SMITH MICRO SOFTWARE,
INC.
4,500,000 Shares of Common
Stock
UBS Securities
LLC
C.E. Unterberg, Towbin, LLC
Needham & Company, LLC
Merriman Curhan Ford & Co.
ThinkEquity Partners LLC
As Representatives of the
several Underwriters listed
in Schedule 1 hereto
c/o UBS
Securities LLC
299 Park Avenue
New York, New York 10171
Smith Micro
Software, Inc., a Delaware corporation (the “Company”),
proposes to issue and sell to the several Underwriters listed in
Schedule 1 hereto (the “Underwriters”), for whom
you are acting as representatives (each a
“Representative” and collectively, the
“Representatives”), an aggregate of 4,000,000 shares of
Common Stock, par value $0.001 per share, of the Company and, at
the option of the Underwriters, up to an additional 675,000 shares
of Common Stock of the Company, and William W. Smith, Jr. (the
“Selling Stockholder”) proposes to sell to the
Underwriters 500,000 shares of Common Stock of the Company. The
aggregate of 4,500,000 shares to be sold by the Company and the
Selling Stockholder are herein referred to as the
“Underwritten Shares” and the aggregate of 675,000
additional shares to be sold by the Company at the option of the
Underwriters are herein referred to as the “Option
Shares.” The Underwritten Shares and the Option Shares are
herein referred to as the “Shares”. The shares of
Common Stock of the Company to be outstanding after giving effect
to the sale of the Shares are herein referred to as the
“Stock”.
The Company and
the Selling Stockholder hereby confirm their agreement with the
several Underwriters concerning the purchase and sale of the Shares
as follows:
1. Registration
Statement. The Company has prepared and filed with the Securities
and Exchange Commission (the “Commission”) under the
Securities Act of 1933, as amended, and the rules and regulations
of the Commission thereunder (collectively, the “Securities
Act”), a registration statement (File No. 333-137408),
including a prospectus relating to securities (the “Shelf
Securities”), including the Shares, to be issued from time to
time by the Company and any
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selling
stockholder. Such registration statement, as amended at the date of
this Agreement, including the information, if any, deemed pursuant
to Rule 430A, 430B or 430C under the Securities Act to be part
of the registration statement at the time of its effectiveness
(“Rule 430 Information”), is referred to herein as
the “Registration Statement” and the related prospectus
covering the Shelf Securities dated October 31, 2006 in the
form first used (or made available upon request of purchasers
pursuant to Rule 173 under the Securities Act) in connection
with the confirmation of sales of the Shares is referred to herein
as the “Basic Prospectus.” The Basic Prospectus, as
supplemented by the prospectus supplement specifically relating to
the Shares in the form first used (or made available upon request
of purchasers pursuant to Rule 173 under the Securities Act)
in connection with confirmation of sales of the Shares is
hereinafter referred to as the “Prospectus” and the
term “Preliminary Prospectus” means any preliminary
form of Prospectus. If the Company has filed an abbreviated
registration statement pursuant to Rule 462(b) under the Securities
Act (the “Rule 462 Registration Statement”), then
any reference herein to the term “Registration
Statement” shall be deemed to include such Rule 462
Registration Statement. Any reference in this Agreement to the
Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form
S-3 under the Securities Act, as of the effective date of the
Registration Statement or the date of such Preliminary Prospectus
or the Prospectus, as the case may be, and any reference to
“amend,” “amendment” or
“supplement” with respect to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any documents filed after such date
under the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder (collectively,
the “Exchange Act”) that are deemed to be incorporated
by reference therein. Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Registration
Statement and the Prospectus.
At or prior to the
time when sales of the Shares were first made (the “Time of
Sale”), the Company had prepared the following information
(collectively with the pricing information set out on Annex A
hereto, the “Time of Sale Information”): (i) a
Preliminary Prospectus dated November 30, 2006; and
(ii) each “free-writing prospectus” (as defined
pursuant to Rule 405 under the Securities Act) listed on Annex
A hereto.
2.
Purchase of the Shares by the Underwriters . (a) The
Company, as to 4,000,000 of the Underwritten Shares, and the
Selling Stockholder, as to 500,000 of the Underwritten Shares,
agree, severally and not jointly, to sell the Underwritten Shares
to the several Underwriters as provided in this Agreement, and each
Underwriter, on the basis of the representations, warranties and
agreements set forth herein and subject to the conditions set forth
herein, agrees, severally and not jointly, to purchase from the
Company and the Selling Stockholder at a purchase price per share
of $13.924 (the “Purchase Price”) the number of
Underwritten Shares (to be adjusted by you so as to eliminate
fractional shares) determined by multiplying the aggregate number
of Underwritten Shares to be sold by each of the Company and the
Selling Stockholder as set forth above by a fraction, the numerator
of which is the aggregate number of Underwritten Shares to be
purchased by such Underwriter as set forth opposite the name of
such Underwriter in Schedule 1 hereto and the denominator of
which is the aggregate number of Underwritten Shares to be
purchased by all the Underwriters from the Company and the Selling
Stockholder hereunder.
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In addition, the
Company agrees to issue and sell the Option Shares to the several
Underwriters as provided in this Agreement, and the Underwriters,
on the basis of the representations, warranties and agreements set
forth herein and subject to the conditions set forth herein, shall
have the option to purchase, severally and not jointly, from the
Company the Option Shares at the Purchase Price.
If any Option
Shares are to be purchased, the number of Option Shares to be
purchased by each Underwriter shall be the number of Option Shares
which bears the same ratio to the aggregate number of Option Shares
being purchased as the number of Underwritten Shares set forth
opposite the name of such Underwriter in Schedule 1 hereto (or
such number increased as set forth in Section 10 hereof) bears
to the aggregate number of Underwritten Shares being purchased from
the Company by the several Underwriters, subject, however, to such
adjustments to eliminate any fractional Shares as the
Representatives in their sole discretion shall make.
The Underwriters
may exercise the option to purchase the Option Shares at any time
in whole, or from time to time in part, on or before the thirtieth
day following the date of this Agreement, by written notice from
the Representatives to the Company. Such notice shall set forth the
aggregate number of Option Shares as to which the option is being
exercised and the date and time when the Option Shares are to be
delivered and paid for, which may be the same date and time as the
Closing Date (as hereinafter defined) but shall not be earlier than
the Closing Date nor later than the tenth full business day (as
hereinafter defined) after the date of such notice (unless such
time and date are postponed in accordance with the provisions of
Section 12 hereof). Any such notice shall be given at least
two business days prior to the date and time of delivery specified
therein.
(b) The
Company and the Selling Stockholder understand that the
Underwriters intend to make a public offering of the Shares as soon
after the effectiveness of this Agreement as in the judgment of the
Representatives is advisable, and initially to offer the Shares on
the terms set forth in the Prospectus. The Company and the Selling
Stockholder acknowledges and agree that the Underwriters may offer
and sell Shares to or through any affiliate of an Underwriter and
that any such affiliate may offer and sell Shares purchased by it
to or through any Underwriter.
(c) Payment
for the Shares shall be made by wire transfer in immediately
available funds to the account specified by the Company to the
Representatives in the case of the Underwritten Shares to be
purchased from the Company and to the account specified by the
Selling Stockholder to the Representatives in the case of the
Underwritten Shares to be sold by the Selling Stockholder, at the
offices of Morrison & Foerster LLP, 555 West Fifth Street, Los
Angeles, California 90013 at 10:00 A.M. New York City time on
December 19, 2006, or at such other time or place on the same
or such other date, not later than the fifth business day
thereafter, as the Representatives, the Company and the Selling
Stockholder may agree upon in writing in the case of the
Underwritten Shares or, in the case of the Option Shares, on the
date and at the time and place specified by the Representatives in
the written notice of the Underwriters’ election to purchase
such Option Shares. The time and date of such payment for the
Underwritten Shares is referred to herein as the “Closing
Date” and the time and date for such
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payment for the
Option Shares, if other than the Closing Date, are herein referred
to as the “Additional Closing Date”.
Payment for the
Shares to be purchased on the Closing Date or the Additional
Closing Date, as the case may be, shall be made against delivery
through the facilities of The Depository Trust Company
(“DTC”) to the Representatives for the respective
accounts of the several Underwriters of the Shares to be purchased
on such date in definitive form registered in such names and in
such denominations as the Representatives shall request in writing
not later than two full business days prior to the Closing Date or
the Additional Closing Date, as the case may be, with any transfer
taxes payable in connection with the sale of the Shares duly paid
by the Company and the Selling Stockholder, as the case may be. Any
certificates for the Shares will be made available for inspection
and packaging by the Representatives at the office of UBS
Securities LLC or its designated custodian not later than 1:00
P.M., New York City time, on the business day prior to the Closing
Date or the Additional Closing Date, as the case may be.
(d) Each of
the Company and the Selling Stockholder acknowledges and agrees
that the Underwriters are acting solely in the capacity of an
arm’s length contractual counterparty to the Company and the
Selling Stockholder with respect to the offering of Shares
contemplated hereby (including in connection with determining the
terms of the offering) and not as a financial advisor or a
fiduciary to, or an agent of, the Company, the Selling Stockholder
or any other person. Additionally, neither the Representatives nor
any other Underwriter is advising the Company, the Selling
Stockholder or any other person as to any legal, tax, investment,
accounting or regulatory matters in any jurisdiction. The Company
and the Selling Stockholder shall consult with their own advisors
concerning such matters and shall be responsible for making their
own independent investigation and appraisal of the transactions
contemplated hereby, and the Underwriters shall have no
responsibility or liability to the Company or the Selling
Stockholder with respect thereto. Any review by the Underwriters of
the Company, the transactions contemplated hereby or other matters
relating to such transactions will be performed solely for the
benefit of the Underwriters and shall not be on behalf of the
Company or the Selling Stockholder.
3.
Representations and Warranties of the Company . The Company
represents and warrants to each Underwriter and the Selling
Stockholder that:
(a)
Preliminary Prospectus. No order preventing or suspending
the use of any Preliminary Prospectus has been issued by the
Commission, and each Preliminary Prospectus, at the time of filing
thereof, complied in all material respects with the Securities Act
and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided that the Company makes no representation and
warranty with respect to any statements or omissions made in
reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Underwriter
through the Representatives expressly for use in any Preliminary
Prospectus.
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(b) Time
of Sale Information . The Time of Sale Information, at the Time
of Sale did not, and at the Closing Date and as of the Additional
Closing Date, as the case may be, will not, contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
provided that the Company makes no representation and
warranty with respect to any statements or omissions made in
reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Underwriter
through the Representatives expressly for use in such Time of Sale
Information. No statement of material fact included in the
Prospectus has been omitted from the Time of Sale Information and
no statement of material fact included in the Time of Sale
Information that is required to be included in the Prospectus has
been omitted therefrom.
(c)
Issuer Free Writing Prospectus. Other than the Preliminary
Prospectus and the Prospectus, the Company (including its agents
and representatives, other than the Underwriters in their capacity
as such) has not made, used, prepared, authorized, approved or
referred to and will not prepare, make, use, authorize, approve or
refer to any “written communication” (as defined in
Rule 405 under the Securities Act) that constitutes an offer to
sell or solicitation of an offer to buy the Shares (each such
communication by the Company or its agents and representatives
(other than a communication referred to in clause (i) below)
an “Issuer Free Writing Prospectus”) other than (i) any
communication not constituting a prospectus pursuant to
Section 2(a)(10)(a) of the Securities Act or Rule 134
under the Securities Act or (ii) the documents listed on Annex
A hereto and other written communications approved in writing in
advance by the Representatives. Each such Issuer Free Writing
Prospectus complied in all material respects with the Securities
Act, has been filed in accordance with the Securities Act (to the
extent required thereby) and, when taken together with the
Preliminary Prospectus accompanying, or delivered prior to delivery
of, such Issuer Free Writing Prospectus, did not, and at the
Closing Date and as of the Additional Closing Date, as the case may
be, will not, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company
makes no representation and warranty with respect to any statements
or omissions made in each such Issuer Free Writing Prospectus in
reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by such Underwriter
through the Representatives expressly for use in any Issuer Free
Writing Prospectus.
(d)
Registration Statement and Prospectus. The Registration
Statement has been declared effective by the Commission. No order
suspending the effectiveness of the Registration Statement has been
issued by the Commission and no proceeding for that purpose or
pursuant to Section 8A of the Securities Act against the
Company or related to the offering has been initiated or threatened
by the Commission; as of the applicable effective date of the
Registration Statement and any amendment thereto, the Registration
Statement complied and will comply in all material respects with
the Securities Act, and did not and will not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading; and as of the date of the
Prospectus and any amendment or supplement thereto and as of the
Closing Date and as of the Additional Closing Date, as the case may
be, the Prospectus will not contain any untrue
6
statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided that the Company makes no
representation and warranty with respect to any statements or
omissions made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by
such Underwriter through the Representatives expressly for use in
the Registration Statement and the Prospectus and any amendment or
supplement thereto.
(e)
Incorporated Documents. The documents incorporated by
reference in the Registration Statement, the Time of Sale
Information or the Prospectus, when they became effective or were
filed with the Commission, as the case may be, conformed in all
material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and none of such documents contained
any untrue statement of a material fact or omitted 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; and any further documents so
filed and incorporated by reference in the Registration Statement,
the Time of Sale Information or the Prospectus, when such documents
become effective or are filed with the Commission, as the case may
be, will conform in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading.
(f)
Financial Statements. The financial statements and the
related notes thereto of the Company and its consolidated
subsidiaries included or incorporated by reference in the
Registration Statement, the Time of Sale Information and the
Prospectus comply in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as
applicable, and present fairly the financial position of the
Company and its subsidiaries as of the dates indicated and the
results of their operations and the changes in their cash flows for
the periods specified; such financial statements have been prepared
in conformity with generally accepted accounting principles applied
on a consistent basis throughout the periods covered thereby, and
the supporting schedule included or incorporated by reference in
the Registration Statement present fairly the information required
to be stated therein; and the other financial information included
or incorporated by reference in the Registration Statement, the
Time of Sale Information and the Prospectus has been derived from
the accounting records of the Company and its subsidiaries and
presents fairly the information shown thereby. The non-GAAP
financial measures and the related reconciliation to operating
(loss) income, net (loss) income and net
(loss) income per share set forth in the Time of Sale
Information and the Prospectus was derived from the Company’s
quarterly consolidated financial statements prepared in accordance
with the previous sentence and complies in all respects with the
requirements of paragraph (e) of Item 10 of
Regulation S-K for the use of non-GAAP financial measures in
SEC filings.
(g) No Material
Adverse Change. Since the date of the most recent financial
statements of the Company included or incorporated by reference in
the Registration Statement, the Time of Sale Information and the
Prospectus, (i) there has not been any material change in the
capital stock or long-term debt of the Company or any of its
subsidiaries, or any dividend or distribution of any kind declared,
set aside for payment, paid or made by the Company on
any
7
class of
capital stock, or any material adverse change, or any development
involving a prospective material adverse change, in or affecting
the business, properties, management, financial position,
stockholders’ equity, results of operations or prospects of
the Company and its subsidiaries taken as a whole; (ii) neither the
Company nor any of its subsidiaries has entered into any
transaction or agreement that is material to the Company and its
subsidiaries taken as a whole or incurred any liability or
obligation, direct or contingent, that is material to the Company
and its subsidiaries taken as a whole; and (iii) neither the
Company nor any of its subsidiaries has sustained any material loss
or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any
labor disturbance or dispute or any action, order or decree of any
court or arbitrator or governmental or regulatory authority, except
in each case as otherwise disclosed in the Registration Statement,
the Time of Sale Information and the Prospectus.
(h)
Organization and Good Standing. The Company and each of its
subsidiaries have been duly organized and are validly existing and
in good standing under the laws of their respective jurisdictions
of organization, are duly qualified to do business and are in good
standing in each jurisdiction in which their respective ownership
or lease of property or the conduct of their respective businesses
requires such qualification, and have all power and authority
necessary to own or hold their respective properties and to conduct
the businesses in which they are engaged, except where the failure
to be so qualified or have such power or authority would not,
individually or in the aggregate, have a material adverse effect on
the business, properties, management, financial position,
stockholders’ equity, results of operations or prospects of
the Company and its subsidiaries taken as a whole (a
“Material Adverse Effect”). The Company does not own or
control, directly or indirectly, any corporation, association or
other entity other than the subsidiaries listed in Exhibit B
hereto. The Company has no subsidiary that is a “significant
subsidiary” (as such term is defined in Rule 1-02(w) of
Regulation S-X, other than PhoTags, Inc. and Allume Systems,
Inc.
(i)
Capitalization. The Company has an authorized capitalization
as set forth in the Registration Statement, the Time of Sale
Information and the Prospectus under the heading
“Capitalization”; all the outstanding shares of capital
stock of the Company (including the Shares to be sold by the
Selling Stockholder) have been duly and validly authorized and
issued and are fully paid and non-assessable and are not subject to
any pre-emptive or similar rights; except as described in or
expressly contemplated by the Time of Sale Information and the
Prospectus, there are no outstanding rights (including, without
limitation, pre-emptive rights), warrants or options to acquire, or
instruments convertible into or exchangeable for, any shares of
capital stock or other equity interest in the Company or any of its
subsidiaries, or any contract, commitment, agreement, understanding
or arrangement of any kind relating to the issuance of any capital
stock of the Company or any such subsidiary, any such convertible
or exchangeable securities or any such rights, warrants or options;
the capital stock of the Company conforms in all material respects
to the description thereof contained or incorporated by reference
in the Registration Statement, the Time of Sale Information and the
Prospectus; and all the outstanding shares of capital stock or
other equity interests of each subsidiary of the Company (other
than directors’ qualifying shares or other nominal shares
held by other shareholders as required in certain jurisdictions)
have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned directly or indirectly by the
Company, free and clear of any lien, charge, encumbrance, security
interest, restriction on voting or transfer or any other claim of
any third party.
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(j) Due
Authorization. The Company has full right, power and authority
to execute and deliver this Agreement and to perform its
obligations hereunder; and all action required to be taken for the
due and proper authorization, execution and delivery by it of this
Agreement and the consummation by it of the transactions
contemplated hereby has been duly and validly taken.
(k)
Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(l) The
Shares. The Shares to be issued and sold by the Company
hereunder have been duly authorized by the Company and, when issued
and delivered and paid for as provided herein, will be duly and
validly issued and will be fully paid and nonassessable and will
conform to the descriptions thereof in the Time of Sale Information
and the Prospectus; and the issuance of the Shares is not subject
to any preemptive or similar rights. The Shares to be sold by the
Selling Stockholder hereunder have been duly authorized and validly
issued by the Company and are fully paid and
nonassessable.
(m) No
Violation or Default. Neither the Company nor any of its
subsidiaries is (i) in violation of its charter or by-laws or
similar organizational documents; (ii) in default, and no
event has occurred that, with notice or lapse of time or both,
would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject; or (iii) in
violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory
authority, except, in the case of clauses (ii) and (iii)
above, for any such default or violation that would not,
individually or in the aggregate, have a Material Adverse
Effect.
(n) No
Conflicts. The execution, delivery and performance by the
Company of this Agreement, the issuance and sale of the Shares to
be sold by the Company and the consummation by the Company of the
transactions contemplated by this Agreement will not
(i) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, (ii) result in any violation of the provisions of the
charter or by-laws or similar organizational documents of the
Company or any of its subsidiaries or (iii) result in the
violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory
authority, except, in the case of clauses (i) and
(iii) above, for any such conflict, breach, violation,
default, lien, charge or encumbrance that could not, individually
or in the aggregate, have a Material Adverse Effect or which would
not have a material adverse effect on the Company’s ability
to consummate the transactions contemplated by this Agreement or
which would not give rise to any liability for any Underwriter or
purchaser of Stock in the offering contemplated hereby.
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(o) No
Consents Required. No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or
governmental or regulatory authority is required for the execution,
delivery and performance by the Company of this Agreement, the
issuance and sale of the Shares to be sold by the Company and the
consummation by the Company of the transactions contemplated by
this Agreement, except for such consents, approvals,
authorizations, orders and registrations or qualifications as may
be required under applicable state securities laws in connection
with the purchase and distribution of the Shares by the
Underwriters.
(p) Legal
Proceedings. Except as described in the Registration Statement,
the Time of Sale Information and the Prospectus, there are no
legal, governmental or regulatory investigations, actions, suits or
proceedings pending to which the Company or any of its subsidiaries
is or may be a party or to which any property of the Company or any
of its subsidiaries is or may be the subject that, individually or
in the aggregate, if determined adversely to the Company or any of
its subsidiaries, could reasonably be expected to have a Material
Adverse Effect or materially and adversely affect the ability of
the Company to perform its obligations hereunder; no such
investigations, actions, suits or proceedings are threatened or, to
the knowledge of the Company, contemplated by any governmental or
regulatory authority or threatened by others; and (i) there
are no current or pending legal, governmental or regulatory
actions, suits or proceedings that are required under the
Securities Act to be described in the Registration Statement that
are not so described in the Registration Statement, the Time of
Sale Information and the Prospectus and (ii) there are no statutes,
regulations or contracts or other documents that are required under
the Securities Act to be filed as exhibits to the Registration
Statement or described in the Registration Statement or the
Prospectus that are not so filed as exhibits to the Registration
Statement or described in the Registration Statement, the Time of
Sale Information and the Prospectus.
(q)
Independent Accountants. Singer, Lewak, Greenbaum &
Goldstein, LLP, who have certified certain financial statements of
the Company and its subsidiaries as of and for the year ended
December 31, 2005, and Deloitte & Touche LLP who have
certified financial statements of the Company and its subsidiaries
as of and for the years ended December 31, 2003 and
December 31, 2004, are each an independent registered public
accounting firm with respect to the Company and its subsidiaries
within the applicable rules and regulations adopted by the
Commission and the Public Company Accounting Oversight Board
(United States) and as required by the Securities Act. There did
not exist any disagreements between the Company and its registered
independent public accounting firms Deloitte & Touche LLP and
BDO Seidman, LLP.
(r) Title to
Real and Personal Property. Except as described in the Time of
Sale Information and the Prospectus, the Company and its
subsidiaries have good and marketable title in fee simple to, or
have valid rights to lease or otherwise use, all items of real and
personal property that are material to the respective businesses of
the Company and its subsidiaries, in each case free and clear of
all liens, encumbrances, claims and defects and imperfections of
title except those that (i) do not materially interfere with
the use made and proposed to be made of such property by the
Company and its subsidiaries or (ii) could not reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect.
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(s) Title
to Intellectual Property. The Company and its subsidiaries own
or possess adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses and
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures) necessary for the conduct of their respective
businesses; and the conduct of their respective businesses will not
conflict in any material respect with any such rights of others,
and the Company and its subsidiaries have not received any notice
of any claim of infringement or conflict with any such rights of
others.
(t) No
Undisclosed Relationships. No relationship, direct or indirect,
exists between or among the Company or any of its subsidiaries, on
the one hand, and the directors, officers, stockholders, customers
or suppliers of the Company or any of its subsidiaries, on the
other, that is required by the Securities Act to be described in
the Registration Statement and the Prospectus and that is not so
described in such documents and in the Time of Sale
Information.
(u)
Investment Company Act. The Company is not and, after giving
effect to the offering and sale of the Shares and the application
of the proceeds thereof as described in the Registration Statement,
the Time of Sale Information and the Prospectus, will not be
required to register as an “investment company” or an
entity “controlled” by an “investment
company” within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission
thereunder (collectively, “Investment Company
Act”).
(v)
Taxes. The Company and its subsidiaries have paid all
federal, state, local and foreign taxes and filed all tax returns
required to be paid or filed through the date hereof; and except as
otherwise disclosed in the Registration Statement, the Time of Sale
Information and the Prospectus, there is no tax deficiency that has
been, or could reasonably be expected to be, asserted against the
Company or any of its subsidiaries or any of their respective
properties or assets, except for any such failure to file or pay or
any such deficiency that would not, individually or in the
aggregate, have a Material Adverse Effect.
(w)
Public Utility Holding Company Act. Neither the Company nor
any of its subsidiaries is a “holding company” or a
“subsidiary company” of a holding company or an
“affiliate” thereof within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(x)
Licenses and Permits. The Company and its subsidiaries
possess all licenses, certificates, permits and other
authorizations issued by, and have made all declarations and
filings with, the appropriate federal, state, local or foreign
governmental or regulatory authorities that are necessary for the
ownership or lease of their respective properties or the conduct of
their respective businesses as described in the Registration
Statement, the Time of Sale Information, and the Prospectus, except
where the failure to possess or make the same would not,
individually or in the aggregate, have a Material Adverse Effect;
and except as described in the Registration Statement, the Time of
Sale Information and the Prospectus, neither the Company nor any of
its subsidiaries has received notice of any revocation or
modification of any such license, certificate, permit or
authorization or has any reason to believe that any such license,
certificate, permit or authorization will not be renewed in the
ordinary course.
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(y) No
Labor Disputes. No labor disturbance by or dispute with
employees of the Company or any of its subsidiaries exists or, to
the knowledge of the Company, is contemplated or threatened and the
Company is not aware of any existing or imminent labor disturbance
by, or dispute with, the employees of any of its or its
subsidiaries’ principal suppliers, contractors or customers,
except as would not have a Material Adverse Effect.
(z)
Compliance with Environmental Laws. (i) The Company and
its subsidiaries (A) are in compliance with any and all
applicable federal, state, local and foreign laws, rules,
regulations, requirements, decisions and orders relating to the
protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants
(collectively, “Environmental Laws”); (B) have
received and are in compliance with all permits, licenses,
certificates or other authorizations or approvals required of them
under applicable Environmental Laws to conduct their respective
businesses; and (C) have not received notice of any actual or
potential liability for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, and (ii) there are no costs or
liabilities associated with Environmental Laws of or relating to
the Company or its subsidiaries, except in any such case for any
such failure to comply, or failure to receive required permits,
licenses or approvals, or cost or liability, as would not,
individually or in the aggregate, have a Material Adverse
Effect.
(aa)
Compliance with ERISA. Each employee benefit plan, within
the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), that is
maintained, administered or contributed to by the Company or any of
its affiliates for employees or former employees of the Company and
its affiliates has been maintained in compliance with its terms and
the requirements of any applicable statutes, orders, rules and
regulations, including but not limited to ERISA and the Internal
Revenue Code of 1986, as amended (the “Code”); no
prohibited transaction, within the meaning of Section 406 of
ERISA or Section 4975 of the Code, has occurred with respect
to any such plan excluding transactions effected pursuant to a
statutory or administrative exemption; and for each such plan that
is subject to the funding rules of Section 412 of the Code or
Section 302 of ERISA, no “accumulated funding
deficiency” as defined in Section 412 of the Code has
been incurred, whether or not waived, and the fair market value of
the assets of each such plan (excluding for these purposes accrued
but unpaid contributions) exceeds the present value of all benefits
accrued under such plan determined using reasonable actuarial
assumptions, except as could not, individually or in the aggregate,
have a Material Adverse Effect.
(bb) Disclosure
Controls . The Company and its subsidiaries maintain an
effective system of “disclosure controls and
procedures” (as defined in Rule 13a-15(e) of the
Exchange Act) that is designed to ensure that information required
to be disclosed by the Company in reports that it files or submits
under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the
Commission’s rules and forms, including controls and
procedures designed to ensure that such information is accumulated
and communicated to the Company’s management as appropriate
to allow timely decisions regarding required disclosure. The
Company and its subsidiaries have carried out evaluations of the
effectiveness of their disclosure controls and procedures as
required by Rule 13a-15 of the Exchange Act.
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(cc)
Accounting Controls. The Company and its subsidiaries
maintain systems of “internal control over financial
reporting” (as defined in Rule 13a-15(f) of the Exchange
Act) that comply with the requirements of the Exchange Act and have
been designed by, or under the supervision of, their respective
principal executive and principal financial officers, or persons
performing similar functions, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles,
including, but not limited to internal accounting controls
sufficient to provide reasonable assurance 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 generally
accepted accounting principles and to maintain asset
accountability; (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 the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. Except
as disclosed in the Registration Statement, the Time of Sale
Information and the Prospectus, there are no material weaknesses in
the Company’s internal controls.
(dd)
Insurance. The Company and its subsidiaries have insurance
covering their respective properties, operations, personnel and
businesses, including business interruption insurance, which
insurance is in amounts and insures against such losses and risks
as are customary within its industry and are adequate to protect
the Company and its subsidiaries and their respective businesses;
and neither the Company nor any of its subsidiaries has
(i) received notice from any insurer or agent of such insurer
that capital improvements or other expenditures are required or
necessary to be made in order to continue such insurance or
(ii) 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 simi
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