Exhibit 1.1
3,750,000 Shares
REGAL BELOIT
CORPORATION
COMMON STOCK ($.01 PAR
VALUE)
UNDERWRITING
AGREEMENT
May 18, 2009
May 18, 2009
ROBERT W. BAIRD & CO.
INCORPORATED
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Ladies and Gentlemen:
Regal Beloit Corporation, a
Wisconsin corporation (the “ Company ”),
proposes to issue and sell to the Underwriter named in
Schedule I hereto (the “ Underwriter ”)
3,750,000 shares of the Common Stock, ($.01 Par Value) of the
Company (the “ Firm Shares ”).
The Company also proposes to issue
and sell to the Underwriter up to an additional 562,500 shares of
Common Stock, ($.01 Par Value) of the Company (the “
Additional Shares ”), if and to the extent that you,
Robert W. Baird & Co. Incorporated (“ Baird
”) (“Manager”), as Manager of the offering, shall
have determined to exercise the right to purchase such shares of
common stock granted to the Underwriter in Section 2 hereof.
The Firm Shares and the Additional Shares, together with the
related Common Share Purchase Rights, are hereinafter collectively
referred to as the “ Shares .” The shares of
Common Stock, ($.01 Par Value) of the Company to be outstanding
after giving effect to the sales contemplated hereby, together with
the related Common Share Purchase Rights, are hereinafter referred
to as the “ Common Stock .”
The Company has prepared and filed,
in accordance with the Securities Act of 1933, as amended (the
“ Securities Act ”), and the rules and
regulations thereunder, with the Securities and Exchange Commission
(the “ Commission ”) a registration statement on
Form S-3 (Registration No. 333-155303), including a
prospectus, relating to the Shares, which registration statement
and prospectus incorporate or are deemed to incorporate by
reference documents that the Company has filed, or will file, with
the Commission in accordance with the Securities Exchange Act of
1934, as amended (the “ Exchange Act ”), and the
rules and regulations thereunder. The registration statement as
amended at the time it becomes effective for purposes of
Section 11 of the Securities Act (as such section applies to
the Underwriter), including the documents filed as part thereof and
information contained or incorporated by reference in the
prospectus or otherwise deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A
or Rule 430B under the Securities Act, is hereinafter referred to
as the “ Registration Statement .” The Company
has also filed with, or transmitted for filing to, or shall
promptly after the date of this Agreement file with or transmit for
filing to, the Commission a prospectus supplement (in the form
first used to confirm sales of the Shares (or in the form first
made available to the Underwriter by the Company to meet requests
of purchasers pursuant to Rule 173 under the Securities Act), the
“ Prospectus
Supplement ”) pursuant to Rule 424 under the
Securities Act. The term “ Base Prospectus ”
means the prospectus dated November 12, 2008, relating to the
Shares, in the form in which it has most recently been filed with
the Commission as part of the Registration Statement on or prior to
the date of this Agreement. The term “ Prospectus
” means the Base Prospectus as supplemented by the Prospectus
Supplement. The term “ Preliminary Prospectus ”
means any preliminary form of Prospectus (including without
limitation the preliminary Prospectus Supplement dated May 18,
2009, filed with the Commission pursuant to Rule 424).
For purposes of this Agreement,
“ free writing prospectus ” has the meaning set
forth in Rule 405 under the Securities Act; “ Time of Sale
Prospectus ” means the Base Prospectus and the
Preliminary Prospectus, together with the free writing
prospectuses, if any, each identified in Schedule II hereto (each,
a “ Permitted Free Writing Prospectus ”), and
other information conveyed to purchasers of the Shares at or prior
to the Time of Sale as set forth in Schedule II hereto; “
Time of Sale ” means 9:00 p.m. (Central Time) on the
date of this Agreement; and “ road show ” has
the meaning set forth in Rule 433(h)(4) under the Securities Act.
As used herein, the terms “Registration Statement,”
“Base Prospectus,” “Preliminary
Prospectus,” “Time of Sale Prospectus” and
“Prospectus” shall include the documents, if any,
deemed to be incorporated by reference therein, including, unless
the context otherwise requires, the documents, if any, filed as
exhibits to such incorporated documents. The terms
“supplement,” “amendment” and
“amend” as used herein with respect to the Registration
Statement, the Base Prospectus, the Time of Sale Prospectus, any
Preliminary Prospectus, the Prospectus or any free writing
prospectus shall include all documents subsequently filed by the
Company with the Commission pursuant to the Exchange Act that are
deemed to be incorporated by reference therein.
1. Representations and Warranties
of the Company . The Company represents and warrants to and
agrees with the Underwriter on the date hereof, on the Closing Date
and on each Option Closing Date, if any, that:
(a) The Registration Statement has
become effective under the Securities Act; no stop order suspending
the effectiveness of the Registration Statement or preventing or
suspending the use of any Preliminary Prospectus or the Prospectus
is in effect, and no proceedings for such purpose are pending
before or to the Company’s knowledge threatened by the
Commission.
(b) The Base Prospectus and any
Preliminary Prospectus filed as part of the registration statement
as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the
rules and regulations thereunder (including, without limitation,
Rule 430B(a) or 430A(b)).
(c) (i) Each document, if any, filed
or to be filed pursuant to the Exchange Act and incorporated by
reference in the Time of Sale Prospectus or the Prospectus complied
or will comply when so filed in all material respects with the
Exchange Act and the applicable
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rules and regulations of the Commission
thereunder; (ii) each part of the Registration Statement, when
such part became effective, did not contain and each such part, 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; (iii) the Registration Statement, as
of the date hereof, 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 required to be
stated therein or necessary to make the statements therein not
misleading; (iv) the Registration Statement complies and, as
amended or supplemented, if applicable, will comply in all material
respects with the Securities Act; the conditions to the use of Form
S-3 in connection with the offering and sale of the Shares as
contemplated hereby have been satisfied; the Registration Statement
meets, and the offering and sale of the Shares as contemplated
hereby complies with, the requirements of Rule 415 under the
Securities Act (including without limitation Rule 415(a)(5)); the
Registration Statement is an “automatic shelf registration
statement” as defined in Rule 405 under the Securities Act
filed not earlier than three years prior to the date hereof, and
the Company has not received notice that the Commission objects to
the use of the Registration Statement as an automatic shelf
registration statement; (v) at no time during the period that
begins on the earlier of the date of the Preliminary Prospectus and
the date on which the Preliminary Prospectus was filed with the
Commission and ends immediately prior to the execution of this
Agreement did any Preliminary Prospectus 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;
(vi) the Time of Sale Prospectus does not, and at the Time of
Sale, at the Closing Date (as defined in Section 4) and, if
applicable, each Option Closing Date (as defined in
Section 5), the Time of Sale Prospectus, 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;
(vii) each Permitted Free Writing Prospectus does not conflict
with the information contained in the Registration Statement, the
Time of Sale Prospectus or the Prospectus; (viii) each road
show, when considered together with the Time of Sale Prospectus,
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 (ix) the Prospectus, as of the date it is
filed with the Commission pursuant to Rule 424, at the Closing Date
and at each Option Closing Date, if any, will comply in all
material respects with the Securities Act (including without
limitation Section 10(a) of the Securities 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; provided, however, that the representations and
warranties set forth in this Section 1(c) do not apply to
statements or omissions in the Registration Statement, the Time of
Sale Prospectus, any Preliminary Prospectus, any Permitted Free
Writing Prospectus, any road show or the Prospectus or any
amendments or supplements thereto based upon information relating
to the Underwriter furnished to
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the Company in writing by such Underwriter
through the Manager expressly for use therein, it being agreed that
the only information furnished by the Underwriter to the Company
expressly for use therein are the statements contained in the
underwriter table in, and the fourth and twelfth paragraphs of, the
“Underwriting” section of the Prospectus Supplement
(and preliminary Prospectus Supplement) and the last paragraph of
the cover page of the preliminary Prospectus Supplement.
(d) Prior to the execution of this
Agreement, the Company has not, directly or indirectly, offered or
sold any Shares by means of any “prospectus” (within
the meaning of the Securities Act) or used any
“prospectus” (within the meaning of the Securities Act)
in connection with the offer or sale of the Shares, in each case
other than the Preliminary Prospectus and/or the Permitted Free
Writing Prospectuses; the Company has not, directly or indirectly,
prepared, used or referred to any free writing prospectuses,
without the prior written consent of Baird, other than the
Permitted Free Writing Prospectuses and road shows furnished or
presented to the Manager before first use. Each Permitted Free
Writing Prospectus has been prepared, used or referred to in
compliance with Rule 163 or with Rules 164 and 433 under the
Securities Act; assuming that such Permitted Free Writing
Prospectus is so sent or given after the Registration Statement was
filed with the Commission (and after such Permitted Free Writing
Prospectus was, if required pursuant to Rule 433(d) under the
Securities Act, filed with the Commission), the sending or giving,
by the Underwriter, of any Permitted Free Writing Prospectus will
satisfy the provisions of Rule 164 and Rule 433 (without reliance
on subsections (b), (c) and (d) of Rule 164); the
conditions set forth in one or more of subclauses (i) through
(iv), inclusive, of Rule 433(b)(1) under the Securities Act are
satisfied, and the registration statement relating to the offering
of the Shares contemplated hereby, as initially filed with the
Commission, includes a prospectus that, other than by reason of
Rule 433 or Rule 431 under the Securities Act, satisfies the
requirements of Section 10 of the Securities Act; neither the
Company nor the Underwriter is disqualified, by reason of
subsection (f) or (g) of Rule 164 under the Securities
Act, from using, in connection with the offer and sale of the
Shares, free writing prospectuses pursuant to Rules 164 and 433
under the Securities Act; each Permitted Free Writing Prospectus
that the Company has filed, or is required to file, pursuant to
Rule 433(d) under the Securities Act or that was prepared by or
behalf of or used or referred to by the Company complies or will
comply in all material respects with the requirements of the
Securities Act; no Permitted Free Writing Prospectus conflicts with
the information contained in the Registration Statement, any
Preliminary Prospectus, Time of Sale Prospectus or Prospectus; and,
to the Company’s knowledge, no free writing prospectus (if
any) prepared by or on behalf of or used by the Underwriter
contains any “issuer information” within the meaning of
Rule 433(h)(2) under the Securities Act.
(e) The Company was a
“well-known seasoned issuer” (as defined in Rule 405
under the Securities Act) as of the most recent determination date
determined pursuant to Rule 405 under the Securities Act. The
Company was not an “ineligible issuer” (as defined in
Rule 405 under the Securities Act) as of the eligibility
determination date for purposes of Rules 164 and 433 under the
Securities Act with respect to the offering of the Shares
contemplated by the Registration Statement.
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(f) In accordance with Rule
5110(c)(7)(C)(i) of the Financial Industry Regulatory Authority
(“FINRA”), the Shares have been registered with the
Commission on Form S-3 under the Securities Act pursuant to the
standards for such Form S-3 in effect prior to October 21,
1992.
(g) The Common Stock is listed on
the New York Stock Exchange (“NYSE”), and the Company
has not received any notice from the NYSE regarding the delisting
of such shares from the NYSE. The Shares are duly listed, and
admitted and authorized for trading, subject to official notice of
issuance, on the NYSE. To the Company’s knowledge, there are
no affiliations or associations between (i) any member of the
FINRA and (ii) the Company or any of the Company’s
officers, directors or 5% or greater security holders or any
beneficial owner of the Company’s unregistered equity
securities that were acquired at any time on or after the 180th day
immediately preceding the date the Registration Statement was
initially filed with the Commission, except as disclosed in the
Registration Statement (excluding the exhibits thereto), the Time
of Sale Prospectus and the Prospectus.
(h) The Company has been duly
incorporated, is validly existing as a corporation in active status
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct
its business as described in the Time of Sale Prospectus and is
duly qualified to transact business and is in good standing (or
similar status) in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not (i) have a material
adverse effect on the assets, business, condition (financial or
otherwise) or results of operation of the Company and its
subsidiaries, taken as a whole, (ii) prevent or materially
interfere with the authority or ability of the Company to perform
its obligations in all material respects under this agreement or
the consummation of the transactions contemplated hereby, or
(iii) result in the delisting of shares of Common Stock from
the NYSE (the occurrence of any such effect, prevention,
interference or result described in the foregoing clauses (i),
(ii) or (iii) being herein referred to as a “
material adverse effect ”).
(i) Attached hereto as Exhibit C is
a complete and correct list of all of the subsidiaries of the
Company, including their jurisdiction of organization and direct
equity owners. Exhibit C also identifies each subsidiary that is a
“significant subsidiary” for purposes hereof (each, a
“Significant Subsidiary”). Each subsidiary of the
Company has been duly organized, is validly existing as a
corporation or limited liability company in good standing (or
similar status) under the laws of the jurisdiction of its
organization, has the corporate power and authority to own its
property and to conduct its business as described in the Time of
Sale Prospectus and is duly qualified to transact business and is
in good standing (or similar status) in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure
to be so qualified or be in good
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standing would not have a material adverse
effect; all of the issued shares of capital stock or other equity
interests of each subsidiary of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable
and, except as set forth on Exhibit C and except for
directors’ qualifying shares, are owned directly by the
Company, free and clear of all liens, encumbrances, equities or
claims. Except as included in joint venture agreements relating to
partially owned subsidiaries organized in China, there are no
outstanding options, warrants or other rights of any description,
contractual or otherwise, entitling any person to subscribe for or
purchase any shares of capital stock or other equity interests of
any Significant Subsidiary.
(j) This Agreement has been duly
authorized, executed and delivered by the Company, and is a valid
and binding agreement of the Company enforceable in accordance with
its terms.
(k) The authorized and outstanding
capitalization of the Company is as set forth in the Time of Sale
Prospectus and will be as set forth in the Prospectus, subject, in
each case, to the issuance of shares of Common Stock upon exercise
of stock options, stock appreciation rights and the Company’s
2.75% Convertible Senior Subordinated Notes disclosed as
outstanding in the Time of Sale Prospectus and the Prospectus, as
the case may be, and the grant of equity incentive awards under
existing equity incentive plans described in the Time of Sale
Prospectus and the Prospectus. The authorized capital stock of the
Company conforms and will conform as to legal matters to the
description thereof contained in the Time of Sale Prospectus and
the Prospectus.
(l) The shares of Common Stock
outstanding prior to the issuance of the Shares to be sold by the
Company have been duly authorized, are validly issued, fully paid
and non-assessable, have been issued in compliance in all material
respects with applicable securities laws and were not issued in
violation of any preemptive or similar rights. All prior offers and
sales of securities by the Company were made in compliance in all
materials respects with the Securities Act and all other applicable
laws and regulations.
(m) The Shares to be sold by the
Company have been duly authorized and, when issued and delivered in
accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar
rights.
(n) Neither the execution and
delivery by the Company of, nor the performance by the Company of
its obligations under, this Agreement, conflict with, contravene,
result in a breach or violation of, or imposition of any lien,
charge or encumbrance upon any assets of the Company or any of its
subsidiaries pursuant to, or constitute a default under
(i) any statute, law, rule, regulation, judgment, order or
decree of any governmental body, regulatory or administrative
agency or court having jurisdiction over the Company or any
subsidiary; (ii) the charter or bylaws of the Company or any
of its Significant Subsidiaries; or (iii) any contract,
agreement, obligation, covenant or instrument to which the Company
or any of its Significant Subsidiaries (or any of their respective
assets) is subject or bound, except to the extent that such breach,
violation, imposition or default would not have a material adverse
effect
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(o) No approval, authorization,
consent or order of or filing with any federal, state, local or
foreign governmental or regulatory commission, board, body,
authority or agency, or of or with any self-regulatory organization
or other non-governmental regulatory authority (including, without
limitation, the NYSE), or approval of the Company’s
shareholders, is required in connection with the issuance and sale
of the Shares or the consummation of the transactions contemplated
hereby, other than (i) registration of the Shares under the
Securities Act, which has been effected, (ii) the filing of a
supplemental listing application and related materials with the
NYSE, or (iii) any necessary qualification under the
securities or blue sky laws of the various states of the United
States, Canada or the United Kingdom in which the Shares are being
offered by the Underwriter.
(p) Neither the Company nor any
Significant Subsidiary is, nor with the giving of notice or passage
of time or both, would be, in violation or in breach of:
(i) its respective charter or bylaws; (ii) any statute,
ordinance, order, rule or regulation applicable to the Company or
such Significant Subsidiary; (iii) any order or decree of any
court, regulatory body, arbitrator, administrative agency or other
instrumentality of the United States or other country or
jurisdiction having jurisdiction over the Company or such
Significant Subsidiary; or (iv) any provision of any
agreement, lease, franchise, license, indenture, permit, mortgage,
deed of trust, evidence of indebtedness or other instrument to
which the Company or such Significant Subsidiary is a party or by
which any property owned or leased by the Company or such
Significant Subsidiary is bound or affected, except, in each case
above, for such violations or breaches as do not or would not have
a material adverse effect.
(q) There are no actions, suits,
claims, investigations or proceedings pending or, to the
Company’s knowledge, threatened or contemplated to which the
Company or any of its subsidiaries or any of their respective
directors or officers is or would be a party or of which any of
their respective properties is or would be subject at law or in
equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or
agency, or before or by any self-regulatory organization or other
non-governmental regulatory authority (including, without
limitation, the NYSE, (i) other than any such action, suit,
claim, investigation or proceeding accurately described in the Time
of Sale Prospectus which, if resolved adversely to the Company or
any of its subsidiaries, would not, individually or in the
aggregate, have a material adverse effect or (ii) that are
required to be described in the Time of Sale Prospectus and are not
so described.
(r) 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 Prospectus
will not be, required to register as an “investment
company” as such term is defined in the Investment Company
Act of 1940, as amended.
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(s) The financial statements
included or incorporated by reference in the Registration
Statement, the Time of Sale Prospectus and the Prospectus, together
with the related notes, present fairly the consolidated financial
position of the Company and its subsidiaries as of the dates
indicated and the consolidated results of operations, cash flows
and changes in shareholders’ equity of the Company for the
periods specified and have been prepared in compliance with the
requirements of the Securities Act and Exchange Act and in
conformity with U.S. generally accepted accounting principles
applied on a consistent basis during the periods involved; the
financial statement schedules, if any, incorporated by reference
into the Registration Statement, the Time of Sale Prospectus and
the Prospectus present fairly, in all material respects, the
information required to be stated therein on a basis consistent
with the consolidated financial statements of the Company contained
therein; and the other financial and statistical data contained or
incorporated by reference in the Registration Statement, the Time
of Sale Prospectus and the Prospectus that are derived from the
Company’s financial statements and/or books and records are
accurately and fairly presented and prepared on a basis consistent
with the financial statements and books and records of the Company;
there are no financial statements (historical or pro forma) that
are required to be included or incorporated by reference in the
Registration Statement, the Time of Sale Prospectus or the
Prospectus that are not included or incorporated by reference as
required; the Company and its subsidiaries do not have any material
liabilities or obligations, direct or contingent (including any
off-balance sheet obligations), not described in the Time of Sale
Prospectus and the Prospectus. Deloitte & Touche LLP,
which has expressed its opinion with respect to the consolidated
financial statements and schedules of the Company, is an
independent registered public accounting firm as required by the
Securities Act.
(t) All statistical or
market-related data included or incorporated by reference in the
Time of Sale Prospectus, the Prospectus and the Permitted Free
Writing Prospectuses are based on or derived from sources that the
Company reasonably believes to be reliable and accurate, and the
Company has obtained the written consent to the use of such data
from such sources to the extent required. Each
“forward-looking statement” (within the meaning of
Section 27A of the Securities Act or Section 21E of the
Exchange Act) contained or incorporated by reference in the
Registration Statement, the Time of Sale Prospectus, the Prospectus
and the Permitted Free Writing Prospectuses has been made or
reaffirmed, as of the date made or reaffirmed, with a reasonable
basis and in good faith.
(u) The Company and its subsidiaries
(i) are in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants (“
Environmental Laws ”), (ii) have received all
permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where
such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or
approvals would not have a material adverse effect. The Company and
its subsidiaries are not subject to any costs or liabilities
associated with
8
Environmental Laws (including, without
limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related constraints on
operating activities and any potential liabilities to third
parties) which would have a material adverse effect.
(v) There are no contracts,
agreements or understandings between the Company and any person
granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such
securities with the Shares registered pursuant to the Registration
Statement.
(w) There is no transaction,
relationship, obligation, agreement or other document required to
be described in the Registration Statement, the Time of Sale
Prospectus and the Prospectus or to be filed or deemed to be filed
as an exhibit to the Registration Statement by the Securities Act,
which has not been described or filed as required. All such
contracts or agreements to which the Company or any Significant
Subsidiary is a party have been duly authorized, executed and
delivered by the Company or such Significant Subsidiary, constitute
valid and binding agreements of the Company or such Significant
Subsidiary, and are enforceable by and against the Company or such
Significant Subsidiary, in accordance with the respective terms
thereof.
(x) Except as disclosed in the Time
of Sale Prospectus or the Prospectus, neither the Company nor any
Significant Subsidiary is a party to a letter of intent, accepted
term sheet or similar instrument or any binding agreement that
contemplates an acquisition, disposition, transfer or sale of the
assets (as a going concern) or capital stock of the Company or of
any subsidiary or business unit or any similar business combination
transaction which would be material to the Company and its
subsidiaries taken as a whole.
(y) Subsequent to the respective
dates as of which information is given in each of the Registration
Statement, the Time of Sale Prospectus and the Prospectus,
(i) there has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
assets, business, condition (financial or otherwise), management,
operations or earnings of the Company and its subsidiaries, taken
as a whole; (ii) the Company and its subsidiaries have not
incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction;
(iii) the Company has not purchased any of its outstanding
capital stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock other than ordinary
and customary dividends; and (iv) there has not been any
material change in the capital stock, short-term debt or long-term
debt of the Company and its Significant Subsidiaries, except in
each case as described in each of the Registration Statement, the
Time of Sale Prospectus and the Prospectus,
respectively.
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(z) The Company and its subsidiaries
have good and marketable title in fee simple to all real property
and good and marketable title to all personal property reflected as
owned by them in the Company’s consolidated financial
statements which is material to the business of the Company and its
subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Time
of Sale Prospectus or such as do not materially affect the value of
such property and do not interfere with the use made and proposed
to be made of such property by the Company and its subsidiaries or
as sold in the ordinary course of business after the end of the
period covered by such financial statements; and any real property
and buildings held under lease by the Company and its subsidiaries
are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings
by the Company and its subsidiaries, in each case except as
described in the Time of Sale Prospectus.
(aa) Each of the Company and its
subsidiaries owns or possesses all inventions, patent applications,
patents, trademarks (both registered and unregistered), trade
names, service names, copyrights, trade secrets and other
proprietary information described in the Registration Statement,
the Time of Sale Prospectus and the Prospectus as being owned or
licensed by it or which is necessary for the conduct of, or
material to, its businesses (collectively, the “
Intellectual Property ”), and the Company is unaware
of any claim to the contrary or any challenge by any other person
to the rights of the Company or any of its subsidiaries with
respect to the Intellectual Property except for any claim that, if
resolved adversely to the Company or any subsidiary would not have
a material adverse effect. Neither the Company nor any of its
subsidiaries has infringed or is infringing the intellectual
property of a third party, and neither the Company nor any of its
subsidiaries has received notice of a claim by a third party to the
contrary, except for any claim that, if resolved adversely to the
Company or any subsidiary, would not have a material adverse
effect.
(bb) No material labor dispute with
the employees of the Company or any of its subsidiaries exists,
except as described in the Time of Sale Prospectus, or, to the
knowledge of the Company, is imminent; and the Company is not aware
of any existing, threatened or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or
contractors that could have a material adverse effect. Neither the
Company nor any of its subsidiaries is in violation of any
provision of the Employee Retirement Income Security Act of 1974,
as amended, or the rules and regulations promulgated thereunder,
except for such violations as would not have a material adverse
effect.
(cc) The Company and each of its
subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which they are
engaged; neither the Company nor any of its subsidiaries has been
refused any insurance coverage sought or applied for except as
would not have a material adverse effect; and neither the Company
nor any of its subsidiaries has any reason to believe that it will
not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost
that would not have a material adverse effect.
10
(dd) The Company and its
subsidiaries possess all certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory
authorities necessary to conduct their respective businesses,
except as would not have a material adverse effect, and neither the
Company, nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit, which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect.
(ee) Except as otherwise would not
have a material adverse effect, no subsidiary of the Company is
subject to any material direct or indirect prohibition on paying
any dividends to the Company, on making any other distribution on
such subsidiary’s capital stock, on repaying to the Company
any loans or advances to such subsidiary from the Company or on
transferring any of such subsidiary’s property or assets to
the Company or any other subsidiary of the Company, except as
described in the Time of Sale Prospectus.
(ff) The Company maintains
“internal control over financial reporting” (as defined
in Rules 13a-15 and 15d-15 under the Exchange Act) in compliance
with the requirements of the Exchange Act. The Company’s
internal control over financial reporting has been designed by the
Company’s principal executive officer and principal financial
officer, or under their supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles and is
effective in performing the functions for which it was established.
Except as described in the Time of Sale Prospectus, since the end
of the Company’s most recent audited fiscal year, there has
been (i) no significant deficiency or material weakness in the
design or operation of the Company’s internal control over
financial reporting (whether or not remediated) which is reasonably
likely to adversely affect the Company’s ability to record,
process, summarize and report financial information, and
(ii) no change in the Company’s internal control over
financial reporting that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control
over financial reporting.
(gg) The Company maintains
“disclosure controls and procedures” (as such term is
defined in Rules 13a-15 and 15d-15 under the Exchange Act); such
disclosure controls and procedures are designed to ensure that
material information relating to the Company, including its
consolidated subsidiaries, is made known to the Company’s
Chief Executive Officer and Chief Financial Office
