DOUBLE-TAKE SOFTWARE,
INC.
Cowen and Company,
LLC
Thomas Weisel Partners
LLC
Cibc World Markets
Corp.
Pacific Crest
Securities
As representatives of the several
Underwriters
c/o Cowen and
Company, LLC
1221 Avenue of the Americas
New York, New York 10020
c/o Thomas
Weisel Partners LLC
Lever House
390 Park Avenue, 2 nd Floor
New York, New York 10022
1.
Introductory
. Double-Take Software, Inc., a Delaware corporation (the
“Company”), and the selling shareholders named in
Schedule B hereto (the “Selling Shareholders”),
propose to sell, pursuant to the terms of this Agreement and acting
severally and not jointly, to the several underwriters named in
Schedule A hereto (the “Underwriters,” or, each,
an “Underwriter”), an aggregate of 7,500,000 shares of
the common stock, $0.001 par value per share of the Company (the
“Common Stock”). The aggregate of 7,500,000 shares of
the Common Stock so proposed to be sold is hereinafter referred to
as the “Firm Stock.” The Selling Shareholders also
propose to sell to the Underwriters, upon the terms and conditions
set forth in Section 3 hereof, up to an additional 1,125,000
shares of the Common Stock (the “Optional Stock”). The
Firm Stock and the Optional Stock are hereinafter collectively
referred to as the “Stock.” Cowen and Company, LLC
(“Cowen”), Thomas Weisel Partners LLC (“Thomas
Weisel”), CIBC World Markets Corp. and Pacific Growth
Equities, LLC are acting as Representatives of the several
underwriters and in such capacity are hereinafter referred to as
the “Representatives.”
2.
Representations and Warranties of The
Company And The Selling Shareholders
(I)
Representations and
Warranties of The Company . The Company represents and
warrants to the several Underwriters, as of the date hereof and as
of each Closing Date, and agrees with the several Underwriters,
that:
(a) A
registration statement of the Company on Form S-1 (File
No. 333-136499) (including all pre-effective amendments
thereto, the “Initial Registration Statement”) in
respect of the Stock has been filed with the Securities and
Exchange Commission (the “Commission”). The
Initial
Registration
Statement and any post-effective amendment thereto, each in the
form heretofore delivered to you for each of the Underwriters, and,
excluding exhibits thereto, have been declared effective by the
Commission in such form and meets the requirements in all material
respects of the Securities Act of 1933, as amended (the
“Securities Act”), and the rules and regulations of the
Commission thereunder (the “Rules and Regulations”).
Other than a registration statement, if any, increasing the size of
the offering filed pursuant to Rule 462(b) under the Securities Act
and the Rules and Regulations (a “Rule 462(b)
Registration Statement”) which became effective upon filing,
and the Prospectus (as defined below) contemplated hereby to be
filed pursuant to Rule 424(b) under the Securities Act in
accordance with Section 4(I)(a) hereof, no other document with
respect to the Initial Registration Statement or the offer and sale
of the Stock has heretofore been filed with the Commission or
distributed. No stop order suspending the effectiveness of the
Initial Registration Statement, any post-effective amendment
thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose or pursuant to Section 8A
of the Securities Act has been initiated or, to Company’s
knowledge, threatened by the Commission (any preliminary prospectus
included in the Initial Registration Statement or filed with the
Commission pursuant to Rule 424(a) of the Rules and Regulations is
hereinafter called a “Preliminary Prospectus”). The
various parts of the Initial Registration Statement and the Rule
462(b) Registration Statement, if any, in each case including all
exhibits thereto and including the information contained in the
Prospectus (as defined below) filed with the Commission pursuant to
Rule 424(b) under the Securities Act and deemed by virtue of
Rule 430A under the Securities Act to be part of the Initial
Registration Statement at the time it became effective are
hereinafter collectively called the “Registration
Statements.” The final prospectus, in the form filed pursuant
to and within the time limits described in Rule 424(b) under the
Securities Act, is hereinafter called the
“Prospectus.”
(b) As of
the Applicable Time (as defined below) and as of the Closing Date
or the Option Closing Date, as the case may be, neither
(i) the General Use Free Writing Prospectus(es) (as defined
below) issued at or prior to the Applicable Time, and the Pricing
Prospectus (as defined below) and the information included on
Schedule C-2 hereto, all considered together (collectively,
the “General Disclosure Package”), nor (ii) any
individual Limited Use Free Writing Prospectus (as defined below),
when considered together with the General Disclosure Package,
included or will include any untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided ,
however , that the Company makes no representations or
warranties as to information contained in or omitted from the
General Disclosure Package or any Limited Use Free Writing
Prospectus, in reliance upon, and in conformity with, written
information furnished to the Company through Cowen and Thomas
Weisel by or on behalf of any Underwriter expressly for inclusion
therein, which information the parties hereto agree is limited to
the Underwriter’s Information (as defined in
Section 17). As used in this paragraph (b) and elsewhere
in this Agreement:
“Applicable
Time” means 6:45P.M., New York time, on the date of this
Agreement or such other time as agreed to by the Company and the
Representatives.
“Issuer
Free Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 under the Securities
Act relating to the Stock in the form filed or required to be filed
with the Commission or, if not required to be filed, in the form
retained in the Company’s records pursuant to Rule 433(g)
under the Securities Act.
“General
Use Free Writing Prospectus” means any Issuer Free Writing
Prospectus that is identified on Schedule C-1 to this
Agreement.
“Limited
Use Free Writing Prospectuses” means any Issuer Free Writing
Prospectus that is not a General Use Free Writing
Prospectus.
“Pricing
Prospectus” means the Preliminary Prospectus relating the
Stock that is included in the Registration Statement immediately
prior to the Applicable Time.
(c) No
order preventing or suspending the use of any Preliminary
Prospectus, any Issuer Free Writing Prospectus or the Prospectus
relating to the proposed offering of the Stock has been issued by
the Commission, and no proceeding for that purpose or pursuant to
Section 8A of the Securities Act has been instituted or, to
the Company’s knowledge, threatened by the Commission; and
each Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the
Securities Act and the Rules and Regulations, and the Pricing
Prospectus, at the time of filing thereof, did not contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided , however ,
that the Company makes no representations or warranties as to
information contained in or omitted from any Preliminary
Prospectus, in reliance upon, and in conformity with, written
information furnished to the Company through Cowen and Thomas
Weisel by or on behalf of any Underwriter expressly for inclusion
therein, which information the parties hereto agree is limited to
the Underwriter’s Information (as defined in
Section 17).
(d) At the
respective times the Registration Statements and any amendments
thereto became or become effective and at each Closing Date, each
Registration Statement and any amendments thereto conformed and
will conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and did not and will
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein not misleading; and the Prospectus
and any amendments or supplements thereto, at time the Prospectus
or any amendment or supplement thereto was issued and at each
Closing Date, conformed and will conform in all material respects
to the requirements of the Securities Act and the Rules and
Regulations and did not and will not contain an untrue statement of
a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided ,
however , that the foregoing representations and warranties
in this paragraph (d) shall not apply to information contained
in or omitted from the Registration Statements or the Prospectus,
or any amendment or supplement thereto, in reliance upon, and in
conformity with, written information furnished to the Company
through Cowen and Thomas Weisel by or on behalf of any Underwriter
expressly for inclusion therein, which information the parties
hereto agree is limited to the Underwriter’s Information (as
defined in Section 17).
(e) 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 Stock or until any earlier date that the Company
notified or notifies the Representatives as described in
Section 4(I)(f) did not, does not and will not include any
information that conflicted, conflicts or will conflict with the
information contained in the Registration Statement, Pricing
Prospectus or the Prospectus, or included or would include an
untrue statement of a material fact or omitted or would omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances prevailing at the subsequent time, not misleading.
The foregoing sentence does not apply to statements in or omissions
from any Issuer Free Writing Prospectus in reliance upon, and in
conformity with, written information furnished to the Company
through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, which information the parties
hereto agree is limited to the Underwriter’s Information (as
defined in Section 17).
(f) The
Company has not, directly or indirectly, distributed and will not
distribute any offering material in connection with the offering
and sale of the Stock other than any Preliminary Prospectus, the
Prospectus and other materials, if any, permitted under the
Securities Act and consistent with Section 4(I)(b) below. The
Company will file with the Commission all Issuer Free Writing
Prospectuses in the time and manner required under Rules 163(b) and
433(d) under the Securities Act.
(g) (i) At
the earliest time after the filing of the Registration Statement
that the Company or another offering participant made a bona
fide offer (within the meaning of Rule 164(h)(2) of the
Securities Act) and (ii) as of the date hereof (with such date
being used as the determination date for purposes of this clause
(g)(ii)), the Company was not and is not an “ineligible
issuer” as defined in Rule 405 under the Securities Act
(without taking into account of any determination by the Commission
pursuant to Rule 405 that it is not necessary that the Company
be considered an “ineligible issuer,”) including
without limitation, for purposes of Rules 164 and 433 under
the Securities Act with respect to the offering of the Stock as
contemplated by the Registration Statement.
(h) The
Company and each of its subsidiaries (as defined in
Section 15) have been duly incorporated and are validly
existing as corporations or other legal entities in good standing
(or the foreign equivalent thereof) under the laws of their
respective jurisdictions of incorporation. The Company and each of
its subsidiaries are duly qualified to do business and are in good
standing as foreign corporations or other legal entities 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 (corporate or
other) necessary to own or hold their respective properties and to
conduct the businesses in which they are engaged, except where the
failure to so qualify, be in good standing or have such power or
authority would not have, singularly or in the aggregate, a
material adverse effect on the condition (financial or otherwise),
results of operations, assets, business or prospects of the Company
and its subsidiaries taken as a whole (a “Material Adverse
Effect”). The Company owns or controls, directly or
indirectly, only the following corporations, partnerships, limited
liability partnerships, limited liability companies, associations
or other entities: Double-Take Software S.A.S. existing under the
laws of the Republic of France (“Sunbelt”)
(100%).
(i) This
Agreement has been duly authorized, executed and delivered by the
Company.
(j) The
Stock to be issued and sold by the Company to the Underwriters
hereunder has been duly authorized and, when issued and delivered
against payment therefor as provided herein, will be validly
issued, fully paid and nonassessable and free of any preemptive or
similar rights and will conform to the description thereof
contained in the General Disclosure Package and the
Prospectus.
(k) The
Company has an authorized capitalization as set forth in the
Pricing Prospectus under the “Actual” column of the
table set forth under the heading “Capitalization,” and
all of the issued shares of capital stock of the Company, including
the Stock to be sold by the Selling Shareholders, have been duly
authorized and validly issued, are fully paid and non-assessable,
have been issued in compliance with applicable federal and state
securities laws, and conform to the description thereof contained
in the General Disclosure Package and the Prospectus. As of the
date of such table, there were 3,795,478 shares of Common Stock
issued and outstanding, 13,633,334 shares of Series B
Preferred Stock, par value $0.01 and 7,840,092 shares of
Series C Preferred Stock, par value $0.01 issued and
outstanding and 3,183,568 shares of Common Stock were issuable upon
the exercise of all options, warrants and convertible securities
outstanding as of such date (excluding 11,347,662 shares of Common
Stock issuable after giving effect to
dividends
accrued, on the conversion of the Series B Preferred Stock and
Series C Preferred Stock). Since such date, the Company has
not issued any securities other than Common Stock issued pursuant
to the exercise of stock options outstanding under the
Company’s stock option plans, the issuance of restricted
Common Stock pursuant to employee stock purchase plans, the
issuance of securities pursuant to reservations and other
transactions, in each such case, as described in the General
Disclosure Package or Prospectus or the issuance of common stock
pursuant to the conversion of convertible securities referred to in
the General Disclosure Package or Prospectus. None of the
outstanding shares of Common Stock was issued in violation of any
preemptive rights, rights of first refusal or other similar rights
to subscribe for or purchase securities of the Company. There are
no authorized or outstanding shares of capital stock, options,
warrants, preemptive rights, rights of first refusal or other
rights to purchase, or equity or debt securities convertible into
or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those described above
or accurately described in the General Disclosure Package. The
description of the Company’s stock option, stock bonus and
other stock plans or similar equity incentive arrangements, and the
options or other rights granted thereunder, as described in the
General Disclosure Package and the Prospectus, accurately and
fairly present the information required by the Securities Act or
Rules and Regulations to be shown with respect to such plans,
arrangements, options and rights.
(l) All
the outstanding shares of capital stock of each subsidiary of the
Company have been duly authorized and validly issued, are fully
paid and nonassessable and, except to the extent set forth in the
General Disclosure Package or the Prospectus, are owned by the
Company directly or indirectly through one or more wholly-owned
subsidiaries, free and clear of any claim, lien, encumbrance,
security interest, restriction upon voting or transfer or any other
claim of any third party.
(m) The
execution, delivery and performance of this Agreement by the
Company, the issuance and sale of the shares of Stock to be sold by
the Company and the consummation of the transactions contemplated
hereby to be consummated by the Company will not (with or without
notice or lapse of time or both) (i) conflict with or result
in a breach or violation of any of the terms or provisions of,
constitute a default under, give rise to any right of termination
or other right or the cancellation or acceleration of any right or
obligation or loss of a benefit under, or give rise to the creation
or imposition of any lien, encumbrance, security interest, claim or
charge upon any property or assets of the Company or any subsidiary
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, except
(A) under such indentures, mortgages, deeds of trust, loan
agreements or other agreements or instruments that are not
material, and (B) for such conflicts, breaches, violations,
defaults, rights, losses, creations or impositions that would not,
in the aggregate, be material), (ii) violate the provisions of the
charter or by-laws (or analogous governing instruments, as
applicable) of the Company or any of its subsidiaries, or
(iii) violate any law, statute, rule, regulation, judgment,
order or decree of any court or governmental agency or body,
domestic or foreign, having jurisdiction over the Company or any of
its subsidiaries or any of their properties or assets, except, in
the case of clause (iii) for such conflicts, breaches,
violations, defaults, rights, liens, encumbrances, security
interests, claims and charges that would not have, singularly or in
the aggregate, a Material Adverse Effect.
(n) Except
for (x) the registration of the Stock under the Securities Act
and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state securities laws, the National Association of
Securities Dealers, Inc. (“NASD”) and the Nasdaq Global
Market in connection with the purchase and distribution of
the
Stock by the
Underwriters, (y) such as have been obtained and are in full
force and effect under the laws and regulations of jurisdictions,
if any, outside the United States in which the Stock is offered and
(z) the filing with the Delaware Secretary of State
immediately following the Initial Closing of a Restated Certificate
of Incorporation of the Company, and no consent, approval,
authorization, license, certificate, permit, notice or order of, or
filing, qualification or registration with (each an
“Authorization”), any court, tribunal, government,
governmental or regulatory authority, self-regulatory organization
or body (each, a “Regulatory Body”), foreign or
domestic, which has not been made, obtained or taken and is not in
full force and effect, is required for the execution, delivery and
performance of this Agreement by the Company, the offer or sale of
the Stock or the consummation of the transactions contemplated
hereby to be consummated by the Company; and to the knowledge of
the Company, no event has occurred that allows or results in, or
after notice or lapse of time or both would allow or result in,
revocation, suspension, termination or invalidation of any such
Authorization or any other impairment of the rights of the holder
or maker of any such Authorization. All corporate approvals
(including those of stockholders) necessary for the Company to
consummate the transactions contemplated in this Agreement have
been obtained and are in effect.
(o) Eisner
LLP which has certified certain financial statements and related
schedules included in the Registration Statements, the General
Disclosure Package and the Prospectus is, to the Company’s
knowledge, an independent registered public accounting firm as
required by the Securities Act and the Rules and Regulations,
including Rule 2-01 of Regulation S-X of the Rules and
Regulations and the Rules and Regulations and the Public Company
Accounting Oversight Board (United States) (the
“PCAOB”). Ernst & Young Audit, which has certified
certain financial statements and related schedules included in the
Registration Statements, the General Disclosure Package and the
Prospectus is, to the Company’s knowledge, an independent
certified public accounting firm as required by the Securities Act
and the Rules and Regulations, including Rule 2-01 of
Regulation S-X of the Rules and Regulations.
(p) The
financial statements, together with the related notes, included in
the General Disclosure Package, the Prospectus and in each
Registration Statement fairly present the financial position and
the results of operations and changes in financial position of the
Company and its consolidated subsidiaries at the respective dates
or for the respective periods therein specified. Such statements
and related notes have been prepared in accordance with the
generally accepted accounting principles in the United States
(“GAAP”) applied on a consistent basis throughout the
periods involved except as may be set forth in the related notes
included in the General Disclosure Package; provided ,
however , that those financial statements that are unaudited
are subject to year-end adjustment and do not contain all of the
footnotes required under GAAP. The financial statements, together
with the related notes and schedules, included in the General
Disclosure Package and the Prospectus comply in all material
respects with the Securities Act and the Rules and Regulations. No
other financial statements or supporting schedules or exhibits are
required by the Securities Act or the Rules and Regulations to be
included in the Registration Statements, the General Disclosure
Package or the Prospectus. The pro forma and pro forma as adjusted
financial information and the related notes included in the
Registration Statements, the General Disclosure Package and the
Prospectus have been properly compiled and prepared in accordance
with the applicable requirements of the Securities Act and the
Rules and Regulations and present fairly the information shown
therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
The summary and selected financial data included in the General
Disclosure Package, the Prospectus and each Registration Statement
fairly present the information shown therein as at the respective
dates and for the respective periods specified.
(q) Neither the Company nor any of its
subsidiaries has sustained, since the date of the latest audited
financial statements included in the General Disclosure Package,
any material loss or material interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or
contemplated in the General Disclosure Package; and, since such
date, there has not been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries, or any
material adverse changes, or any development involving a
prospective material adverse change, in or affecting the business,
assets, management, financial position, prospects,
stockholders’ equity or results of operations of the Company
and its subsidiaries taken as a whole, otherwise than as set forth
or contemplated in the General Disclosure Package.
(r) Except
as set forth in the General Disclosure Package, there is no legal
or governmental proceeding pending to which the Company or any of
its subsidiaries is a party or of which any property or assets of
the Company or any of its subsidiaries is the subject which is
required to be described in the Registration Statements, the
General Disclosure Package or the Prospectus and which is not
described therein, or which, singularly 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; and
to the Company’s knowledge, no such proceedings are
threatened or contemplated by governmental authorities or
threatened by others.
(s) Neither the Company nor any of its
subsidiaries (i) is in violation of its charter or by-laws (or
analogous governing instrument, as applicable), (ii) is in
default, and no event has occurred which, with notice or lapse of
time or both, would constitute a default, in the performance or
observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it is
bound or to which any of its property or assets is subject or
(iii) is in violation in any respect of any law, ordinance,
governmental rule, regulation or court order, decree or judgment to
which it or its property or assets may be subject except, in the
case of clauses (ii) and (iii) of this paragraph (s), for
any violations, defaults or events which, singularly or in the
aggregate, would not have a Material Adverse Effect.
(t) The
Company and each of its subsidiaries possess all permits issued by,
and have made all declarations and filings with, each appropriate
local, state, federal or foreign Regulatory Body that are necessary
or desirable for the ownership of their respective properties or
the conduct of their respective businesses as described in the
General Disclosure Package and the Prospectus (collectively, the
“Governmental Permits”) except where any failures to
possess or make the same, singularly or in the aggregate, would not
have a Material Adverse Effect. The Company and its subsidiaries
are in compliance with all such Governmental Permits, and all such
Governmental Permits are valid and in full force and effect, except
where such non-compliance, invalidity or failure to be in full
force and effect would not, singularly or in the aggregate, have a
Material Adverse Effect. Neither the Company nor any subsidiary has
received notification of any revocation, modification, suspension,
termination or invalidation (or proceedings related thereto) of any
such Governmental Permit and, to the knowledge of the Company, no
event has occurred that allows or results in, or after notice or
lapse of time or both would allow or result in, revocation,
modification, suspension, termination or invalidation (or
proceedings related thereto) of any such Governmental Permit will
not be renewed, except where such revocation, modification,
suspension, termination, invalidation or lack of renewal would not,
singularly or in the aggregate, have a Material Adverse
Effect.
(u) Neither the Company nor any of its
subsidiaries is or, immediately after giving effect to the offering
of the Stock and the application of the proceeds thereof as
described in the General
Disclosure
Package and the Prospectus, will be required to register as an
“investment company” under the Investment Company Act
of 1940, as amended, and the rules and regulations of the
Commission thereunder.
(v) Neither the Company nor, to the
Company’s knowledge, any of its officers or directors has
taken or will take, and the Company has used reasonable efforts to
cause each of its affiliates not to have taken or take, directly or
indirectly, any action designed or intended to stabilize or
manipulate the price of any security of the Company, or which
caused or resulted in, or which would reasonably be expected to
cause or result in, stabilization or manipulation of the price of
any security of the Company, in each case to facilitate the sale or
resale of the shares of the Stock.
(w)
(i) The Company and its subsidiaries own or possess the right
to use all patents, trademarks, trademark registrations, service
marks, service mark registrations, trade names, copyrights,
licenses, inventions, software, databases, know-how, Internet
domain names, trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures, and other intellectual property (collectively,
“Intellectual Property”) necessary to carry on their
respective businesses as currently conducted, and as proposed to be
conducted and described in the General Disclosure Package and the
Prospectus, and the Company has no knowledge of any claim to the
contrary or any challenge by any other person to the rights of the
Company and its subsidiaries with respect to the foregoing. To the
Company’s knowledge, the Intellectual Property licenses
described in the General Disclosure Package and the Prospectus are
valid, binding upon, and enforceable by or against the parties
thereto in accordance with its terms. The Company has complied in
all material respects with, and is not in breach nor has received
any asserted or threatened claim of breach, except for such claims
that have been fully resolved or are not material, of any
Intellectual Property license, and the Company has no knowledge of
any breach or anticipated breach by any other person to any
Intellectual Property license. The Company’s business as now
conducted does not, and to the Company’s knowledge, as
proposed to be conducted will not, infringe or conflict with any
Intellectual Property or franchise right of any person. Except as
described in the General Disclosure Package, no claim has been made
against the Company alleging the infringement by the Company or any
of its licensees or other third parties of any Intellectual
Property right or franchise right of any person, except for such as
would not have a Material Adverse Effect. The Company has taken all
reasonable steps to protect, maintain and safeguard its rights in
all Intellectual Property, including the execution of appropriate
nondisclosure and confidentiality agreements. Each employee of and
consultant to the Company and its subsidiaries has entered into a
confidentiality and invention assignment agreement in favor of the
Company or its applicable subsidiary as a condition of the
employment or retention of services of such employee or consultant,
except where the failure to enter into such an agreement would not
have a Material Adverse Effect.
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(ii)
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Except for matters relating to third
parties expressly identified and named in the Prospectus:
(A) there are no rights of third parties to any Intellectual
Property owned by or licensed to the Company or any of its
subsidiaries that conflict with the rights of the Company or its
subsidiaries related to such Intellectual Property, except for any
such rights that, singularly or in the aggregate, would not have a
Material Adverse Effect; (B) to the Company’s knowledge,
there is no infringement by third parties of any Intellectual
Property right owned by or licensed to the Company or its
subsidiaries that would have a Material Adverse Effect;
(C) other than in connection with assertions or inquiries made
by patent office examiners in the ordinary course of the
prosecution of the patent applications of the Company or its
subsidiaries, there is no pending or threatened action, suit,
proceeding or other claim by others challenging the rights of the
Company or any of its subsidiaries in or to, or the validity or
scope of, any
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Intellectual Property owned by or
licensed to the Company or its subsidiaries, except for any such
claim that would not have a Material Adverse Effect, and the
Company is unaware of any facts that would form a reasonable basis
for any such claim; (D) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or
other claim by others that the Company or any of its subsidiaries,
or any of their respective licensees, infringes or otherwise
violates, or would infringe or otherwise violate upon
commercialization of its products and product candidates described
in the Prospectus, any patent, trademark, copyright, trade secret
or other proprietary rights of others, and there are no facts that
would form a reasonable basis for any such claim by others that the
Company or any of its subsidiaries, or any of their respective
licensees, infringes or otherwise violates, or would infringe or
otherwise violate upon commercialization of its products and
product candidates described in the Prospectus, any Intellectual
Property of others, except, in each case in this clause (D), for
any such claims that would not have a Material Adverse Effect; and
(E) there is no patent or, to the Company’s knowledge,
patent application that contains claims that conflict with any
Intellectual Property described in the Prospectus as being owned by
or licensed to the Company or any of its subsidiaries or that is
necessary for the conduct of their respective businesses as
currently or contemplated to be conducted, except for such as would
not have a Material Adverse Effect.
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(iii)
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The
consummation of the transactions contemplated by this Agreement
will not result in the loss or impairment of or payment of any
additional amounts with respect to, nor require the consent of any
other person in respect of, the Company’s right to own, use,
or hold for use any of the Intellectual Property as owned, used or
held for use in the conduct of the business as currently conducted.
With respect to the use of the software in the Company’s
business as it is currently conducted, the Company has not
experienced any material defects in such software including any
material error or omission in the processing of any transactions
other than defects which have been corrected, and to the knowledge
of the Company, no such software contains any device or feature
designed to disrupt, disable, or otherwise impair the functioning
of any software or is subject to the terms of any “open
source” or other similar license that provides for the source
code of the software to be publicly distributed or dedicated to the
public. The Company has at all times complied in all material
respects with all applicable laws relating to privacy, data
protection, and the collection and use of personal information
collected, used, or held for use by the Company in the conduct of
the Company’s business. To the Company’s knowledge, no
claims have been asserted or threatened against the Company
alleging a violation of any person’s privacy or personal
information or data rights and the consummation of the transactions
contemplated hereby will not breach or otherwise cause any
violation of any law related to privacy, data protection, or the
collection and use of personal information collected, used, or held
for use by the Company in the conduct of the Company’s
business. The Company takes reasonable measures to ensure that such
information is protected against unauthorized access, use,
modification, or other misuse.
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(x) The
Company and each of its subsidiaries have good and marketable title
to, or have valid rights to lease or otherwise use, all real
property, and good title to all other property owned by them, in
each case, which are material to the business of the Company and
its subsidiaries taken as a whole, and, in each case, free and
clear of all liens, encumbrances, security interests,
claims and
defects that could, singularly or in the aggregate, reasonably be
expected to result in a Material Adverse Effect; and all of the
leases and subleases material to the business of the Company and
its subsidiaries, considered as one enterprise, and under which the
Company or any of its subsidiaries holds properties described in
the General Disclosure Package and the Prospectus, are in full
force and effect, and neither the Company nor any subsidiary has
received any notice of any material claim (i) of any sort that
has been asserted by anyone adverse to the rights of the Company or
any subsidiary under any of the leases or subleases mentioned
above, or (ii) affecting or questioning the rights of the
Company or such subsidiary to the continued possession of any
leased or subleased premises under any such lease or
sublease.
(y) No
labor disturbance by the employees of the Company or any of its
subsidiaries exists or, to the Company’s knowledge, is
imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or its
subsidiaries principal suppliers, manufacturers, customers or
contractors that could reasonably be expected, singularly or in the
aggregate, to have a Material Adverse Effect. The Company is not
aware that any key employee or significant group of employees of
the Company or any subsidiary has plans to terminate employment
with the Company or any such subsidiary.
(z) To the
knowledge of the Company, no “prohibited transaction”
as defined under Section 406 of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”) or Section
4975 of the Internal Revenue Code of 1986, as amended (the
“Code”) and not exempt under ERISA Section 408 and
the regulations and published interpretations thereunder has
occurred with respect to any “employee benefit plan” as
defined in Section 3(3) of ERISA which the Company or any
member of the Company’s controlled group as defined in Code
Section 414(b), (c), (m), or (o) (an “ERISA
Affiliate”) sponsors or to which the Company or any ERISA
Affiliate could have an obligation to contribute (each an
“Employee Benefit Plan”). At no time has the Company or
any ERISA Affiliate maintained, sponsored, participated in, or
contributed to any Employee Benefit Plan subject to Part 3 of
Subtitle B of Title I of ERISA, Title IV of ERISA, or
Section 412 of the Code or any “multiemployer
plan” as defined in Section 3(37) of ERISA. No Employee
Benefit Plan provides or promises retiree health, life insurance,
or other retiree welfare benefits except as may be required by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
or similar state law. Each Employee Benefit Plan is and has been
operated in material compliance with its terms and all applicable
laws, including but not limited to ERISA and the Code. Each
Employee Benefit Plan intended to be qualified under Code Section
401(a) has a favorable determination or opinion letter from the IRS
upon which it can rely, and any such determination or opinion
letter remains in effect and has not been revoked; to the
Company’s knowledge, nothing has occurred since the date of
any such determination or opinion letter that is reasonably likely
to adversely affect such qualification. The Company does not have
any obligations under any collective bargaining agreement with any
union and, to the Company’s knowledge, no organization
efforts are underway with respect to Company employees.
(aa) The
Company and its subsidiaries are in compliance with all foreign,
federal, state and local rules, laws and regulations relating to
the use, treatment, storage and disposal of hazardous or toxic
substances or waste and protection of health and safety or the
environment which are applicable to their businesses
(“Environmental Laws”), except where the failure to
comply would not, singularly or in the aggregate, have a Material
Adverse Effect. There has been no storage, generation,
transportation, handling, treatment, disposal, discharge, emission,
or other release of any kind of toxic or other wastes or other
hazardous substances by, due to, or caused by the Company or any of
its subsidiaries (or, to the Company’s knowledge, any other
entity for whose acts or omissions the Company or any of its
subsidiaries is or may otherwise be liable) upon any of the
property now or previously owned or leased by the Company or any of
its subsidiaries, or
upon any other
property, in violation of any law, statute, ordinance, rule,
regulation, order, judgment, decree or permit or which would, under
any law, statute, ordinance, rule (including rule of common law),
regulation, order, judgment, decree or permit, give rise to any
liability, except for any violation or liability which would not
have, singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Effect; and there has been no
disposal, discharge, emission or other release of any kind onto
such property or into the environment surrounding such property of
any toxic or other wastes or other hazardous substances with
respect to which the Company or any of its subsidiaries has
knowledge, except for any such disposal, discharge, emission, or
other release of any kind which would not have, singularly or in
the aggregate with all such discharges and other releases, a
Material Adverse Effect. To the knowledge of the Company, the
associated costs and liabilities, with respect to compliance with
all Environmental laws, (including, without limitation, any capital
or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or Governmental
Permits issued thereunder, any related constraints on operating
activities and any potential liabilities to third parties) to the
Company and its subsidiaries, would not, singularly or in the
aggregate, result in a Material Adverse Effect.
(bb) The
Company and its subsidiaries each (i) have timely filed all
necessary federal, state, local and foreign tax returns, and all
such returns were true, complete and correct, (ii) have paid
all federal, state, local and foreign taxes, assessments,
governmental or other charges due and payable for which it is
liable, including, without limitation, all sales and use taxes and
all taxes which the Company or any of its subsidiaries is obligated
to withhold from amounts owing to employees, creditors and third
parties, and (iii) do not have any tax deficiency or claims
outstanding or assessed or, to its knowledge, proposed against any
of them, except those, in each of the cases described in clauses
(i), (ii) and (iii) of this paragraph (bb), that could
not reasonably be expected to, singularly or in the aggregate, have
a Material Adverse Effect or that are disclosed in the General
Disclosure Package and the Prospectus. The Company and its
subsidiaries have not engaged in any transaction which is a
corporate tax shelter or which has a reasonable basis to be
characterized as such by the Internal Revenue Service or any other
taxing authority.
(cc) The
Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is reasonably
adequate for the conduct of their respective businesses and the
value of their respective properties and as is customary for
companies engaged in similar businesses in similar
industries.
(dd) The
Company and each of its subsidiaries maintains a system of internal
control over financial reporting (as such term is defined in
Rule 13a-15(f) under the Exchange Act) that has been designed
by the Company’s principal executive officer and principal
financial officer, or under their supervision, to provide
reasonable assurances that (i) transactions are executed in
accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP
and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect
to any differences. The Company’s internal control over
financial reporting is effective in all material respects. Since
the end of the Company’s most recent audited fiscal year,
there has been (A) no material weakness in the Company’s
internal control over financial reporting (whether or not
remediated) and (B) 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.
(ee) The
minute books of the Company and each of its subsidiaries have been
made available to the Underwriters and counsel for the
Underwriters, and such books (i) contain a summary that is
complete in all material respects of all meetings and actions of
the board of directors (including each board committee) and
shareholders of the Company (or analogous governing bodies and
interest holders, as applicable) and each of its subsidiaries since
the time of its respective incorporation or organization through
the date of the latest meeting and action and (ii) accurately
in all material respects reflect all meetings and actions referred
to in such minutes.
(ff) There
is no franchise, lease, contract, agreement or document required by
the Securities Act or by the Rules and Regulations to be described
in the General Disclosure Package and in the Prospectus or to be
filed as an exhibit to the Registration Statements which is not
described or filed therein as required; and all descriptions of any
such franchises, leases, contracts, agreements or documents
contained in the Registration Statements are accurate and complete
descriptions of such documents in all material respects. Other than
as described in the General Disclosure Package, no such franchise,
lease, contract or agreement has been suspended or terminated for
convenience or default by the Company or any of the other parties
thereto, and neither the Company nor any of its subsidiaries has
received notice and the Company does not have knowledge of any such
pending or threatened suspension or termination, except for such
pending or threatened suspensions or terminations that would not
reasonably be expected to, singularly or in the aggregate, have a
Material Adverse Effect.
(gg) No
relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, stockholders
(or analogous interest holders), customers or suppliers of the
Company or any of its affiliates on the other hand, which is
required to be described in the General Disclosure Package and the
Prospectus and which is not so described.
(hh) No
person or entity has the right to require registration of shares of
Common Stock or other securities of the Company or any of its
subsidiaries because of the filing or effectiveness of the
Registration Statements or otherwise in connection with the
offering and sale of the Stock as contemplated by this Agreement,
except for persons and entities (i) who have been given proper
notice and who are Selling Shareholders, (ii) who have
expressly waived such right in writing or (iii) who have been
given timely and proper written notice and have failed to exercise
such right within the time or times required under the terms and
conditions of such right. Except as described in the General
Disclosure Package, there are no persons with registration rights
or similar rights to have any securities registered by the Company
or any of its subsidiaries under the Securities Act.
(ii) Neither the Company nor any of its
subsidiaries own any “margin securities” as that term
is defined in Regulation U of the Board of Governors of the
Federal Reserve System (the “Federal Reserve Board”),
and none of the proceeds of the sale of the Stock will be used,
directly or indirectly, for the purpose of purchasing or carrying
any margin security, for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of
the Stock to be considered a “purpose credit” within
the meanings of Regulation T, U or X of the Federal Reserve
Board.
(jj) Neither the Company nor any of its
subsidiaries is a party to any contract, agreement or understanding
with any person that would give rise to a valid claim against the
Company or the Underwriters for a brokerage commission,
finder’s fee or like payment in connection with the offering
and sale of the Stock or any transaction contemplated by this
Agreement.
(kk) No
forward-looking statement (within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act)
contained in either the General Disclosure Package or
the
Prospectus has
been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith.
(ll) The
Stock has been approved for listing subject to notice of issuance
on the Nasdaq Global Market (“Nasdaq GM”) of The Nasdaq
Stock Market (“Nasdaq”).
(mm) The
Company has taken all necessary actions to ensure that, upon the
effectiveness of the Registration Statement, it will be in
compliance with all provisions of the Sarbanes-Oxley Act of 2002
and all rules and regulations promulgated thereunder or
implementing the provisions thereof (the “Sarbanes-Oxley
Act”) that are then in effect and that the Company is
required to comply with as of the effectiveness of the Registration
Statement, and is actively taking steps to ensure that it will be
in compliance with other provisions of the Sarbanes-Oxley Act when
such provisions will become applicable to the Company.
(nn) The
Company has taken all necessary actions to ensure that, upon the
time the Nasdaq GM shall have approved the Stock for inclusion
therein, it will be in compliance with all corporate governance
requirements set forth in the Nasdaq Marketplace Rules that are
then in effect and that the Company is required to comply with as
of time the Nasdaq GM shall have approved the Stock for inclusion
therein, and is actively taking such steps to ensure that it will
be in compliance with other corporate governance requirements set
forth in the Nasdaq Marketplace Rules when such provisions will
become applicable to the Company.
(oo) To
the Company’s knowledge after due inquiry, neither the
Company nor any of its subsidiaries, nor any employee or agent of
the Company or any subsidiary, has (i) used any corporate
funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made
any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns
from corporate funds, (iii) violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended or (iv) made
any other unlawful payment.
(pp) There
are no transactions, arrangements or other relationships between
and/or among the Company or, the knowledge of the Company, any of
its affiliates (as such term is defined in Rule 405 of the
Rules and Regulations), on the one hand, and any unconsolidated
entity, including, but not limited to, any structure finance,
special purpose or limited purpose entity, on the other hand, that
could reasonably be expected to materially affect the
Company’s liquidity or the availability of or requirements
for its capital resources required to be described in the General
Disclosure Package and the Prospectus that have not been described
as required.
(qq) There
are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees
or indebtedness by the Company or any of its subsidiaries to or for
the benefit of any of the executive officers or directors of the
Company, any of its subsidiaries or any of their respective family
members, except as disclosed in the Registration Statements, the
General Disclosure Package and the Prospectus.
(rr) The
statistical and market related data included in the Registration
Statement, the General Disclosure Package and the Prospectus are
based on or derived from sources that the Company believes to be
reliable and accurate.
(ss) The
operations of the Company and its subsidiaries are and have been
conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, applicable
money laundering statutes and applicable rules and regulations
thereunder (collectively, the “Money
Laundering
Laws”), and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries with respect to
the Money Laundering Laws is pending, or to the knowledge of the
Company, threatened.
(tt) Neither the Company nor any of its
subsidiaries nor, to the knowledge of the Company, any director,
officer, agent, employee or affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other person or entity, for
the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC, in violation of
such sanctions.
(uu) The
Company does not directly or indirectly control an associated
person (within the meaning of Article I, Section 1(ee) of
the By-laws of the NASD) of, any member firm of the NASD. The
Company (i) does not control, (ii) is not controlled by,
and (iii) is not under common control by any entity, other
than as set forth on Schedule F.
Any certificate
signed by or on behalf of the Company and delivered to the
Representatives or to counsel for the Underwriters pursuant to this
Agreement shall be deemed to be a representation and warranty by
the Company to each Underwriter as to the matters covered
thereby.
(II)
Representations and
Warranties and Agreements of The Selling Shareholders .
Each Selling Shareholder severally and not jointly represents and
warrants to the several Underwriters as of the date hereof and as
of each Closing Date, and agrees with the several Underwriters,
that such Selling Shareholder:
(a) Such
Selling Shareholder has, and immediately prior to each Closing Date
(as defined in Section 3 hereof) the Selling Shareholder will
have, good and valid title to, or a valid “security
entitlement” within the meaning of Section 8-501 of the
New York Uniform Commercial Code (the “UCC” in respect
of, the shares of Stock to be sold by the Selling Shareholder
hereunder on such date, free and clear of all liens, security
interests, encumbrances, equities or claims of any kind, other than
pursuant to this Agreement, the Power of Attorney and the Custody
Agreement; upon payment for the shares of Stock to be sold by such
Selling Shareholder pursuant to this Agreement, delivery of such
shares, as directed by the Underwriters, to Cede & Co.
(“Cede”) or such other nominee as may be designated by
the Depository Trust Company (“DTC”) (unless delivery
of such shares is unnecessary because such shares are already in
possession of Cede or such nominee), registration of such shares in
the name of Cede or such other nominee (unless registration of such
shares is unnecessary because such shares are already registered in
the name of Cede or such nominee), and the crediting of such shares
on the books of DTC to securities accounts of the Underwriters
(assuming that neither DTC nor any such Underwriter has notice of
any “adverse claim,” within the meaning of
Section 8-105 of the New York Uniform Commercial Code (the
“UCC”) to such shares), (A) DTC shall be a
“protected purchaser” of such shares within the meaning
of Section 8-303 of the UCC and will acquire its interest in
the shares (including without limitation, all rights that such
Selling Shareholder had or has the power to transfer in such
shares) free and clear of any “adverse claim” within in
the meaning of Section 8-102 of the UCC, (B) under
Section 8-501 of the UCC, the Underwriters will acquire a
valid security entitlement in respect of such shares and
(C) no action based on any “adverse claim” within
the meaning of Section 8-102 of the UCC to such shares may be
asserted against the Underwriters with respect to such security
entitlement; for purposes of this representation, such Selling
Shareholder may assume that when such payment, delivery (if
necessary) and crediting
occur,
(x) such shares will have been registered in the name of Cede
or another nominee designated by DTC, in each case on the
Company’s share registry in accordance with its certificate
of incorporation, bylaws and applicable law, (y) DTC will be
registered as a “clearing corporation” within the
meaning of Section 8-102 of the UCC and (z) appropriate
entries to the accounts of the several Underwriters on the records
of DTC will have been made pursuant to the UCC.
(b) This
Agreement has been duly authorized, executed and delivered by or on
behalf of such Selling Shareholder.
(c) Such
Selling Shareholder (other than (i) entities affiliated with
J. & W. Seligman & Co. and (ii) ABS Capital Partners
and related entities) has duly and irrevocably authorized, executed
and delivered a power of attorney, in substantially the form
attached hereto as Exhibit II (the “Power of
Attorney”), appointing, Dean Goodermote and S. Craig Huke and
each of them, as attorney in fact (the “Attorneys in
fact”) with the authority specified therein; and the Power of
Attorney is a valid and binding agreement of such Selling
Shareholder, enforceable against such Selling Shareholder in
accordance with its terms.
(d) Such
Selling Shareholder (other than (i) entities affiliated with
J. & W. Seligman & Co. and (ii) the Selling
Shareholders set forth on Schedule E ) has duly and
irrevocably authorized, executed and delivered a custody agreement,
in substantially the form attached hereto as
Exhibit III (the “Custody Agreement”), with
Continental Stock Transfer & Trust Co. as custodian for such
Selling Shareholder (in such capacity, the
“Custodian”), pursuant to which such Selling
Shareholder has placed in custody with the Custodian for delivery
under this Agreement certificates for all of the shares of Stock to
be sold by such Selling Shareholder hereunder, in negotiable and
suitable form for transfer or delivery or accompanied by duly
executed instruments of transfer or assignment in blank; and the
Custody Agreement is a valid and binding agreement of such Selling
Shareholder, enforceable against such Selling Shareholder in
accordance with its terms.
(e) Such
Selling Shareholder has full right, power and authority to enter
into this Agreement, the Power of Attorney and the Custody
Agreement; the execution, delivery and performance of this
Agreement, the Power of Attorney and the Custody Agreement by such
Selling Shareholder, the consummation by such Selling Shareholder
of the transactions contemplated hereby and thereby and the
compliance by such Selling Shareholder with its obligations
hereunder and thereunder have been duly authorized and do not and
will not (with or without notice or lapse of time or both) conflict
with or result in a breach or violation of any of the terms or
provisions of, constitute a default under, or give rise to the
creation or imposition of any lien, encumbrance, security interest,
claim or charge upon the Stock to be sold by such Selling
Shareholder hereunder or any other property or assets of such
Selling Shareholder pursuant to, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which
such Selling Shareholder is a party or by which the Selling
Shareholder is bound or to which any of the property or assets of
the Selling Shareholder is subject, except (A) as to such
property and assets (other than the Stock) that are not material,
and (B) for such conflicts, breaches, violations, defaults,
rights, losses, creations or impositions that would not have an
adverse effect on the ability of the Selling Shareholder to perform
its obligations under the Agreement, nor will such actions result
in any violation of the provisions of the charter, by-laws or the
articles of partnership (or analogous governing instruments, as
applicable) of the Selling Shareholder, any law, statute, rule,
regulation, judgment, order or decree of any court or governmental
agency or body, domestic or foreign, having jurisdiction over the
Selling Shareholder or any property or assets of the Selling
Shareholder; and, except for the registration of the Stock under
the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under
applicable
state securities laws in connection with the purchase and
distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement, the
Power of Attorney or the Custody Agreement by such Selling
Shareholder, and the consummation by such Selling Shareholder of
the transactions contemplated hereby and thereby.
(f) The
representations and warranties of such Selling Shareholder in
Section 8 of the Custody Agreement are as of the date hereof
and as of each Closing Date true and correct.
(g) At the
respective times the Registration Statements and any amendments
thereto became or become effective and at
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