its
subsidiaries is or could reasonably be expected to be liable) at,
on, under or from any property or facility now or previously owned,
operated or leased by the Company or any of its subsidiaries, or
at, on, under or from any other property or facility, in violation
of any Environmental Laws or in a manner or amount or to a location
that could reasonably be expected to result in any liability under
any Environmental Law, except for any violation or liability which
would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. “Hazardous
Materials” means any material, chemical, substance, waste,
pollutant, contaminant, compound, mixture, or constituent thereof,
in any form or amount, including petroleum (including crude oil or
any fraction thereof) and petroleum products, natural gas liquids,
asbestos and asbestos containing materials, naturally oc
