Exhibit 1.1
SHARES
BASIN WATER, INC.
COMMON STOCK
UNDERWRITING
AGREEMENT
,
2006
JANNEY MONTGOMERY SCOTT
LLC
A.G. EDWARDS & SONS, INC.
CANACCORD ADAMS INC.
As Representatives of the Several
Underwriters
Named in Schedule I hereto
c/o Janney Montgomery Scott LLC
1801 Market Street
Philadelphia, PA 19103
Ladies and Gentlemen:
Basin Water, Inc., a Delaware
corporation (“Basin”), proposes, subject to the terms
and conditions stated herein, to sell to the several Underwriters
named in Schedule I hereto (the “Underwriters”),
for whom Janney Montgomery Scott LLC, A.G. Edwards & Sons,
Inc. and Canaccord Adams Inc. are serving as Representatives
(collectively the “Representatives”), an aggregate of
shares (the “Firm Shares”) of Basin’s Common
Stock, $
par value per share (“Common Stock”). The respective
amounts of the Firm Shares to be purchased by the several
Underwriters are set forth opposite their names in Schedule
I hereto. The Firm Shares shall be offered to the public at a
public offering price of $
per Firm Share (the “Offering Price”).
In order to cover over-allotments in
the sale of the Firm Shares, the Underwriters may, at the
Underwriters’ election and subject to the terms and
conditions stated herein, purchase ratably in proportion to the
amounts set forth opposite their respective names in Schedule
I hereto, for the Underwriters’ own accounts, up to
additional shares of Common Stock from Basin. Such
additional shares of Common Stock are referred to herein
as the “Optional Shares.” If any
Optional Shares are purchased, the Optional Shares shall be
purchased for offering to the public at the Offering Price and in
accordance with the terms and conditions set forth herein. The Firm
Shares and the Optional Shares are referred to collectively herein
as the “Shares.”
As part of the offering contemplated
by this Agreement, Janney Montgomery Scott LLC has agreed to
reserve out of the Firm Shares set forth opposite its name on
Schedule I to this Agreement, up to
Firm Shares for sale to parties designated by Basin (collectively,
“Participants”), as set forth in the Prospectus under
the heading “Underwriting” (the “Directed Share
Program”). The Firm Shares to be sold by Janney Montgomery
Scott LLC pursuant to the Directed Share Program (the
“Directed Shares”) will be sold by Janney Montgomery
Scott LLC at the public offering price pursuant to this Agreement,
the applicable rules, regulations and interpretations of the NASD
and all other applicable laws, rules and regulations. Any Directed
Shares not orally confirmed for purchase by any Participants by the
end of the first business day after the date on which this
Agreement is executed will be offered to the public by Janney
Montgomery Scott LLC as set forth in the Registration Statement,
the Disclosure Package and the Prospectus.
In consideration of the mutual
agreements contained herein, Basin and the Underwriters, intending
to be legally bound, hereby confirm their agreement as
follows:
1. Representations and
Warranties of Basin . Basin represents and warrants to, and
agrees with, the several Underwriters that:
a. Basin has prepared and filed with
the Securities and Exchange Commission (the “SEC”), in
accordance with the provisions of the Securities Act of 1933, as
amended (the “Act”), and the applicable rules and
regulations thereunder (the “Regulations”), a
registration statement on Form S-1 (file no. 333-
), including a prospectus, relating to the Shares. The term
“Registration Statement” as used herein means the
registration statement (including all financial schedules and
exhibits) as amended at the time it becomes effective or, if the
registration statement became effective prior to the execution of
this Agreement, as supplemented or amended prior to the execution
of this Agreement and includes information (if any) contained in
the Prospectus (as defined below). If it is contemplated, at the
time this Agreement is executed, that a post-effective amendment to
the Registration Statement will be filed and must be declared
effective before the offering of the Shares may commence, the term
“Registration Statement” as used herein shall mean the
Registration Statement as amended by such post-effective amendment.
If Basin has filed or files on or after the date of this Agreement
a registration statement to register additional shares of Common
Stock pursuant to Rule 462(b) under the Act (the “Rule 462(b)
Registration Statement”), then any reference herein to the
term “Registration Statement” shall be deemed to
include such Rule 462(b) Registration Statement. The term
“Preliminary Prospectus” shall mean any preliminary
prospectus included in the Registration Statement or filed with the
SEC pursuant to Rule 424(a) of the Regulations. The term
“Statutory Prospectus” shall mean any Preliminary
Prospectus, as amended or supplemented, relating to the Shares that
is included in the Registration Statement immediately prior to the
Initial Sale Time (as defined herein), including any document
incorporated by reference therein. The term
“Prospectus” shall mean the final prospectus relating
to the Shares that is first filed pursuant to Rule 424(b) after the
effective date of the Registration Statement (the “Effective
Date”) or, if no
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filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Shares
included in the Registration Statement at the Effective Date. The
term “Issuer Free Writing Prospectus” shall have the
meaning ascribed to it in Rule 433 of the Regulations relating to
the Shares, in the form filed or required to be filed with the SEC
or, if not required to be filed, in the form retained in
Basin’s record pursuant to Rule 433(g) of the Regulations.
The term “Disclosure Package” shall mean (i) the
Statutory Prospectus, (ii) the Issuer Free Writing Prospectus,
if any, identified in Schedule II hereto and (
iii) any other free writing prospectus defined in Rule 405 of
the Regulations that is required to be filed by Basin with the SEC
or retained by Basin under Rule 433 of the Regulations and that all
parties hereto expressly agree to treat as part of the Disclosure
Package (the “Other Free Writing Prospectus”). For
purposes of this Agreement, the “Initial Sale Time”
shall mean 5:00 p.m. (Eastern time) on the date of this Agreement.
All references in this Agreement to the Registration Statement, the
Rule 462(b) Registration Statement, a Preliminary Prospectus, the
Statutory Prospectus, the Prospectus, the Issuer Free Writing
Prospectus , the Other Free Writing Prospectus or any
amendments or supplements to any of the foregoing, shall include
any copy thereof filed with the SEC pursuant to its Electronic Data
Gathering, Analysis and Retrieval System
(“EDGAR”).
b. The Registration Statement has
become effective under the Act, and the SEC has not issued any stop
order suspending the effectiveness of the Registration Statement or
preventing or suspending the use of the Statutory Prospectus or the
Prospectus, nor has the SEC instituted or threatened to institute
proceedings with respect to such an order. No stop order suspending
the sale of the Shares in any jurisdiction designated by the
Representatives as provided for in Section 5(f) of this
Agreement has been issued, and, to the knowledge of Basin, no
proceedings for that purpose have been instituted or threatened.
Basin has complied with all requests of the SEC, or requests of
which Basin has been advised of any state or foreign securities
commission in a state or foreign jurisdiction designated by the
Representatives as provided for in Section 5(f) of this
Agreement, for additional information to be included in the
Registration Statement, the Disclosure Package or the
Prospectus.
c. (A) 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, (B) the Registration Statement, the Statutory
Prospectus and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects
with the Act and the Regulations, (C) the Statutory Prospectus
and the Prospectus do 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 paragraph do not apply to omissions
from or statements in the Registration Statement, the Statutory
Prospectus or the Prospectus based upon and in conformity with
written information furnished to Basin by any Underwriter
specifically for use herein, and (D) the statistical and
market-related data included in the Registration Statement, the
Disclosure Package and the Prospectus are based on or derived from
sources that Basin believes to be reliable and accurate. With
respect to the exception set forth at sub-clause (C) above,
Basin acknowledges that the only information furnished by any
Underwriter for use in the Registration Statement, the Statutory
Prospectus or the Prospectus is the information as set forth in
Section 12 of this Agreement.
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d. As of the Initial Sale Time, the
Disclosure Package complied in all material respects with the Act
and the Regulations and, if filed by electronic transmission
pursuant to EDGAR (except as may be permitted by Regulation S-T
under the Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the
Shares. The Disclosure Package, at the Initial Sale Time did not,
and at the Closing Date will not, contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The preceding sentence does not apply to omissions from
or statements in the Disclosure Package based upon and in
conformity with written information furnished to Basin by any
Underwriter through the Representatives specifically for use
therein, it being understood and agreed that the only such
information furnished by any Underwriter for use in the Disclosure
Package is the information as set forth in Section 12 of this
Agreement.
e. Basin (including its agents and
representatives, other than the Underwriters in their capacity as
such) has not used, authorized, approved or referred to and will
not use, authorize, approve or refer to any Issuer Free Writing
Prospectus other than the documents listed on Schedule II
hereto. Each such Issuer Free Writing Prospectus complied in all
material respects with the Act and has been filed in accordance
with the Act (to the extent required thereby). 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 of which Basin notified or
notifies the Representatives as described in the next sentence, did
not, does not and will not include any information that conflicted,
conflicts or will conflict with the information contained in the
Registration Statement. If at any time following issuance of an
Issuer Free Writing Prospectus, there occurred or occurs an event
or development as a result of which such Issuer Free Writing
Prospectus conflicted or would conflict with the information then
contained in the Registration Statement or included or would
include an untrue statement of a material fact or omitted or would
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances prevailing at
that subsequent time, not misleading, (i) Basin has promptly
notified or will promptly notify the Representatives and
(ii) Basin has promptly amended or will promptly amend or
supplement such Issuer Free Writing Prospectus to eliminate or
correct such conflict, untrue statement or omission. The foregoing
sentences do not apply to omissions from or statements in any
Issuer Free Writing Prospectus based upon and in conformity with
written information furnished to Basin by any Underwriter through
the Representatives specifically for use therein, it being
understood and agreed that the only such information furnished by
any Underwriter for use in any Issuer Free Writing Prospectus is
the information as set forth in Section 12 of this
Agreement.
f. Basin has not distributed and
will not distribute, prior to the later of the last Option Closing
Date and the completion of the Underwriters’ distribution of
the Shares, any offering material in connection with the offering
and sale of the Shares other than the Registration Statement, the
Disclosure Package or the Prospectus.
g. Basin is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware, with all necessary power and authority,
corporate or otherwise, to own or lease and operate its properties
and to conduct its business as described in the Registration
Statement, the Disclosure Package and the Prospectus, and to
execute, deliver and perform this Agreement. Bion, a California
corporation, shall herein be referred to as the
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“Subsidiary” or the
“Subsidiaries”. Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of
the State of California, with all necessary power and authority,
corporate and otherwise, to own or lease and operate its properties
and to conduct its current business. Basin and its Subsidiaries
have all required licenses, permits, certifications, registrations,
approvals, consents and franchises to own or lease and operate
their respective properties and to conduct their respective
businesses as described in the Registration Statement, the
Disclosure Package and the Prospectus, except for such licenses,
permits, certifications, registrations, approvals, consents or
franchises as to which the failure to have would not have a
material adverse effect on the properties, assets, operations,
condition (financial or otherwise), results of operations,
stockholders’ equity, or business (collectively, the
“Business Conditions”) of Basin and the Subsidiaries,
taken as a whole (a “Material Adverse Effect”). Basin
and its Subsidiaries are duly qualified to do business as foreign
entities, and are in good standing, in all jurisdictions in which
such qualification is required, except where the failure to so
qualify would not have a Material Adverse Effect. References to
“material” or “materiality” or
“material adverse change” herein as applicable to Basin
or any of its Subsidiaries shall mean material to the Business
Conditions of Basin and the Subsidiaries, taken as a
whole.
h. All of the outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized
and validly issued, are fully paid and non-assessable; all of such
outstanding shares of capital stock owned by Basin, which
constitute the amount set forth on Schedule 1(h) attached hereto,
are owned, directly or indirectly, free and clear of all liens,
encumbrances and security interests, except as set forth on
Schedule 1(h) attached hereto; 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 each of the Subsidiaries or
securities convertible into or exchangeable for capital stock of,
or other ownership interests in any of the Subsidiaries are
outstanding except as set forth on Schedule 1(h) attached hereto.
Except for shares in the Subsidiaries, Basin does not own any stock
or other interest whatsoever, whether equity or debt, in any
corporation, limited liability company, partnership or other
entity.
i. This Agreement has been duly
authorized, executed and delivered by Basin and constitutes its
legal, valid and binding obligation, enforceable against Basin in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally and subject to applicability of
general principles of equity and except, as to this Agreement, as
rights to indemnity and contribution may be limited by federal and
state securities laws or principles of public policy.
j. The execution, delivery and
performance of this Agreement and the transactions contemplated
herein, do not and will not, with or without the giving of notice
or the lapse of time, or both, (i) conflict with any term or
provision of Basin’s or the Subsidiaries’ charter
documents or Bylaws; (ii) result in a breach of, constitute a
default under, result in the termination or modification of, result
in the creation or imposition of any lien, security interest,
charge or encumbrance upon any of the properties of Basin or the
Subsidiaries or require any payment by Basin or any of the
Subsidiaries or impose any liability on Basin or any of the
Subsidiaries pursuant to, any contract, indenture, mortgage, deed
of trust, commitment or other agreement or instrument to which
Basin or any of the Subsidiaries is a party or by which any of
their properties are bound or affected other than this Agreement;
(iii) assuming compliance with Blue Sky laws and the rules of
the National Association of Securities Dealers, Inc. (the
“NASD”)
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applicable to the offer and sale of the Shares,
violate any law, rule, regulation, judgment, order or decree of any
government or governmental agency, instrumentality or court,
domestic or foreign, having jurisdiction over Basin or the
Subsidiaries or any of their respective properties or businesses;
or (iv) result in a breach, termination or lapse of
Basin’s or the Subsidiaries’ corporate power and
authority to own or lease and operate their respective properties
and conduct their respective businesses, except, in the case of
clauses (ii), (iii) and (iv) above, as would not
reasonably be expected to have a Material Adverse
Effect.
k. Basin had the capitalization set
forth in the Registration Statement, the Disclosure Package and the
Prospectus under the caption “Capitalization” as of the
date indicated in that section, subject to the adjustments
described therein, and will have, as of the issuance of the Firm
Shares on the Closing Date, the pro forma as adjusted
capitalization set forth therein as of the date indicated in the
Registration Statement, the Disclosure Package and the Prospectus.
On the Effective Date, the Closing Date and any Option Closing
Date, there will be no options or warrants or other outstanding
rights to purchase, agreements or obligations to issue or
agreements or other rights to convert or exchange any obligation or
security into, capital stock of Basin or securities convertible
into or exchangeable for capital stock of Basin, except as
disclosed in the Registration Statement, the Disclosure Package or
the Prospectus.
l. The currently outstanding shares
of Basin’s capital stock have been duly authorized and are
validly issued, fully paid and non-assessable, and none of such
outstanding shares of Basin’s capital stock has been issued
in violation of any preemptive rights or similar rights of any
security holder of Basin. The holders of the outstanding shares of
Basin’s capital stock are not subject to personal liability
solely by reason of being such holders. All previous offers and
sales by Basin of the outstanding shares of Basin’s capital
stock, whether described in the Registration Statement, the
Disclosure Package or the Prospectus, were made in conformity with
applicable federal, state and foreign securities laws. The
authorized capital stock of Basin, including, without limitation,
the outstanding Common Stock, the Shares being issued, and the
outstanding options to purchase shares of Common Stock conform in
all material respects with the descriptions thereof in the
Registration Statement, the Disclosure Package and the Prospectus,
and such descriptions conform in all material respects with the
instruments defining the same. The description of Basin’s
stock option, stock bonus and other stock plans or arrangements,
and the options or other rights granted thereunder, set forth in
the Registration Statement, the Disclosure Package and the
Prospectus accurately and fairly presents, in all material
respects, the information required to be shown with respect to such
plans, arrangements, options and rights.
m. There are no contracts,
agreements or understandings between Basin and any person granting
such person the right, contractually or otherwise, to require Basin
to file a registration statement under the Act with respect to any
securities of Basin owned or to be owned by such person or to
require Basin to include such securities in the securities
registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by Basin under the Act other than as described in
the Registration Statement, the Statutory Prospectus and the
Prospectus or as have been waived in writing in connection with the
offering contemplated hereby.
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n. The Shares have been duly
authorized, and, when issued and delivered against payment
therefore as contemplated by this Agreement, will be validly
issued, fully paid and non-assessable, and the holders thereof will
not be subject to personal liability solely by reason of being such
holders, and the issuance of such Shares will not be subject to any
preemptive rights or similar rights to subscribe for or to purchase
or acquire any shares of capital stock of Basin or its Subsidiaries
or any such rights pursuant to Basin’s certificate of
incorporation or bylaws or any agreement or instrument to or by
which Basin or any of its Subsidiaries is a party or bound The
certificates representing the Shares are in proper legal form
under, and conform in all respects to the requirements of, the
Delaware General Corporation Laws.
o. No consent, approval,
authorization, order, registration, license or permit of, or filing
or registration with, any court, government, governmental agency,
instrumentality or other regulatory body or official is required
for the valid and legal execution, delivery and performance by
Basin of this Agreement and the consummation of the transactions
contemplated hereby or described in the Registration Statement, the
Disclosure Package or the Prospectus, except such as may be
required for the registration of the issuance of the Shares under
the Act or to quote the Shares on The Nasdaq National Market, for
filings under the Exchange Act, and for compliance with the
applicable state securities or Blue Sky laws or the Bylaws, rules
and other pronouncements of the NASD.
p. The Shares have been duly
authorized for quotation on The Nasdaq National Market, subject to
official notice of issuance. A registration statement has been
filed on Form 8-A pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”),
which complies in all material respects with the Exchange Act.
Neither Basin nor any other person has taken any action designed
to, or likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act or the quotation of the
Common Stock on The Nasdaq National Market, nor has Basin received
any notification that the SEC or The Nasdaq National Market is
contemplating terminating such registration or
quotation.
q. The statements in the
Registration Statement, the Disclosure Package and the Prospectus,
insofar as they are descriptions of or references to contracts,
agreements or other documents, are accurate and present or
summarize fairly, the information required to be disclosed under
the Act or the Regulations, with respect to such contracts,
agreements or other documents and there are no contracts,
agreements or other documents, instruments or transactions of any
character required to be described or referred to in the
Registration Statement, the Disclosure Package or the Prospectus or
to be filed as exhibits to the Registration Statement that have not
been so described, referred to or filed.
r. Each contract or other instrument
(however characterized or described) to which Basin or any of the
Subsidiaries is a party or by which any of its properties or
businesses is bound or affected and which is material to the
conduct of Basin’s and its Subsidiaries’ businesses,
taken as a whole, has been duly and validly executed by Basin or
its Subsidiaries, as applicable, and, to the knowledge of Basin,
has been duly and validly executed by the other parties thereto.
Each such contract or other instrument is in full force and effect
and is enforceable against the parties thereto in accordance with
its terms, except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of
creditors’ rights generally and subject to applicability of
general principles of equity, and neither
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Basin nor any of the Subsidiaries is, and to the
knowledge of Basin, no other party is in default under any such
contract or other instrument, and no event has occurred that, with
the lapse of time or the giving of notice, or both, would
constitute a default under any such contract or other instrument.
All necessary consents under such contracts or other instruments to
the disclosure in the Registration Statement, the Disclosure
Package or the Prospectus with respect thereto have been
obtained.
s. The financial statements of Basin
(including the notes thereto) filed as part of the Registration
Statement, the Disclosure Package and the Prospectus present
fairly, in all material respects, the financial position of Basin
and its Subsidiaries as of the respective dates thereof, as
applicable, and the results of operations and cash flows of Basin
and its Subsidiaries for the periods indicated therein, as
applicable, such financial statements comply as to form in all
material respects with the requirements of Regulation S-X under the
Act and have been prepared in conformity with generally accepted
accounting principles (“GAAP”), applied on a consistent
basis throughout the periods covered thereby, except as may be
expressly stated otherwise in the related notes thereto. No
financial statements or supporting schedules other than those filed
as part of the Registration Statement, the Disclosure Package and
the Prospectus are required to be included in the Registration
Statement, the Disclosure Package and the Prospectus, respectively
. The financial information included in the Registration
Statement, the Disclosure Package and the Prospectus under the
captions “Prospectus Summary - Summary Financial
Information,” “Selected Financial Information,”
“Use of Proceeds” and “Capitalization”
presents fairly the information shown therein and has been compiled
on a basis consistent with that of the audited financial statements
included in the Registration Statement, the Disclosure Package and
the Prospectus. The unaudited pro forma adjustments to financial
information included in the Registration Statement, the Disclosure
Package and the Prospectus have been properly applied to the
historical amounts in the compilation of that information to
reflect the sale by Basin of the Shares offered thereby at an
assumed Offering Price or the actual Offering Price, as the case
may be, and the anticipated application of the estimated net
proceeds therefrom in accordance with the description set forth
under the caption “Use of Proceeds” in such
document.
t. Since the respective dates as of
which information is given in the Registration Statement, the
Disclosure Package and the Prospectus, except as otherwise stated
therein, there has not been (i) any material adverse change
(including, whether or not insured against, any loss or damage to
any material assets), or development involving a prospective
material adverse change, in the Business Conditions of Basin or any
of its Subsidiaries, taken as a whole; (ii) any adverse
change, loss, reduction, termination or non renewal of any material
contract (which, for the purposes hereof, shall be limited to any
contract, arrangement or other agreement that (A) is filed as
an exhibit to the Registration Statement and (B) is set forth
on Schedule 1(t) hereto) to which Basin or any of its Subsidiaries
is a party; (iii) any transaction entered into by Basin or any
of the Subsidiaries not in the ordinary course of its business that
is material to Basin; (iv) any dividend or distribution of any
kind declared, paid or made by Basin on its capital stock;
(v) any liabilities or obligations, direct or indirect,
incurred by Basin or any of the Subsidiaries that are material to
Basin or any of the Subsidiaries; (vi) any change in the
capitalization of Basin or any of the Subsidiaries; or
(vii) any change in the indebtedness of Basin or any of the
Subsidiaries that is material to Basin or the Subsidiaries. Neither
Basin nor the Subsidiaries has any contingent liabilities or
obligations that are material and that are not expressly disclosed
in the Registration Statement, the Disclosure Package and the
Prospectus.
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u. Basin has not distributed, and
will not distribute, any offering material in connection with the
offering and sale of the Shares other than the Registration
Statement, a Preliminary Prospectus, the Disclosure Package and the
Prospectus. Neither Basin nor any of its officers, directors or
affiliates has (i) taken, nor shall Basin or such persons
take, 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 (ii) since
the filing of the Registration Statement (A) sold, bid for,
purchased or paid anyone any compensation for soliciting purchases
of, the Shares or (B) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other
securities of Basin, other than pursuant to this
Agreement.
v. Basin and the Subsidiaries have
filed with the appropriate federal, state and local governmental
agencies, and all foreign countries and political subdivisions
thereof, all tax returns that are required to be filed or have duly
obtained extensions of time for the filing thereof and have paid
all taxes shown on such returns or otherwise due and all material
assessments received by them to the extent that the same have
become due. Neither Basin nor any of the Subsidiaries has executed
or filed with any taxing authority, foreign or domestic, any
agreement extending the period for assessment or collection of any
income or other tax and neither of them is a party to any pending
action or proceeding by any foreign or domestic governmental agency
for the assessment or collection of taxes, and, to the knowledge of
Basin, no claims for assessment or collection of taxes have been
asserted against Basin or any of the Subsidiaries that would have a
Material Adverse Effect.
w. Singer Lewak Greenbaum and
Goldstein LLP, which has given its report on certain financial
statements included as part of the Registration Statement, is a
firm of independent certified public accountants with respect to
Basin as required by the Act and the Regulations.
x. Neither Basin nor any of the
Subsidiaries is in violation of, or in default under, any of the
terms or provisions of (i) its charter documents or Bylaws or
similar governing instruments, (ii) any indenture, mortgage,
deed of trust, contract, commitment or other agreement or
instrument to which it is a party or by which it or any of its
assets or properties is bound or affected, (iii) any law,
rule, regulation, judgment, order or decree of any government or
governmental agency, instrumentality or court, domestic or foreign,
having jurisdiction over it or any of its properties or business,
or (iv) any license, permit, certification, registration,
approval, consent or franchise, except in the case of clauses (ii),
(iii) and (iv) above, where any such violation or default
would not reasonably be expected to have a Material Adverse
Effect.
y. Except as expressly disclosed in
the Registration Statement, the Disclosure Package or the
Prospectus, there are no claims, actions, suits, protests,
proceedings, arbitrations, investigations or inquiries pending
before, or, to the knowledge of Basin, threatened or contemplated
by, any governmental agency, instrumentality, court or tribunal,
domestic or foreign, or before any private arbitration tribunal
(“Claims or Proceedings”) (i) against or affecting
Basin or any of its Subsidiaries or (ii) which have as the
subject thereof any “named executive officer” (as the
term is used in the Prospectus) or director of, or property owned
or leased by, Basin or any of its Subsidiaries, and which such
Claim or Proceeding, if determined adversely to Basin, such
Subsidiary, such named executive officer or director, could,
individually or in the aggregate, reasonably be expected to affect
the validity of any of the outstanding Common Stock, or the
consummation of the transactions contemplated by this Agreement,
or
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that, if determined adversely to Basin or any of
the Subsidiaries would, in any case or in the aggregate, result in
a Material Adverse Effect, nor to the knowledge of Basin is there
any reasonable basis for any such Claim or Proceeding. There are no
outstanding orders, judgments or decrees of any court, governmental
agency, instrumentality or other tribunal (“Orders”)
enjoining Basin or any of the Subsidiaries from, or requiring Basin
to take or refrain from taking, any action, or to which Basin or
any of the Subsidiaries or their properties, assets or businesses
are bound or subject other than as disclosed in the Registration
Statement, the Disclosure Package and the Prospectus. There are no
Claims or Proceedings or Orders that are required to be described
in the Registration Statement, the Disclosure Package or the
Prospectus and are not so described or any statutes or regulations
that are required to be described in the Registration Statement,
the Disclosure Package or the Prospectus and are not described as
required.
z. Each of Basin and its
Subsidiaries owns, or has obtained licenses for, or possess
adequate rights to use, all inventions, patent applications,
patents, trademarks (both registered and unregistered), tradenames,
copyrights, trade secrets, (including any unpatented and/or
unpatentable proprietary or confidential technology or information)
and other proprietary information (collectively “Intellectual
Property”) described in the Registration Statement, the
Disclosure Package or the Prospectus as being owned, licensed, or
used by Basin or its Subsidiaries (hereinafter “Basin
Intellectual Property”) and which are necessary for the
conduct of Basin’s business and the business of its
Subsidiaries, as currently conducted except where the failure to
own, license or have such rights would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect, and, except as disclosed in the Registration Statement, the
Disclosure Package or the Prospectus, (i) there are no third
parties who have or, to the knowledge of Basin after due inquiry,
will be able to establish rights to any Basin Intellectual
Property, except for the ownership rights of the owners of the
Intellectual Property which is licensed to Basin, (ii) to the
knowledge of Basin, there is no infringement by third parties of
any Basin Intellectual Property, except where such infringement
would not, individually or in the aggregate, have a Material
Adverse Effect, (iii) there is no pending or, to the knowledge
of Basin, threatened action, suit, proceeding or claim by any third
party challenging the validity, enforceability or scope of any
Basin Intellectual Property, (iv) neither Basin nor its
Subsidiaries has infringed, is infringing or violating the
Intellectual Property rights of others, except where such
infringement or violation, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would not
have a Material Adverse Effect, and there is no pending or, to the
knowledge of Basin, threatened action, suit, proceeding or claim by
others that Basin infringes or otherwise violates any Intellectual
Property of third parties, (v) Basin is not a party to, nor is
Basin bound by, any agreement pursuant to which royalties or fees
are payable by Basin to any person by reason of the ownership or
use of any Intellectual Property, except for
“off-the-shelf” software and computer applications used
in the ordinary course of business, (vi) each of Basin and its
Subsidiaries has filed or caused to be filed with the United States
Patent and Trademark Office (the “PTO”) and applicable
foreign and international patent authorities all patent
applications owned by Basin (the “Applications”), and
(vii) each of Basin and its Subsidiaries has complied with the
PTO’s duty of candor and disclosure for the Applications and
has made no material misrepresentation in the
Applications.
aa. Each of Basin and the
Subsidiaries has good and marketable title to all property
described in the Registration Statement, the Disclosure Package and
the Prospectus as being owned by it, free and clear of all liens,
security interests, charges or encumbrances and the
like,
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except such as are expressly described or
referred to in the Registration Statement, the Disclosure Package
and the Prospectus or such as do not, individually or in the
aggregate, materially adversely affect the Business Conditions or
the conduct of the business of Basin and the Subsidiaries as
described in the Registration Statement, Disclosure Package and the
Prospectus. Each of Basin and the Subsidiaries has insured its
property against loss or damage by fire or other casualty, in
amounts reasonably believed by Basin to be adequate, and maintains
insurance against such other risks as management of Basin deems
appropriate. Neither Basin nor its Subsidiaries own any real
property. All real and personal property leased by Basin, as
described or referred to in the Registration Statement, Disclosure
Package and the Prospectus, is held by Basin and the Subsidiaries,
as applicable, under valid and enforceable leases. The executive
offices and other facilities of Basin (the “Premises”),
and all operations presently or formerly conducted thereon by Basin
or the Subsidiaries or any predecessors thereof, are now and, since
Basin or the Subsidiaries began to use such Premises, always have
been and, to the knowledge of Basin prior to when Basin or the
Subsidiaries began to use such Premises, always had been, in
compliance with all federal, state and local statutes, ordinances,
regulations, rules, standards and requirements of common law
concerning or relating to industrial hygiene and the protection of
health and the environment (collectively, the “Environmental
Laws”), except to the extent that any failure in such
compliance would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. To the knowledge of
Basin, there are no conditions on, about, beneath or arising from
the Premises or in close proximity to the Premises or at any other
location that might give rise to liability, the imposition of a
statutory lien upon Basin or the Subsidiaries or require a
“Response,” “Removal” or “Remedial
Action,” as defined herein, under any Environmental Law, or
affect the quality of the surface water withdrawn by Basin, and
that would materially adversely affect the Business Conditions of
Basin, except as described in the Registration Statement, the
Disclosure Package or the Prospectus. Except as disclosed in the
Registration Statement, Disclosure Package or the Prospectus,
(i) neither Basin nor the Subsidiaries has received notice or
has knowledge of any claim, demand, investigation, regulatory
action, suit or other action instituted or threatened against Basin
or the Subsidiaries or any portion of the Premises or any parcel in
close proximity to the Premises, relating to any of the
Environmental Laws and (ii) neither Basin nor the Subsidiaries
has received any notice of material violation, citation, complaint,
order, directive, request for information or response thereto,
notice letter, demand letter or compliance schedule to or from any
governmental or regulatory agency, arising out of or in connection
with “hazardous substances” (as defined by applicable
Environmental Laws) on, about, beneath, arising from or generated
at the Premises, near the Premises or at any other location. As
used in this subsection, the terms “Removal,”
“Remedial Action” and “Response” shall have
the respective meanings assigned to such terms under Sections
101(23)-101(25) of the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund
Amendments and Reauthorization Act, 42 U.S.C.
9601(23)-9601(25).
bb. Except as described in the
Registration Statement, the Disclosure Package or the Prospectus,
each of Basin and the Subsidiaries maintain 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 in order to permit
preparation of financial statements in accordance 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
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compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences. Management of Basin is currently designing, refining
and documenting disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15 and 15d-15) for Basin that are being
designed to ensure that (i) information required to be
disclosed by Basin 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 SEC’s rules and
forms and (ii) information required to be disclosed by Basin
in the reports that it files or submits under the Exchange Act is
accumulated and communicated to Basin’s principal executive
and principal financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding
required disclosure. It is Basin’s management’s current
intention to become fully compliant in all respects with the
applicable laws, and related rules and regulations of the SEC,
regarding disclosure controls and procedures on or before the date
on which such laws, rules or regulations become applicable to
Basin.
cc. Basin is in compliance with all
currently effective provisions of the Sarbanes-Oxley Act of 2002
and the rules and regulations promulgated thereunder (the
“Sarbanes-Oxley Act”) that are applicable, or will be
applicable as of the Closing Date, to Basin.
dd. Basin, the Subsidiaries and any
Related Employer (which for purposes of this Paragraph means any
entity that with Basin or the Subsidiaries is a member of a
controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of 1986, as
amended (the “Code”), is, individually or collectively,
a trade or business under common control within the meaning of
Section 414(c) of the Code, or is a member of the same
affiliated service group within the meaning of Section 414(m)
of the Code) have established, maintain, contribute to, are
required to contribute to, are a party to, or are bound by certain
pension, retirement, profit-sharing plans, deferred compensation,
bonus, or other incentive plans, or medical, vision, dental, or
other health plans, or life insurance or disability plans, or any
other employee benefit plans, programs, arrangements, agreements,
or understandings, some of which are subject to the Employee
Retirement Income Security Act of 1974, as amended
(“ERISA”) and the rules and regulations thereunder
(“Plans”). Any disclosure regarding the Plans required
under the Act or the Exchange Act has been made in the Registration
Statement, the Disclosure Package and the Prospectus. All Plans
that are subject to ERISA are in compliance with ERISA in all
material respects, and, to the extent a Plan is intended to be
tax-qualified within the meaning of Section 401(a) of the
Code, such Plan is in compliance with the Code and is the subject
of a current favorable determination or opinion letter from the
Internal Revenue Service as to its tax qualification. Except as
disclosed in the Notes to the Financial Statements of Basin
included in the Registration Statement, the Disclosure Package and
the Prospectus, no Plan is an employee pension benefit plan that is
subject to Part 3 of Subtitle B of Title I of ERISA, a defined
benefit plan subject to Title IV of ERISA, or a multiemployer plan.
Except as disclosed in the Notes to the Financial Statements of
Basin included in the Registration Statement, the Disclosure
Package and the Prospectus, none of Basin, the Subsidiaries or any
Related Employer maintains or has maintained retiree life or
retiree health insurance plans that are employee welfare benefit
plans providing for continuing benefit or coverage for any employee
or any beneficiary of any employee after such employee’s
termination of employment, except as required by Section 4980B
of the Code and except as disclosed in the Registration Statement,
the Disclosure Package and the Prospectus. No fiduciary or other
party in interest with respect to any of the Plans has caused any
of such Plans to engage in a prohibited transaction as defined in
Section 406 of
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ERISA and Section 4975 of the Code. As used
in this subsection, the terms “defined benefit plan,”
“employee benefit plan,” “employee pension
benefit plan,” “employee welfare benefit plan,”
“fiduciary” and “multiemployer plan” shall
have the respective meanings assigned to such terms in
Section 3 of ERISA.
ee. Except as disclosed in the
Registration Statement, the Disclosure Package or the Prospectus,
(i) there is (A) no unfair labor practice complaint
pending or, to the knowledge of Basin or its Subsidiaries,
threatened against Basin or any of its Subsidiaries before the
National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under collective bargaining agreements
pending or, to the knowledge of Basin or its Subsidiaries,
threatened, against Basin or any of its Subsidiaries, (B) no
strike, labor dispute, slowdown or stoppage pending or, to the
knowledge of Basin, threatened against Basin or any of its
Subsidiaries and (C) no union representation question existing
with respect to the employees of Basin or any of its Subsidiaries
and, to the knowledge of Basin and its Subsidiaries, no union
organizing activities taking place and (ii) there has been no
material violation of any federal, state or local law relating to
discrimination in hiring, promotion or pay of employees or of any
applicable wage or hour laws. Basin currently has no knowledge of
any existing or threatened labor disturbance by or dispute with the
employees of any of the principal suppliers, contractors or
customers of Basin or any of the Subsidiaries that would have a
Material Adverse Effect.
ff. There are no contracts,
agreements or understandings between Basin, its Subsidiaries and/or
any person that would give rise to a valid claim against Basin, its
Subsidiaries and/or any of the Underwriters for a brokerage
commission, finder’s fee or other like payment in connection
with the transactions contemplated herein, the Registration
Statement, the Disclosure Package and the Prospectus or in any
contracts, agreements, understandings, payments, arrangements or
issuances with respect to Basin, its Subsidiaries or, to the
knowledge of Basin and its Subsidiaries, any of its officers,
directors, stockholders, employees or affiliates that may affect
the Underwriters’ compensation as determined by the
NASD.
gg. Basin and its Subsidiaries are
insured by the insurers of recognized financial responsibility
against such losses and risks and in such amounts as are customary
in the businesses in which they are engaged; and neither Basin 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 the business of Basin at a
cost that would not have a Material Adverse Effect.
hh. Basin has not taken, directly or
indirectly, any action designed to or that could reasonably be
expected to cause or result in any stabilization or manipulation of
the price of the Shares.
ii. Basin is not, and after giving
effect to the offering and sale of the Shares and the application
of the proceeds therefor described in the Registration Statement,
Disclosure Package and the Prospectus will not be, an
“investment company” or an entity
“controlled” by an “investment company,” as
such terms are defined in the Investment Company Act of 1940, as
amended. None of the Subsidiaries is an “investment
company” as defined in the Investment Company Act of 1940, as
amended.
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jj. Basin and its Subsidiaries have
received all permits, licenses, franchises, authorizations,
registrations, qualifications and approvals (collectively,
“Permits”) of governmental or regulatory authorities as
may be required of them to own their properties and conduct their
businesses in the manner described in the Registration Statement,
the Disclosure Package and the Prospectus subject to such
qualifications as may be set forth in the Registration Statement,
the Disclosure Package and the Prospectus, respectively, except for
failures to have Permits that would not reasonably be expected to
have a Material Adverse Effect; and Basin and its Subsidiaries have
fulfilled and performed all of their obligations with respect to
such Permits and no event has occurred which allows or, after
notice or lapse of time or both, would allow revocation or
termination thereof or result in any other impairment of the rights
of the holder of any such Permit, subject in each case to such
qualifications as may be set forth in the Registration Statement,
the Disclosure Package and the Prospectus or as would not
reasonably be expected to have a Material Adverse Effect; and,
except as described in the Registration Statement, the Disclosure
Package and the Prospectus, such Permits contain no restrictions
that materially affect the ability of Basin and its Subsidiaries to
conduct their businesses.
kk. No statement, representation,
warranty or covenant made by Basin or any of the Subsidiaries in
this Agreement or in any certificate or document required by this
Agreement to be delivered to the Representatives is, or as of the
Closing Date or any Option Closing Date will be, inaccurate, untrue
or incorrect in any material respect. No relationship, direct or
indirect, exists between or among Basin and its Subsidiaries, on
the one hand, and the directors, officers, stockholders, customers
or suppliers of Basin or its Subsidiaries, on the other hand, which
is required to be described in the Registration Statement, the
Disclosure Package and the Prospectus and which is not so
described. There are no outstanding loans, advances or guarantees
of indebtedness by Basin or its Subsidiaries to or for the benefit
of any of the officers or directors of Basin or its Subsidiaries or
any of their respective immediate family members, except as
disclosed in the Registration Statement, the Disclosure Package and
the Prospectus.
ll. None of Basin, the Subsidiaries
or any officer, director, employee, partner, agent or other person
acting on behalf of Basin or the Subsidiaries has, directly or
indirectly, given or agreed to give any money, property or similar
benefit or consideration to any customer or supplier (including any
employee or agent of any customer or supplier) or official or
employee of any agency or instrumentality of any government
(foreign or domestic) or political party or candidate for office
(foreign or domestic) or any other person who was, is or in the
future may be in a position to affect the Business Conditions of
Basin or any of the Subsidiaries or any actual or proposed business
transaction of Basin or any of the Subsidiaries that (i) could
subject Basin or any of the Subsidiaries to any liability
(including, but not limited to, the payment of monetary
