COLEMAN CABLE, INC. 7,900,000 Shares of Common Stock PURCHASE/PLACEMENT AGREEMENT October 3, 2006
EXHIBIT 1.1
XXXXXXX CABLE, INC.
7,900,000 Shares of Common Stock
October 3, 2006
October 3, 2006
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Xxxxxxx Cable, Inc., a Delaware corporation (the “Company”), proposes to issue and
sell to you, Friedman, Billings, Xxxxxx & Co., Inc. (“FBR”), as initial purchaser, a number
of shares of the Company’s common stock, $0.001 par value per share (the “Common Stock”),
equal to 7,900,000 shares less the number of Regulation D Shares sold in the Private Placement
(each as defined herein) (the “144A/Regulation S Shares”).
FBR will also act as the Company’s sole placement agent in connection with the Company’s offer
and sale to certain “Accredited Investors” (as such term is defined in Regulation D
(“Regulation D”) under the Securities Act of 1933, as amended (the “Securities
Act”) of (a) that number of shares of Common Stock equal to the difference between 7,900,000
shares and the number of 144A/Regulation S Shares (the “Regulation D Shares” and, together
with the 144A/Regulation S Shares, the “Initial Shares”), and (b) the Placed Option Shares
(as defined herein), as set forth in the Final Memorandum (as defined herein) under the headings
“Plan of Distribution” and “Private Placement.” The offer and sale of the shares described in the
first sentence of this paragraph (the “Private Placement Shares”) is referred to herein as
the “Private Placement.”
In addition, the Company proposes to grant to you the option described in Section 1(c) hereof
to purchase or place all or any part of 500,000 additional shares of Common Stock (the “Option
Shares” and, together with the Initial Shares, the “Shares”) to cover additional
allotments, if any.
The offer and sale of the Shares to you and to the Accredited Investors, respectively, will be
made without registration of the Shares under the Securities Act and the rules and regulations
thereunder (the “Securities Act Regulations”), in reliance upon the exemption from the
registration requirements of the Securities Act provided by Section 4(2) thereof. You have advised
the Company that you will make offers and sales (“Exempt Resales”) of the 144A/Regulation S
Shares and the Purchased Option Shares (as defined herein) purchased by you hereunder (such shares
referred to collectively herein as “Resale Shares”) in accordance with Section 3 hereof on
the terms set forth in the Final Memorandum (as defined herein), as soon as you deem advisable
after this Agreement has been executed and delivered.
In connection with the offer and sale of the Shares, the Company has prepared (i) a
preliminary offering memorandum, subject to completion, dated September 11, 2006 (the
“Preliminary Memorandum”); (ii) an Offering Memorandum Supplement dated October 2, 2006
(the “Memorandum Supplement”); and (iii) a final offering memorandum, dated the date hereof
and as it may be amended or supplemented from time to time (the “Final Memorandum”). Each
of the Preliminary Memorandum, the Memorandum Supplement and the Final Memorandum sets forth
certain information concerning the Company and the Shares. The Company hereby confirms that it has
authorized the use of the Preliminary Memorandum, the Memorandum Supplement and the Final
Memorandum in connection with (i) the offering and resale of the Resale Shares by FBR and by all
dealers to whom Resale Shares may be sold and (ii) the Private Placement. Any references to the
Preliminary Memorandum, the Memorandum Supplement or the Final Memorandum shall be deemed to
include all exhibits and annexes thereto.
It is understood and acknowledged that holders (including subsequent transferees) of the
Shares will have the registration rights set forth in the registration rights agreement between the
Company and FBR, which shall be in substantially the form attached hereto as Exhibit A and
dated as of the Closing Time (as defined herein) (the “Registration Rights Agreement”), for
so long as such securities constitute “Registrable Shares” (as defined in the Registration Rights
Agreement).
Pursuant to, and subject to the terms of, the Registration Rights Agreement, the Company will
agree to file with the Securities and Exchange Commission (the “Commission”), under the
circumstances set forth therein, (i) a registration statement on Form S-1 under the Securities Act
for the initial public offering of Common Stock, that in accordance with the Registration Rights
Agreement, includes the resale by holders of the Registrable Shares and/or (ii) a shelf
registration statement on Form S-1 or such other appropriate form pursuant to Rule 415 under the
Securities Act relating to the resale by holders of the Registrable Shares, and to use commercially
reasonable efforts to cause any such registration statement to be declared effective.
The Company and FBR agree as follows:
1. Sale and Purchase.
(a) 144A/Regulation S Shares. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, the Company agrees
to issue and sell to FBR and FBR agrees to purchase from the Company the
144A/Regulation S Shares at a purchase price of $13.95 per share (the
“144A/Regulation S Purchase Price”).
(b) Regulation D Shares. The Company agrees to issue and sell the Regulation D
Shares and, to the extent that FBR exercises the option described in Section 1(c),
the Placed Option Shares, for which the Accredited Investors have subscribed
pursuant to the terms and conditions set forth in the subscription agreements
substantially in the forms attached to the Preliminary Memorandum as Annex III and
Annex IV, as applicable (each a “Subscription Agreement”). The Private
Placement Shares will be sold by the Company pursuant to this Agreement at a price
of $15.00 per share (the “Regulation D Purchase Price”). As compensation
for the services to be provided by FBR in connection with the Private Placement, the
Company shall pay to FBR at each of the Closing Time and any Secondary Closing Time
(as defined herein), to the extent applicable, an
- 2 -
amount equal to $1.05 per Private Placement Share sold at such time (the
“Placement Fee”).
(c) Option Shares. Upon the basis of the representations and warranties and
subject to the other terms and conditions herein set forth, the Company hereby
grants an option to FBR to (i) purchase from the Company, as initial purchaser, up
to an aggregate of 500,000 Option Shares at the 144A/Regulation S Purchase Price per
share (the “Purchased Option Shares”); and (ii) place, as exclusive
placement agent for the Company, up to that number of Option Shares remaining, after
subtracting any Purchased Option Shares with respect to which FBR has exercised its
option pursuant to clause (i), at the Regulation D Purchase Price per share (the
“Placed Option Shares”). The option granted hereby will expire 30 days
after the date hereof and may be exercised in whole or in part from time to time in
one or more installments, including at the Closing Time, only for the purpose of
covering additional allotments which may be made in connection with the offering and
distribution of the Initial Shares upon written notice by FBR to the Company setting
forth (i) the number of Option Shares as to which FBR is then exercising the option,
(ii) the names and denominations to which the Option Shares are to be delivered in
book entry form through the facilities of The Depository Trust Company (“DTC”) (iii)
the number of Option Shares that will be Purchased Option Shares and the number of
Option Shares that will be Placed Option Shares, and (iv) the time and date of
payment for and delivery of such Option Shares in book-entry form. Any such time
and date of delivery shall be determined by FBR, but shall not be later than five
full business days nor earlier than two full business day after the exercise of said
option, nor in any event prior to the Closing Time, unless otherwise agreed in
writing by FBR and the Company.
2. Payment and Delivery.
(a) 144A/Regulation S Shares. The closing of FBR’s purchase of the
144A/Regulation S Shares shall be held at the office of Xxxxxx Xxxxxxx Xxxxx &
Xxxxxxxxxxx LLP, 000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, XX 00000
(unless another place shall be agreed upon by FBR and the Company). At the closing,
subject to the satisfaction or waiver of the closing conditions set forth herein,
FBR shall pay to the Company the aggregate purchase price for the 144A/Regulation S
Shares by wire transfer of immediately available funds to an account previously
designated by the Company in writing against delivery by the Company of the
144A/Regulation S Shares to FBR for FBR’s account through the facilities of The
Depository Trust Company (“DTC”) in such denominations and registered in
such names as FBR shall specify. Such payment and delivery shall be made at 10:00
a.m., New York City time, on the fifth business day after the date hereof (unless
another time, not later than ten business days after such date, shall be agreed to
by FBR and the Company). The time at which such payment and delivery are actually
made is hereinafter called the “Closing Time.”
- 3 -
(b) Regulation D Shares. At the Closing Time, subject to the satisfaction of
the closing conditions set forth herein, FBR shall pay to the Company the aggregate
applicable purchase price received by FBR prior to the Closing Time (net of any
Placement Fee, if the Placement Fee is withheld as provided in the immediately
following paragraph) for the Regulation D Shares against the Company’s delivery of
the Regulation D Shares to FBR, as placement agent in respect of such shares, in
book-entry form through the facilities of DTC for each such Accredited Investor’s
account. At FBR’s option, it may delay the placement of up to 3% of Regulation D
Shares (but not to exceed $1.0 million in the aggregate net proceeds from the sale
of all Regulation D Shares) (the “Extended Regulation D Shares”) for an
additional five business days after the Closing Time (the “Extended Regulation D
Closing Date”) at which time FBR shall cause the Bank of New York, as escrow
agent, to the extent it has available funds transferred to it by Accredited
Investors, to pay the Company the aggregate applicable purchase price for the
Extended Regulation D Shares placed by FBR (net of any Placement Fee, if the
Placement Fee is withheld as provided herein) against the Company’s delivery of the
Extended Regulation D Shares to the purchasers thereof, in book-entry form through
the facilities of DTC. Extended Regulation D Shares may only be placed with
Accredited Investors who have committed to purchase Regulation D Shares before the
Closing Time. The time at which payment and delivery on an Extended Regulation D
Closing Date is actually made is hereinafter sometimes called the “Extended
Closing Time.”
At each of the Closing Time or any Extended Closing Time, unless FBR has withheld such
amount from the applicable purchase price paid by FBR to the Company with respect to the
Regulation D Shares placed by FBR on such date, the Company shall pay to FBR, by wire
transfer of immediately available funds to an account or accounts designated by FBR, any
Placement Fee amount payable with respect to the Regulation D Shares for which the Company
shall have received the purchase price.
(c) Option Shares. The closing of FBR’s purchase or placement of the Option
Shares shall occur from time to time at the office of Xxxxxx Xxxxxxx Xxxxx &
Scarborough LLP, 000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, XX 00000
(unless another place shall be agreed upon by FBR and the Company). On the
applicable Secondary Closing Time (as defined herein), subject to the satisfaction
or waiver of the closing conditions set forth herein, FBR shall pay to the Company
the aggregate applicable purchase price for the Option Shares then purchased or
placed by FBR (net of any Placement Fee with respect to any Placed Option Shares) by
wire transfer of immediately available funds against the Company’s delivery of the
Option Shares. Such payment and delivery shall be made at 10:00 a.m., New York City
time, on each Secondary Closing Time. The Option Shares shall be delivered in
book-entry form through the facilities of DTC, in such names and in such
denominations as FBR shall specify. The time at which payment by FBR for and
delivery by the Company of any Option Shares are actually made is referred to herein
as a “Secondary Closing Time.”
- 4 -
3. Offering of the Shares; Restrictions on Transfer.
(a) FBR represents and warrants to and agrees with the Company that (i) it has
not solicited and will not solicit any offer to buy, and has not and will not make
any offer to sell, the Shares by means of any form of general solicitation or
general advertising (within the meaning of Regulation D), and, with respect to
Resale Shares sold in reliance on Regulation S under the Securities Act
(“Regulation S”), by means of any directed selling efforts (within the
meaning of Regulation S) in the United States; (ii) it is an Accredited Investor;
(iii) it has solicited and will solicit offers to buy the Resale Shares only from,
and has offered and will offer, sell and deliver the Resale Shares only to, (A)
persons who it reasonably believes to be “qualified institutional buyers” (as
defined in Rule 144A under the Securities Act) (“QIBs”) or, if any such
person is buying for one or more institutional accounts for which such person is
acting as fiduciary or agent, only when such person has represented to it that each
such account is a QIB to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under Rule
144A and who provide to it a fully completed and executed purchaser’s letter
substantially in the form of Annex I to the Preliminary Memorandum or Final
Memorandum, and (B) persons (each a “Regulation S Purchaser”) to whom, and
under which circumstances, it reasonably believes offers and sales of Resale Shares
may be made without registration under the Securities Act in reliance on Regulation
S thereunder, and who provide to it a fully completed and executed purchaser’s
letter substantially in the form of Annex II to the Preliminary Memorandum or Final
Memorandum (such persons specified in clauses (A) and (B) being referred to herein
as the “Eligible Purchasers”); (iv) (A) it is familiar with the rules and
restrictions set forth in Regulation S and that it has not undertaken, and will not
undertake, any activity for the purpose of, or that could reasonably be expected to
have the effect of, conditioning the market for any Resale Shares being offered in
reliance on Regulation S, (B) it will not offer or sell the Shares as part of its
distribution at any time and otherwise prior to the expiration of the one year
distribution compliance period (as defined under Regulation S), in the United States
or to or for the account or benefit of a U.S. person (as defined under Regulations
S) except as permitted to QIBs pursuant to Rule 144A, pursuant to an available
exemption from the registration requirements of the Securities Act, or pursuant to
the registration requirements of the Securities Act and, in each case, in compliance
with applicable law, (C) it will not engage in hedging transactions with regard to
any Shares prior to the expiration of the one year distribution compliance period
unless in compliance with the Securities Act, (D) at or prior to confirmation of a
sale of such Shares to a distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases such Shares from it during the
one year distribution compliance period, it will have sent a confirmation or notice
to such purchaser stating that the purchaser is subject to the same restrictions on
offers and sales that apply to a distributor under Regulation S; (v) it has
solicited and will solicit offers to buy the Private Placement Shares only from, and
has offered and will offer only to, persons it reasonably believes are Accredited
Investors and who provide to it a fully completed and executed
- 5 -
purchaser’s letter substantially in the form of Appendix III or IV to the
Preliminary Memorandum or Final Memorandum; and (vi) it will resell and place the
Shares in such a manner so as not to require any Xxxx-Xxxxx-Xxxxxx Act filings in
connection herewith.
(b) The Company represents and warrants to and agrees with FBR that it
(together with its affiliates) has not solicited and will not solicit any offer to
buy, and it (together with its affiliates) has not offered and will not offer to
sell, the Shares by means of any form of general solicitation or general advertising
(within the meaning of Regulation D), and, with respect to any investors identified
in writing by the Company to FBR, if any, it has solicited and will solicit offers
to buy the Private Placement Shares only from, and has offered and will offer, sell
or deliver the Private Placement Shares only to, Accredited Investors. The Company
also represents and warrants and agrees that it will sell the Private Placement
Shares only to persons that have provided to the Company a fully completed and
executed Subscription Agreement in the form of Annex III or Annex IV, as applicable,
to the Preliminary Memorandum or Final Memorandum.
(c) The Company represents and warrants to and agrees with FBR that, assuming
the accuracy of FBR’s representations and warranties and FBR’s compliance with its
obligations set forth in this Section 3, (i) none of the Company or any of its
affiliates or any person acting on behalf of it or its affiliates has engaged in,
nor will any of them engage in, any directed selling efforts (as that term is
defined in Regulation S) with respect to the Shares; and (ii) the Company or any of
its affiliates, and any person acting on behalf of it or its affiliates (in each
case, other than FBR as to which no representation is made) have complied, and will
comply, with the offering restrictions requirement of Regulation S.
(d) FBR represents and warrants that it has not offered, sold or placed, nor
will it offer, sell or place, any Shares in a jurisdiction outside of the United
States except in material compliance with all applicable laws, regulations and rules
of those countries.
(e) Each of FBR and the Company represents and warrants to the other that no
action is being taken by it or is contemplated that would permit an offering or sale
of the Shares or possession or distribution of the Preliminary Memorandum, the
Memorandum Supplement or the Final Memorandum or any other offering material
relating to the Shares in any jurisdiction where, or in any other circumstances in
which, action for those purposes is required (other than in jurisdictions where such
action has been duly taken by counsel for FBR).
(f) FBR and the Company agree that FBR may arrange (i) for the private offer
and sale of a portion of the Resale Shares to a limited number of Eligible
Purchasers (which may include affiliates of FBR), and (ii) for the private offer and
sale of the Private Placement Shares by the Company to Accredited Investors (which
may include affiliates of FBR), in each case under restrictions and other
circumstances designed to preclude a distribution of the Shares that
- 6 -
would require registration of the Shares under the Securities Act, including
those restrictions and procedures set forth in this Section 3.
(g) FBR and the Company agree that the Shares may be resold or otherwise
transferred by the holders thereof only if the offer and sale of such Shares are
registered under the Securities Act or if an exemption from registration is
available. FBR hereby establishes and agrees that it has observed and will observe
the following procedures in connection with offers, sales and subsequent resales or
other transfers of any Shares purchased or placed by FBR:
(i) Sales only to Eligible Purchasers. Initial offers and sales of the
Resale Shares will be made only in Exempt Resales by FBR to investors that FBR
reasonably believes to be Eligible Purchasers and who have delivered to the Company
and FBR a fully completed and executed purchaser’s letter substantially in the form
of Annex I or II, as applicable, to the Preliminary Memorandum or Final Memorandum.
(ii) No general solicitation. The Shares will be offered only by
approaching prospective purchasers on an individual basis with whom FBR has an
existing relationship. No general solicitation or general advertising within the
meaning of Regulation D will be used in connection with the offering of the Shares.
(iii) Restrictions on transfer. Each of the Preliminary Memorandum and
the Final Memorandum shall state that the offer and sale of the Shares have not been
and will not be registered (other than pursuant to the Registration Rights
Agreement) under the Securities Act, and that no resale or other transfer of any
Shares or any interest therein prior to the date that is two years (or such shorter
period as is prescribed by Rule 144(k) under the Securities Act as then in effect)
after the later of the original issuance of such Shares and the last date on which
the Company or any “affiliate” (as defined in Rule 144 under the Securities Act) of
the Company was the owner of such Shares may be made by a purchaser of such Shares
except as follows:
(A) to the Company or any subsidiary thereof,
(B) pursuant to a registration statement that has been declared
effective under the Securities Act,
(C) for so long as the Shares are eligible for resale pursuant to Rule
144A under the Securities Act, in a transaction complying with the
requirements of Rule 144A to a person who such purchaser reasonably believes
is a QIB that purchases for its own account or for the account of a QIB and
to whom notice is given that the offer, resale, pledge or transfer is being
made in reliance on Rule 144A,
- 7 -
(D) pursuant to offers and sales to non-U.S. persons that occur outside
the United States within the meaning of Regulation S, with the consent of
the Company,
(E) to an Accredited Investor that is acquiring the Shares for his, her
or its own account or an investment adviser who is acquiring the Shares for
the account of an Accredited Investor for investment purposes and not with a
view to, or for offer or sale in connection with, any distribution thereof,
or
(F) pursuant to any other available exemption from the registration
requirements of the Securities Act,
in each case in accordance with the restrictions on transfer set forth in the
Preliminary Memorandum and the Final Memorandum and any applicable federal
securities laws and the securities laws of any state of the United States or other
jurisdiction.
(h) FBR and the Company agree that each initial resale of Resale Shares by FBR
(and each purchase of Resale Shares from the Company by FBR) in accordance with this
Section 3 shall be deemed to have been made on the basis of and in reliance on the
representations, warranties, covenants and agreements (including, without
limitation, agreements with respect to indemnification and contribution) of the
Company herein contained.
(i) Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Securities Act, the global
certificates representing the Shares (and all securities issued in exchange therefor
or in substitution thereof) shall bear the following legend (in addition to any
other legends that may be required by DTC or deemed necessary by the Company to
ensure compliance with the Securities Act):
THIS SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS SECURITY
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF XXXXXXX CABLE, INC. (THE
“COMPANY”), AND ITS AGENTS THAT, ABSENT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT: (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY (I) TO THE COMPANY OR A SUBSIDIARY THEREOF, (II) TO A “QUALIFIED INSTITUTIONAL BUYER”
PURSUANT TO RULE 144A, (III) TO A PERSON WHO IS NOT A UNITED STATES PERSON IN AN “OFFSHORE”
TRANSACTION PURSUANT TO REGULATION S OR (IV) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION
AS PERMITTED UNDER THE
- 8 -
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, AS CONFIRMED TO THE COMPANY BY AN
OPINION OF COUNSEL IF REQUESTED, SUBJECT IN EACH OF THE FOREGOING CASES TO COMPLIANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY JURISDICTION. THE HOLDER OF THIS SECURITY
ACKNOWLEDGES THAT THE COMPANY SHALL REFUSE TO REGISTER ANY SALE OR TRANSFER OF THE SECURITY
NOT MADE IN ACCORDANCE WITH THE FOREGOING PROVISIONS.
4. Representations and Warranties of the Company.
The Company hereby represents and warrants to FBR that:
(a) the Preliminary Memorandum did not, as of its date, contain an 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; the Preliminary Memorandum, as amended and supplemented by the
Memorandum Supplement, and each written communication constituting an offer to sell,
or the solicitation of an offer to purchase, listed on Schedule A
(collectively, the “Disclosure Package”) did
not as of 2:30 p.m., EDT, on October 3, 2006 (the “Applicable Time”), 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; and the Final Memorandum will not, as of its date, at the
Closing Time and each Extended Closing Time (if any) and each Secondary Closing Time
(if any), contain an 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, however, that
this representation and warranty shall not apply to any statement in or omission
from the Preliminary Memorandum, the Disclosure Package or Final Memorandum made in
reliance upon and in conformity with information furnished to the Company in writing
by FBR expressly for use therein (that information being limited to that described
in the last sentence of Section 8(b) hereof);
(b) the Disclosure Package included, as of its date, and the Final Memorandum
will include, as of its date, and will include at the Closing Time and at each
Secondary Closing Time (if any), the information required by Rule 144A and all
information required by the antifraud provisions of the securities laws;
(c) the Company is a corporation duly organized and validly existing and in
good standing under the laws of the State of Delaware, with requisite corporate
power and authority to own, lease or operate its properties and to conduct its
business as described in the Disclosure Package and the Final Memorandum and to
execute and deliver this Agreement and the Registration Rights Agreement, and to
- 9 -
consummate the transactions contemplated hereby (including the issuance, sale
and delivery of the Shares) and thereby;
(d) each corporation, association, partnership or other business entity of
which more than 50% of the total voting power entitled to vote in the election of
directors, managers, general partners, or trustees thereof is controlled, directly
or indirectly, by the Company (each, a “Subsidiary”) is a legal entity duly
organized and validly existing and in good standing under the laws of its respective
jurisdiction of organization, with requisite power and authority to own, lease or
operate its properties and to conduct its business;
(e) the Company had, at the date indicated, the authorized capitalization set
forth in the Disclosure Package and the Final Memorandum under the caption
“Capitalization” and, at the Closing Time, will have the pro forma authorization set
forth in the Disclosure Package and the Final Memorandum under the caption
“Capitalization;” all of the issued and outstanding shares of capital stock of the
Company and each Subsidiary have been duly and validly authorized and issued and are
fully paid and non-assessable, and have been issued and sold in compliance with all
applicable federal, state, foreign and local securities laws and the laws of the
jurisdiction of incorporation of the Company or such Subsidiary, as applicable, and
have not been issued in violation of or subject to any preemptive right or other
similar right of stockholders arising by operation of law, under the certificate of
incorporation or bylaws, or other governing document of the Company or such
Subsidiary, as applicable, under any agreement to which the Company or such
Subsidiary, as applicable, is a party or otherwise; all of the capital stock,
partnership interests or membership interests of any of the Company’s Subsidiaries
are owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims, except as disclosed in the Disclosure Package and
the Final Memorandum; except as disclosed in the Disclosure Package and the Final
Memorandum, there are no outstanding (i) securities or obligations of the Company
convertible into or exchangeable for any capital stock of the Company or capital
stock, partnership interests or membership interests of any of its Subsidiaries,
(ii) warrants, rights or options to subscribe for or purchase from the Company or
any such Subsidiary any such capital stock, partnership interest, or membership
interest or any such convertible or exchangeable securities or obligations or (iii)
obligations of the Company or any such Subsidiary to issue or sell any shares of
capital stock, partnership interest, or membership interest, any such convertible or
exchangeable securities or obligation, or any such warrants, rights or options;
(f) the Shares have been duly authorized for issuance, sale and delivery
pursuant to this Agreement and, when issued and delivered by the Company against
payment therefor in accordance with the terms of this Agreement, will be duly and
validly issued and fully paid and nonassessable, free and clear of any pledge, lien,
encumbrance, security interest or other claim, and the issuance, sale and delivery
of the Shares by the Company are not subject to any preemptive right, co-sale right,
registration right, right of first refusal or other
- 10 -
similar right of stockholders arising by operation of law, under the
certificate of incorporation or bylaws of the Company, under any agreement to which
the Company is a party or otherwise, other than as provided for in the Registration
Rights Agreement; the Shares satisfy the requirements set forth in Rule 144A(d)(3)
under the Securities Act;
(g) each of the Company and the Subsidiaries is a duly qualified or licensed
by, and is in good standing in, each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification of licensing,
except where the failure, individually or in the aggregate, to be so qualified or
licensed could not reasonably be expected to have a material adverse effect or a
prospective material adverse effect on the business, financial condition, results of
operations or prospects of the Company and the Subsidiaries taken as a whole (a
“Material Adverse Effect”);
(h) each of the Company and the Subsidiaries has good and marketable title to
all real property reflected as owned by them in the Disclosure Package and the Final
Memorandum (whether through fee ownership, mineral estates or similar rights of
ownership), and good and marketable title to substantially all other real and
personal property reflected as owned by them in the Disclosure Package and the Final
Memorandum, in each case free and clear of all liens, security interests, pledges,
charges, encumbrances, mortgages and defects, except such as are disclosed in both
the Disclosure Package and the Final Memorandum or as could not reasonably be
expected to have a Material Adverse Effect; and any real property or personal
property held under lease by the Company or any Subsidiary is held under a lease
that is valid, existing and enforceable by the Company, with such exceptions as are
disclosed in the Disclosure Package and the Final Memorandum or as could not
reasonably be expected to have a Material Adverse Effect, and neither the Company
nor any Subsidiary has received any written notice of any material claim that has
been asserted by anyone adverse to the right of the Company or such Subsidiary under
any such lease;
(i) each of the Company and the Subsidiaries owns or possesses such licenses or
other rights to use all patents, trademarks, service marks, trade names, copyrights,
software and design licenses, trade secrets, manufacturing processes, other
intangible property rights and know-how (collectively “Intellectual
Property”), as are necessary to entitle the Company and the Subsidiaries to
conduct their business as described in the Disclosure Package and the Final
Memorandum, and neither the Company nor any such Subsidiary has received written
notice of any infringement of or conflict with (and the Company is not aware of any
such infringement of or conflict with) asserted rights of others with respect to any
Intellectual Property which could reasonably be expected to have a Material Adverse
Effect;
(j) neither the Company nor any Subsidiary has violated, or received notice of
any violation with respect to, any law, rule, regulation, order, decree or judgment
applicable to it or its business, including those relating to environmental
- 11 -
safety or similar laws, federal or state laws relating to discrimination in the
hiring, promotion or pay of employees, federal or state wages and hours law or the
rules and regulations promulgated thereunder, except for those violations that would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect;
(k) except as would not have a Material Adverse Effect, none of the Company,
any Subsidiary or, to the Company’s knowledge, any officer, director, agent or
employee purporting to act on behalf of the Company or any Subsidiary, has at any
time, directly or indirectly, (i) made any contributions to any candidate for
political office, or failed to disclose fully any such contributions, in violation
of law, (ii) made any payment to any state, federal or foreign governmental officer
or official, or other person charged with similar public or quasi-public duties,
other than payments required or allowed by applicable law (including the Foreign
Corrupt Practices Act of 1977, as amended (the “FCPA”)), (iii) engaged in any
transactions or maintained any bank account on behalf of the Company or a Subsidiary
or used any corporate funds except for transactions, bank accounts and funds which
have been and are reflected in the normally maintained books and records of the
Company and each Subsidiary, (iv) violated any provision of the FCPA, or (v) made
any other unlawful payment;
(l) except as otherwise disclosed in both the Disclosure Package and the Final
Memorandum, there are no outstanding loans or advances or guarantees of indebtedness
by the Company or any Subsidiary to or for the benefit of any of the officers,
directors, affiliates or representatives of the Company or any Subsidiary or any of
the members of the families of any of them;
(m) except as otherwise disclosed in both the Disclosure Package and the Final
Memorandum, and except with respect to FBR, the Company has not incurred any
liability for any finder’s fees or similar payments in connection with the
transactions contemplated hereby;
(n) neither the Company nor any Subsidiary is in breach of, or in default under
(nor has any event occurred which with notice, lapse of time, or both would
constitute a breach of, or default under) its certificate of incorporation, bylaws,
or other organizational documents (collectively, the “Charter Documents”) or
in the performance or observance of any obligation, agreement, covenant or condition
contained in any contract, license, indenture, mortgage, deed of trust, bank loan or
credit agreement or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them or their respective properties is
bound, except for such breaches or defaults which would not have a Material Adverse
Effect;
(o) the execution, delivery and performance by the Company of this Agreement
and the Registration Rights Agreement, and the issuance, sale and delivery of the
Shares by the Company, the Company’s use of the proceeds from the sale of the Shares
as described in the Disclosure Package and Final
- 12 -
Memorandum and the consummation by the Company of the transactions contemplated
hereby and thereby, and compliance by the Company with the terms and provisions
hereunder and thereof will not conflict with, or result in any breach of or
constitute a default under (nor constitute any event which with notice, lapse of
time, or both would constitute a breach of, or default under), (i) any provision of
the Charter Documents of the Company or any Subsidiary, (ii) any provision of any
contract, license, indenture, mortgage, deed of trust, bank loan or credit agreement
or other agreement or instrument to which the Company or any Subsidiary is a party
or by which it or its respective properties is bound, or (iii) any, statute, rule or
regulation or any judgment, order or decree (each a “Legal Requirement”)
issued by the U.S. government or any state, local or foreign government, court,
administrative agency or commission or other governmental agency, authority or
instrumentality, domestic or foreign, of competent jurisdiction (each a
“Governmental Authority”) applicable to the Company or any Subsidiary,
except in the case of clauses (ii) or (iii) for such conflicts, breaches or defaults
which have been validly waived or would not reasonably be expected to have a
Material Adverse Effect or result in the creation or imposition of any material
lien, charge, claim or encumbrance upon any property or asset of the Company;
(p) this Agreement has been duly authorized, executed and delivered by the
Company, and the Registration Rights Agreement has been duly authorized by the
Company and at the Closing Time will have been duly executed and delivered by the
Company and will constitute a legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ rights
generally, and by general principles of equity, and except to the extent that the
indemnification provisions may be limited by federal or state securities laws and
public policy considerations in respect thereof;
(q) the Shares, this Agreement, and the Registration Rights Agreement conform
in all material respects to the descriptions thereof contained in the Disclosure
Package and the Final Memorandum;
(r) assuming the accuracy of FBR’s representations and warranties and
compliance with its agreements set forth in Section 3 of this Agreement and the
accuracy of each of the purchaser’s representations and warranties and compliance
with their respective agreements set forth in the purchaser’s letter or subscription
agreement completed in connection with this Agreement and that the purchasers who
buy the Resale Shares in Exempt Resales are Eligible Purchasers and the purchasers
who buy the Regulation D Shares are Accredited Investors, no approval,
authorization, consent or order of or filing with any Governmental Authority is
required in connection with the execution, delivery and performance by the Company
of this Agreement or the Registration Rights Agreement, or the consummation by the
Company of the transactions contemplated hereby and thereby, or the issuance, sale
and delivery of the Shares as contemplated hereby, other than (i) such as have been
obtained or made, or will have been obtained or
- 13 -
made at the Closing Time, (ii) any necessary filings or qualifications under
the securities or blue sky laws of the various domestic and foreign jurisdictions in
which the Shares are being offered or placed by FBR, (iii) with or by federal or
state securities regulatory authorities in connection with or pursuant to the
Registration Rights Agreement, including without limitation the filing of the
registration statement(s) required thereby with the Commission, and (iv) the filing
of a Form D with the Commission and with the applicable state regulatory
authorities;
(s) each of the Company and the Subsidiaries has all necessary licenses,
permits, certificates, authorizations, consents and approvals and has made all
necessary filings required under any Requirement of Law (collectively,
“Authorizations”), and has obtained all necessary Authorizations from other
persons required in order to conduct its respective business as described in the
Disclosure Package and the Final Memorandum, except to the extent that any failure
to have any such Authorizations, to make any such filings or to obtain any such
Authorizations would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect; the Company and the Subsidiaries have complied
with the terms of the necessary Authorizations and there are not pending
modifications, amendments or revocations of the Authorizations that would reasonably
be expected to have a Material Adverse Effect; the Company and each Subsidiary have
paid all fees due to Governmental Authorities pursuant to the Authorizations, except
to the extent that any failure to pay any such fees would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect; all
reports required to be filed in connection with the Authorizations have been timely
filed and are accurate and complete, except to the extent that any failure to file a
complete and accurate report in a timely manner would not reasonably be expected,
individually, or in the aggregate, to have a Material Adverse Effect; true and
correct copies of the Authorizations and all amendments thereto to the date hereof
have been delivered to, or made available to, FBR; none of the Company or any of its
Subsidiaries is in violation of, or in default under, any such Authorizations or any
federal, state, local or foreign law, regulation or rule or any decree, order or
judgment applicable to the Company, the effect of which could reasonably be expected
to have a Material Adverse Effect;
(t) there is no outstanding judgment, order, writ, injunction, decree or award
of any Governmental Authority or arbitrator affecting the businesses of the Company
or any Subsidiary which questions the validity of any action taken or to be taken
pursuant to this Agreement or in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement;
(u) the Disclosure Package and the Final Memorandum contain accurate summaries
of all material contracts, agreements, instruments and other documents of the
Company and the Subsidiaries that would be required to be described in a prospectus
included in a registration statement on Form S-1 under the Securities Act; the
copies of all contracts, agreements, instruments and other
- 14 -
documents (including Authorizations and all amendments or waivers relating to
any of the foregoing) that have been previously furnished to FBR or its counsel are
complete and genuine and include all material collateral and supplemental agreements
thereto;
(v) there are no actions, suits, arbitrations, claims, proceedings, inquiries
or investigations pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary, or any of their respective properties, directors,
officers or affiliates at law or in equity, or before or by any Governmental
Authority other than as set forth in the Disclosure Package and the Final Memorandum
or that could reasonably be expected to have alone or in the aggregate a Material
Adverse Effect or which could terminate, modify, or adversely change the Company’s
or any Subsidiary’s rights with respect to the Authorizations, and the Company has
no knowledge of any reasonably likely basis thereafter; other than FBR, the Company
has not authorized anyone to make any representations regarding the offer and sale
of the Shares, or regarding the Company and its Subsidiaries in connection
therewith; the Company has not received notice of any order or decree preventing the
use of the Disclosure Package or the Final Memorandum or any amendment or supplement
thereto, and no order asserting that the transactions contemplated by this Agreement
are subject to the registration requirements of the Securities Act, has been issued
and no proceeding for that purpose has commenced or is pending or, to the Company’s
knowledge, is contemplated;
(w) no securities of the Company of the same class (within the meaning of Rule
144A under the Securities Act) as the Shares are listed on a national securities
exchange registered under Section 6 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), or quoted in a U.S. automated inter-dealer
quotation system;
(x) subsequent to the Applicable Time, and except as may be otherwise stated in
the Disclosure Package and the Final Memorandum, there has not been (i) any event,
circumstance or change that has had, or could reasonably be expected to have, a
Material Adverse Effect, (ii) any transaction, other than in the ordinary course of
business, which is material to the Company and the Subsidiaries taken as a whole,
entered into by the Company or any Subsidiary, (iii) any obligation, contingent or
otherwise, directly or indirectly incurred by the Company or any Subsidiary, other
than in the ordinary course of business, which is material to the Company and the
Subsidiaries taken as a whole, or (iv) any dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock, or any
purchase by the Company of any of its outstanding capital stock;
(y) neither the Company nor any of the Subsidiaries is, nor upon the sale of
the Shares as contemplated herein and the application of the net proceeds therefrom
as described in the Disclosure Package and the Final Memorandum under the caption
“Use of Proceeds” will be, an “investment company” or an
- 15 -
entity “controlled” by an “investment company” (as such terms are defined in
the Investment Company Act of 1940, as amended);
(z) other than as set forth in both the Disclosure Package and the Final
Memorandum, there are no persons with registration or other similar rights to have
any securities registered by the Company under the Securities Act other than
pursuant to the Registration Rights Agreement;
(aa) the Company has not relied upon FBR or legal counsel for FBR for any
legal, tax or accounting advice in connection with the offering and sale of the
Shares;
(bb) Xxxxx X. London satisfies the definition of an independent director as set
forth in the indenture governing the Company’s senior notes;
(cc) in connection with the offering of the Shares, neither the Company or any
of its Subsidiaries, nor any of its affiliates (as defined in Section 501(b) of
Regulation D) has, whether directly or through any agent or person acting on its
behalf (other than FBR): (i) offered Common Stock of the Company or any other
securities convertible into or exchangeable or exercisable for such Common Stock in
a manner in violation of the Securities Act or the rules and regulations thereunder,
(ii) distributed any other offering material in connection with the offer and sale
of the Shares, other than as described in the Disclosure Package and the Final
Memorandum, or (iii) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of any security (as defined in the Securities Act) which is or
will be integrated with the offering and sale of the Shares in a manner that would
require the registration of the Shares under the Securities Act;
(dd) none of the Company, any of its Subsidiaries nor any of their respective
affiliates (i) is required to register as a “broker” or “dealer” in accordance with
the provisions of the Exchange Act or the rules and regulations thereunder, or (ii)
directly, or indirectly through one or more intermediaries, controls or has any
other association with (within the meaning of Article 1 of the Bylaws of the
National Association of Securities Dealers, Inc. (the “NASD”)) any member
firm of the NASD;
(ee) none of the Company, any of its Subsidiaries or any of its directors,
officers, representatives or affiliates have taken, directly or indirectly, any
action intended, or which might reasonably be expected, to cause or result, under
the Securities Act, the Exchange Act or otherwise, or which has constituted,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares;
(ff) except as would not have a Material Adverse Effect, each of the Company
and the Subsidiaries carries, or is covered by, insurance (issued by insurers of
recognized financial responsibility to the knowledge of the Company) in such amounts
and covering such risks and in such amounts as is appropriate for
- 16 -
the conduct of their respective businesses, all of which insurance is in full
force and effect;
(gg) the historical consolidated financial statements, including the notes
thereto, included in the Disclosure Package and the Final Memorandum fairly present
the financial condition of the Company and its consolidated Subsidiaries as of the
respective dates thereof, and the results of their operations for the periods then
ended, correctly reflect and disclose all extraordinary items in accordance with,
and have been prepared in conformity with U.S. generally accepted accounting
principles applied on a consistent basis and in accordance with Regulation S-X
promulgated by the Commission; the unaudited pro forma financial information and
related notes included in the Disclosure Package and the Final Memorandum have been
prepared on a basis consistent with the historical financial statements of the
Company and its consolidated Subsidiaries and the assumptions underlying the pro
forma adjustments were believed by the Company to be true and reasonable at the time
made;
(hh) Deloitte & Touche LLP, who have certified certain consolidated financial
statements included in the Disclosure Package and the Final Memorandum, whose
reports with respect to such consolidated financial statements are included in the
Disclosure Package and the Final Memorandum and who have delivered the comfort
letters referred to in Section 6(b) hereof, are, and were during the periods covered
by their reports, independent registered public accountants with respect to the
Company within the meaning of the Securities Act or the Securities Act Regulations;
(ii) any certificate signed by any officer of the Company delivered to FBR or
to counsel for FBR pursuant to this Agreement shall be deemed a representation and
warranty by the Company (and not by the officer in his or her personal capacity) to
FBR as to the matters covered thereby;
(jj) the forms of the certificates used to evidence the Common Stock comply in
all material respects with all applicable statutory requirements and with any
applicable requirements of the Charter Documents of the Company;
(kk) except as disclosed in the Disclosure Package and the Final Memorandum and
except where such failure to file or pay an assessment or lien would not in the
aggregate reasonably be expected to have a Material Adverse Effect or where such
matters are the result of a pending bona fide dispute with taxing authorities, (i)
each of the Company and the Subsidiaries has accurately prepared and timely filed
any and all federal, state, foreign and other tax returns that are required to be
filed by it, if any, and has paid or made provision for the payment of all taxes,
assessments, governmental or other similar charges, including without limitation,
all sales and use taxes and all taxes which the Company or such Subsidiary is
obligated to withhold from amounts owing to employees, creditors and third parties,
with respect to the periods covered by such tax returns (whether or not such amounts
are shown as due on any tax return), (ii)
- 17 -
no deficiency assessment with respect to a proposed adjustment of the Company’s
or any Subsidiary’s federal, state, local or foreign taxes is pending or, to the
best of the Company’s knowledge, threatened; (iii) since the date of the most recent
audited consolidated financial statements, neither the Company nor any Subsidiary
has incurred any liability for taxes other than in the ordinary course of its
business; and (iv) there is no tax lien, whether imposed by any federal, state,
foreign or other taxing authority, outstanding against the assets, properties or
business of the Company or any Subsidiary;
(ll) except as described in the Disclosure Package and the Final Memorandum or
as would not in the aggregate reasonably be expected to have a Material Adverse
Effect, (i) neither the Company nor any Subsidiary is in violation of any Legal
Requirement or rule of common law or any judicial or administrative interpretation
thereof, relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), natural resources or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release of
chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products, asbestos-containing materials or mold
(collectively, “Hazardous Materials”) or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, “Environmental Laws”), (ii) each of the Company and
the Subsidiaries has all permits, authorizations and approvals required under any
applicable Environmental Laws to conduct their respective businesses and are each in
compliance with their requirements, (iii) there are no pending or, to the knowledge
of the Company, threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the Company
or any Subsidiary, (iv) to the knowledge of the Company, there are no events or
circumstances that would reasonably be expected to form the basis of an order for
investigation, clean-up or remediation, or an action, suit or proceeding by any
private party or Governmental Authority, against or affecting the Company or any
Subsidiary relating to Hazardous Materials or any Environmental Laws; and (v)
neither the Company nor any Subsidiary anticipates material capital expenditures
relating to Environmental Laws or changes in processes or operations relating to any
Environmental Laws;
(mm) the Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act), which
(i) are designed to ensure that material information relating to the Company and its
consolidated Subsidiaries is made known to the Company’s chief executive officer and
its chief financial officer by others within those entities, particularly during the
periods in which the periodic reports required under the Exchange Act are being
prepared, (ii) have been evaluated for effectiveness as of the end of the last
fiscal period covered by the Disclosure Package and Final Memorandum, (iii) are
effective in all material respects to perform the functions
- 18 -
for which they were established, and (iv) the Company is not aware of any
fraud, whether or not material, that involves management or other employees who have
a significant role in the Company’s internal control over financial reporting.
Since the most recent evaluation of the Company’s disclosure controls and procedures
described above, there have been no significant changes in internal control over
financial reporting or in other factors that could significantly affect internal
control over financial reporting;
(nn) the Company and each of the Subsidiaries maintain a system of 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 as applied in
the United States 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;
(oo) the Company and each of the Subsidiaries are in compliance in all material
respects with all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (“ERISA”); no “reportable event” (as defined in
ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for
which the Company or any of the Subsidiaries would have any liability; the Company
and each of the Subsidiaries have not incurred and do not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any
“pension plan” or (ii) Section 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations thereunder
(“Code”); and each “pension plan” for which the Company and each of its
Subsidiaries would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification;
(pp) the operations of the Company and its Subsidiaries and, to the Company’s
knowledge, its affiliates 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, the Money Laundering
Control Act of 1986, as amended, the Bank Secrecy Act, as amended, the United and
Strengthening of America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act (USA PATRIOT Act) of 2001, as any other money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any related
or similar rules, regulations or guidelines, issued, administered or enforced by any
Governmental Authority (collectively, the “Money Laundering Laws”), except
for any such non-compliance as would not, individually or in the aggregate,
reasonably be expected to have a Material
- 19 -
Adverse Effect, and no action, suit or proceeding by or before any Governmental
Authority or any arbitrator involving the Company or any of its Subsidiaries, or, to
the Company’s knowledge, any of its affiliates, with respect to the Money Laundering
Laws is pending or, to the Company’s knowledge, threatened;
(qq) except as would not have a Material Adverse Effect, neither the Company
nor any of its Subsidiaries, nor, to the Company’s knowledge, any of its affiliates
or any director, officer, agent or employee of, or other person associated with or
acting on behalf of, the Company, is currently subject to any United States
sanctions administered by the Office of Foreign Assets Control of the United States
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, partner or joint venturer or other person
or entity, for the purpose of financing the activities of any person currently
subject to any United States sanctions administered by OFAC;
(rr) there are no existing or, to the Company’s knowledge, threatened, labor
disputes with the employees of the Company or any of the Subsidiaries which would,
individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect;
(ss) except as otherwise disclosed in the Disclosure Package and the Final
Memorandum, neither the Company nor any Subsidiary has any material off-balance
sheet transactions, arrangements, obligations (including contingent obligations), or
any other similar relationships with unconsolidated entities or other persons;
(tt) each of the Company and its Subsidiaries, and, to the Company’s knowledge,
each of their affiliates and any director, officer, agent or employee of, or other
person associated with or acting on behalf of, the Company has acted at all times in
compliance in all material respects with applicable Export and Import Laws (as
defined below) and there are no claims, complaints, charges, investigations or
proceedings pending or, to the knowledge of the Company, threatened between the
Company or any of its Subsidiaries and any Governmental Authority under any Export
or Import Laws. The term “Export and Import Laws” means the Arms Export Control Act,
the International Traffic in Arms Regulations, the Export Administration Act of
1979, as amended, the Export Administration Regulations, the Trading with the Enemy
Act, the International Emergency Economic Powers Act, and sanctions regulations
issued pursuant to those statutory authorities prohibiting unlicensed transactions
(including exports of services, data, or goods) with sanctioned countries or
entities, and all other laws and regulations of the United States government
regulating the provision of services to non-U.S. parties or the export and import of
articles or information from and to the United States of America, and all similar
laws and regulations of any foreign government regulating the provision of services
to parties not of the foreign country or the export and import of articles and
information from and to the foreign country to parties not of the foreign country;
- 20 -
(uu) to the Company’s knowledge, there have been no allegations of any
violations of export control rules by the Company or any of its Subsidiaries,
including allegations by any Governmental Authority, and no investigations of any
export control matters of the Company or its Subsidiaries by any Governmental
Authority;
(vv) the Company, the Subsidiaries and any of the officers and directors of the
Company and the Subsidiaries, in their capacities as such, are, and at the Closing
Time, any Extended Closing Time and any Secondary Closing Time will be, in
compliance in all material respects with the provisions of the Xxxxxxxx-Xxxxx Act of
2002 and the rules and regulations promulgated thereunder applicable to the Company;
(ww) as of the date hereof, the Company (i) files reports pursuant to Section
13 or Section 15(d) of the Exchange Act, (ii) has filed all reports and other
materials required to be filed by Sections 13(a), 14 or 15(d) of the Exchange Act
during the preceding 12 months (or for such shorter period that the Company was
required to file such reports and materials), (iii) has filed an Annual Report on
Form 10-K required under Section 13(a) or 15(d) under the Exchange Act for its most
recently completed fiscal year; and (iv) makes its periodic and current reports
filed pursuant to Section 13 or Section 15(d) of the Exchange Act readily available
and accessible on a web site maintained by or for the Company and containing
information about the Company;
(xx) the Company has complied and will comply in all material respects with the
provisions of Florida Statutes, Section 517.075 (Chapter 92-198, Laws of Florida);
and neither the Company nor any of the Subsidiaries or affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba;
(yy) no relationship, direct or indirect, exists between or among the Company
or any of the Subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of the Subsidiaries on
the other hand, which would be required by the Securities Act and the Securities Act
Regulations to be described in a prospectus included in a registration statement on
Form S-1 under the Securities Act, which is not so described in the Disclosure
Package and the Final Memorandum;
(zz) At all times prior to the Closing Time, the Company qualified for “S
corporation” tax treatment under the Internal Revenue Code and the regulations
promulgated thereunder and the Company owes no federal income tax, except for such
tax as may be attributable to the Company’s Subsidiary that is taxed as a “C
corporation” and described in both the Disclosure Package and Final Memorandum; and
(aaa) each of the Company and the Subsidiaries has complied in all material
respects with all Legal Requirements governing or applicable to its
- 21 -
Government Contracts and Government Bids, each as hereinafter defined,
including the material terms and conditions of all such Government Contracts and
Government Bids; each Government Contract performed or being performed by the
Company or any Subsidiary was legally and properly awarded to the Company or such
Subsidiary and, if performance is ongoing, each Government Contract is currently
valid; neither the Company nor any Subsidiary has, in obtaining or performing any
Government Contract, violated any laws, regulations, rules, directives, requirements
or procedures of any Governmental Authority or any other applicable Legal
Requirement that could reasonably be expected to have a Material Adverse Effect;
there exist (i) no outstanding claims (including, but not limited to, termination
settlement proposals), contracting officer’s final decisions, requests for equitable
adjustment or other contractual action(s) for relief against the Company or any
Subsidiary, by a Governmental Authority or by any prime contractor, subcontractor or
other person, arising under or relating to any Government Contract or Government
Bid, and (ii) no disputes between the Company or any Subsidiary and any Governmental
Authority or between the Company or any Subsidiary and any prime contractor,
subcontractor or other person, arising under or relating to any Government Contract
or Government Bid that could reasonably be expected to have a Material Adverse
Effect; neither the Company nor any Subsidiary has an interest in any pending or
potential claim, request for equitable adjustment, action, litigation or appeal
under the Contract Disputes Act of 1978, as amended, and/or under or related to the
disputes clause of any contract against any Governmental Authority or involving any
prime contractor or subcontractor; for the purposes of this paragraph, (A)
“Government Contract” means any prime contract, subcontract, teaming
agreement, joint venture, basic ordering agreement, pricing agreement, letter
contract, grant, cooperative agreement, or other mutually binding legal agreement
between the Company or any Subsidiary and (x) any Governmental Authority, (y) any
prime contractor of any Governmental Authority, or (z) any subcontractor of any
Governmental Authority; provided that a task order, purchase order or delivery order
under a Government Contract shall not constitute a separate Government Contract for
purposes of this definition, but shall be part of the Government Contract to which
it relates and (B) “Government Bid” shall mean any written quotations, bids
or proposals that, if accepted, would bind the Company or any Subsidiary to perform
the resultant Government Contract.
5. Certain Covenants of the Company.
The Company hereby agrees with FBR:
(a) to furnish such information as may be required and otherwise to cooperate
in qualifying the Shares for offer and sale under the securities or blue sky laws of
such states and other jurisdictions as FBR may designate or as required for the
Private Placement and to maintain such qualifications in effect as long as required
by such laws for the distribution of the Shares and for the Exempt Resales of the
Resale Shares; provided, however, that the Company shall not be required to qualify
as a foreign corporation or to consent to the service of
- 22 -
process under the laws of, or subject itself to taxation as doing business in,
any such state or other jurisdiction (except service of process with respect to the
offering and sale of the Shares);
(b) to prepare the Final Memorandum in a form approved by FBR and to furnish
promptly (and with respect to the initial delivery of such Final Memorandum, not
later than 10:00 a.m. (New York City time) on the third business day following the
execution and delivery of this Agreement) to FBR or to purchasers upon the direction
of FBR as many copies of the Final Memorandum (and any amendments or supplements
thereto) as FBR may reasonably request for the purposes contemplated by this
Agreement;
(c) to advise FBR promptly, confirming such advice in writing, of: (i) the
happening of any event known to the Company within the time during which the Final
Memorandum shall (in the view of FBR) be required to be distributed by FBR in
connection with an Exempt Resale (and FBR hereby agrees to notify the Company in
writing when the foregoing time period has ended) which, in the judgment of the
Company, would require the making of any change in the Final Memorandum then being
used so that the Final Memorandum would not include an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they are made, not misleading;
and (ii) the receipt of any notification with respect to the modification,
rescission, withdrawal or suspension of the qualification of the Shares, or of any
exemption from such qualification or from registration of the Shares, for offering
or sale in any jurisdiction, or of the initiation or threatening of any proceedings
for any of such purposes and, if any Governmental Authority should issue any such
order, to make every reasonable effort to obtain the lifting or removal of such
order as soon as possible;
(d) to furnish to FBR for a period of two years from the Closing Time, (i)
copies of all annual, quarterly and current reports supplied to holders of the
Shares, (ii) copies of all reports filed by the Company with the Commission, and
(iii) such other information as FBR may reasonably request regarding the Company;
provided, however, that the Company shall not be required to furnish to FBR any
information that is made publicly available by filing electronically with the
Commission;
(e) not to amend or supplement the Final Memorandum prior to the Closing Time
or any Secondary Closing Time unless FBR shall previously have been advised thereof
and shall have consented thereto (which consent shall not be unreasonably withheld)
or not have reasonably objected thereto (for legal reasons) in writing within a
reasonable time after being furnished a copy thereof;
(f) during any period in the two years (or such shorter period as may then be
applicable under the Securities Act regarding the holding period for securities
under Rule 144(k) under the Securities Act or any successor rule) after the Closing
Time in which the Company is not subject to Section 13 or 15(d) of
- 23 -
the Exchange Act to furnish, upon request, to any holder of such Shares the
information (“Rule 144A Information”) specified in Rule l44A(d)(4) under the
Securities Act and any additional information (“PORTAL Information”)
required by the National Association of Securities Dealers, Inc.
Portal SM Market (“PORTAL”), and any such Rule l44A
Information and Portal Information will not, at the date thereof, 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 are
made, not misleading;
(g) to apply the net proceeds from the sale of the Shares in the manner set
forth under the caption “Use of Proceeds” in both the Disclosure Package and the
Final Memorandum;
(h) that neither the Company nor any of its affiliates (as defined in Section
501(b) of Regulation D) will, whether directly or through any agent or person acting
on its behalf (other than FBR): (i) offer Common Stock of the Company or any other
securities convertible into or exchangeable or exercisable for such Common Stock in
a manner in violation of the Securities Act or the rules and regulations thereunder,
(ii) distribute any other offering material in connection with the offer and sale of
the Shares, other than as described in both the Disclosure Package and the Final
Memorandum, or (iii) sell, offer for sale, solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Securities Act), any of
which will be integrated with the offering and sale of the Shares in a manner that
would require the registration under the Securities Act of the sale to FBR or the
Eligible Purchasers of the Resale Shares or to the Accredited Investors of the
Private Placement Shares;
(i) that none of the Company, its Subsidiaries or any of its affiliates will
take, directly or indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the price of the
Shares;
(j) that, except as permitted by the Securities Act, neither the Company nor
any of its affiliates will distribute any offering materials in connection with
Exempt Resales;
(k) to pay all expenses, fees and taxes in connection with (i) the preparation
of the Disclosure Package and the Final Memorandum, and any amendments or
supplements thereto, and the printing and furnishing of copies of each thereof to
FBR (including costs of mailing and shipment), (ii) the preparation, issuance, sale
and delivery of the Shares, including any stock or other transfer taxes or duties
payable upon the sale of the Resale Shares to FBR, (iii) the printing of this
Agreement and any dealer agreements, and the reproduction and/or printing and
furnishing of copies of each thereof to dealers (including costs of mailing and
shipment), (iv) the qualification of the Shares for offering and sale under state
laws and the determination of their eligibility for investment under state law as
aforesaid (including any filing fees), and the printing and furnishing
- 24 -
of copies of any blue sky surveys or legal investment surveys to FBR and to
dealers but not to exceed in the aggregate $5,000, (v) the designation of the Shares
as PORTAL-eligible securities by PORTAL, (vi) all fees and disbursements of counsel
and accountants for the Company, and (vii) the fees and expenses of any transfer
agent or registrar for the Common Stock, (viii) the costs and expenses of the
Company and the reasonable and itemized costs and expenses of FBR incurred in
connection with the marketing of the Shares, including “out of pocket” expenses,
roadshow costs (regardless of the form in which the roadshow is conducted) and
expenses, and expenses of Company personnel, including commercial or charter air
travel, local hotel accommodations and transportation, and (ix) performance of the
Company’s other obligations hereunder;
(l) to use reasonable efforts in cooperation with FBR to obtain permission for
the Shares (other than Shares offered and sold in accordance with Regulation S) to
be eligible for clearance and settlement through DTC, and for the Shares sold in
accordance with Regulation S to be eligible for clearance and settlement through the
Euroclear System and Clearstream Banking, société anonyme, Luxembourg;
(m) in connection with Resale Shares offered and sold in an offshore
transaction (as defined in Regulation S), not to register any transfer of such
Resale Shares not made in accordance with the provisions of Regulation S and not,
except in accordance with the provisions of Regulation S, if applicable, to issue
any such Resale Shares in the form of definitive securities;
(n) to furnish to FBR, during the period referred to in clause (i) of Section
5(c), as soon as reasonably practicable before filing with the Commission, a copy of
the most current draft at such time of any document proposed to be filed with the
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and FBR agrees to
keep such information confidential;
(o) to refrain during the period (i) beginning on the date of the Final
Memorandum until 180 days after the Final Memorandum, (ii) from the date the
registration statement to be filed pursuant to the Registration Rights Agreement is
declared effective until 60 days thereafter and (iii) from the effective date of any
registration statement relating to an initial public offering of the Company’s
common stock that is commenced within one year from the date of the Final Memorandum
and for which FBR serves as either the lead managing underwriter or co-book managing
underwriter and ending on the date that is 180 days after the effective date of such
registration statement, without the prior written consent of FBR (which consent may
be withheld or delayed in FBR’s sole discretion), from (A) offering, pledging,
selling, contracting to sell, selling any option or contract to purchase, purchasing
any option or contract to sell, granting any option, right or warrant for the sale
of, lending or otherwise disposing of or transferring, directly or indirectly, any
equity securities of the Company or any securities convertible into or exercisable
or exchangeable for equity securities of the Company, or filing any registration
statement under the Securities Act with respect to any of the
- 25 -
foregoing, or (B) entering into any swap or other arrangement that transfers,
in whole or in part, directly or indirectly, any of the economic consequences of
ownership of equity securities of the Company, whether any such transaction
described in clause (A) or (B) above is to be settled by delivery of Common Stock or
such other securities, in cash or otherwise. The foregoing sentence shall not apply
to (v) the Shares to be sold hereunder, (w) the registration and sale of the Shares
in accordance with the terms of the Registration Rights Agreement, (x) any shares of
Common Stock issued by the Company upon the exercise of an option outstanding on the
date hereof and referred to in the Disclosure Package and the Final Memorandum, (y)
such issuances of options or grants of restricted stock under the Company’s stock
option and incentive plans as described in the Disclosure Package and the Final
Memorandum, or (z) the issuance of shares of Common Stock in connection with
acquisitions or other business combinations, provided that the Company shall cause
the recipients of any such shares of Common Stock to be bound by the restrictions
contained in this paragraph;
(p) if the Resale Shares are not delivered by the Company to FBR for any reason
other than the termination of this Agreement pursuant to clauses (ii) through (v) of
the first paragraph of Section 7 hereof or the default by FBR in its obligations
hereunder, to reimburse FBR for all of its out-of-pocket expenses relating to the
transactions contemplated hereby, including the reasonable fees and disbursements of
its legal counsel;
(q) that, from and after the Closing Time, the Company shall have in place and
maintain a system of 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; and
(r) that the Company will conduct its affairs in such a manner so as to ensure
that the Company will not be an “investment company” or an entity “controlled” by an
investment company within the meaning of the Investment Company Act.
6. Conditions of FBR’s Obligations. The obligations of FBR hereunder are subject to
(i) the accuracy of the representations and warranties on the part of the Company on the date
hereof, at the Closing Time, each Extended Closing Time and each Secondary Closing Time, (ii) the
accuracy of the statements of the Company’s officers made in any certificate pursuant to the
provisions hereof as of the date of such certificate, (iii) the performance by the Company of all
of its covenants and other obligations hereunder and (iv) the following other conditions:
- 26 -
(a) The Company shall furnish to FBR at the Closing Time an opinion of Mayer,
Brown, Xxxx & Maw LLP, counsel for the Company, addressed to FBR and dated the
Closing Time, in form and substance satisfactory to FBR, covering the matters set
forth on Exhibit B hereto. Such opinion shall indicate that it is being
rendered to FBR at the request of the Company.
(b) FBR shall have received from Deloitte & Touche LLP “comfort” letters dated,
respectively, as of the date of the Preliminary Memorandum and as of the Closing
Time, addressed to FBR, and such comfort letters shall include in scope the
Preliminary Memorandum, the Memorandum Supplement and the Final Memorandum, and in
form and substance satisfactory to FBR.
(c) FBR shall have received at the Closing Time a favorable opinion of Xxxxxx
Xxxxxxx Xxxxx & Scarborough LLP, counsel for FBR, dated the Closing Time, in form
and substance satisfactory to FBR.
(d) Prior to the Closing Time, any Extended Closing Time or any Secondary
Closing Time, (i) no suspension of the qualification of the Shares for offering or
sale in any jurisdiction, or of the initiation or threatening of any proceedings for
any of such purposes, shall have occurred and (ii) both the Disclosure Package and
the Final Memorandum and all amendments or supplements thereto, or modifications
thereof, if any, shall not contain an untrue statement of material fact or omit to
state a material fact that would be necessary to make the statements therein, in the
light of the circumstances under which they are made, not misleading.
(e) Between the time of execution of this Agreement and the Closing Time, any
Extended Closing Time or any Secondary Closing Time, (i) no event, circumstance or
change constituting a Material Adverse Effect shall have occurred or become known,
(ii) no transaction which is material to the Company and its Subsidiaries, taken as
a whole, shall have been entered into by the Company or any of its Subsidiaries that
has not been fully and accurately disclosed in the Disclosure Package and the Final
Memorandum, or any amendment or supplement thereto; and (iii) no order or decree
preventing the use of any of the Disclosure Package or the Final Memorandum, or any
order asserting that any of the transactions contemplated by this Agreement are
subject to the registration requirements of the Securities Act shall have been
issued.
(f) The Company shall have delivered to FBR a certificate, executed by the
secretary of the Company and dated as of the Closing Time, as to (i) the resolutions
adopted by the Company’s board of directors in form and substance reasonably
acceptable to FBR, (ii) the Company’s certificate of incorporation, as amended and
(iii) the Company’s bylaws, as amended, each as in effect at the Closing Time.
(g) The Company shall have delivered to FBR a certificate, executed by its
chief executive officer and chief financial officer to the effect that the
- 27 -
representations and warranties of the Company set forth in this Agreement shall
be true and correct as of the Closing Time as though made on and as of such date
(except to the extent that such representations and warranties speak as of another
date, in which case such representations and warranties shall be true and correct as
of such other date), the conditions set forth in subsections (d) and (e) of this
Section 6 shall have been satisfied and be true and correct as of the Closing Time,
and the Company shall have complied with all covenants and agreements and satisfied
all conditions on its part to be performed or satisfied under this Agreement at or
prior to the Closing Time.
(h) On or before the Closing Time, FBR shall have received the Registration
Rights Agreement executed by the Company and such agreement shall be in full force
and effect.
(i) At the time of execution and delivery of this Agreement, FBR shall have
received from each of the officers, directors and existing stockholders of the
Company a written agreement (a “Lock-up Agreement”) in substantially the
form attached hereto as Exhibit C.
(j) The Company shall have obtained and delivered to FBR a copy of (i) all
executed consents required under the relevant leases and contracts in connection
with the Company’s performance of its obligations under this Agreement, (ii) any
approvals under the credit facility, and (iii) any approvals under the
Xxxx-Xxxxx-Xxxxxx Act.
(k) At each Extended Closing Time and Secondary Closing Time, FBR shall have
received:
(i) certificates, dated as of each Extended Closing Time and Secondary
Closing Time, of the Company, substantially to the same effect as the
certificates delivered at the Closing Time pursuant to subsections (f) and
(g), of this Section 6, subject to any exceptions that, in the reasonable
judgment of FBR, are not material.
(ii) the opinion of Mayer, Brown, Xxxx & Maw LLP, in form and substance
satisfactory to FBR, dated as of each Secondary Closing Time relating to the
Regulation D Shares or the Option Shares, as applicable, and otherwise
substantially to the same effect as the opinions required by subsection (a)
of this Section 6.
(iii) “comfort” letters from Deloitte & Touche, LLP, in form and
substance satisfactory to FBR, dated as of each Secondary Closing Time,
substantially the same in scope and substance as the letter furnished to FBR
pursuant to subsection (b) of this Section 6, except that the “specified
date” in the letter furnished pursuant to this subsection (k)(iii) shall be
a date not more than five days prior to such Secondary Closing Time.
- 28 -
In the event that any “comfort” letter referred to in subsection (b) of
this Section 6 or this subsection (k)(iii) sets forth any such changes,
decreases or increases that, in the reasonable discretion of FBR, are likely
to result in a Material Adverse Effect, it shall be a further condition to
the obligations of FBR that such letters shall be accompanied by a written
explanation of the Company as to the significance thereof, unless FBR deems
such explanation unnecessary. References to the Preliminary Memorandum, the
Memorandum Supplement, the Disclosure Package and/or Final Memorandum with
respect to any “comfort” letter referred to in this Section 6 shall include
any amendment or supplement thereto at the date of such letter.
(iv) the opinion of Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx LLP, dated as of
each Secondary Closing Time, relating to the Regulation D Shares or the
Option Shares, as applicable, and otherwise to the same effect as the
opinion required by subsection (c) of this Section 6.
(l) The Company shall have furnished to FBR such other documents and
certificates as to the accuracy and completeness of any statement in the Disclosure
Package and the Final Memorandum or any amendment or supplement thereto, and any
additional matters as FBR may reasonably request, as of the Closing Time or any
Secondary Closing Time, or as FBR may reasonably request.
(m) The Shares to be resold by FBR to QIBs pursuant to Rule 144A under the
Securities Act shall have been designated as PORTAL-eligible securities by PORTAL.
(n) Each Subscription Agreement shall remain in full force and effect and no
event shall have occurred giving any party the right to terminate any Subscription
Agreement pursuant to the terms thereof.
7. Termination. The obligations of FBR hereunder shall be subject to
termination in the reasonable discretion of FBR, at any time prior to the Closing Time or
any Secondary Closing Time, if (i) any of the conditions specified in Section 6 shall not
have been fulfilled when and as required by this Agreement to be fulfilled, (ii) trading in
securities in general on any exchange or national quotation system shall have been
suspended or minimum prices shall have been established on such exchange or quotation
system, (iii) there has been a material disruption in the securities settlement, payment or
clearance services in the United States, (iv) a banking moratorium shall have been declared
either by the United States or New York State authorities, or (v) if the United States
shall have declared war in accordance with its constitutional processes or there shall have
occurred any material outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic, political or other conditions of
such magnitude in its effect on the financial markets of the United States as, in the
judgment of FBR, to make it impracticable to market the Shares.
- 29 -
If FBR elects to terminate this Agreement as provided in this Section 7, the Company shall be
notified promptly by letter or fax.
If the sale to FBR of the Resale Shares, as contemplated by this Agreement, is not carried out
by FBR for any reason permitted under this Agreement or if such sale is not carried out because the
Company shall be unable to comply with any of the terms of this Agreement, (i) the Company shall
not be under any obligation or liability to FBR under this Agreement (except to the extent provided
in Sections 5(k), 5(p) and 8 hereof), and (ii) FBR shall be under no obligation or liability to the
Company under this Agreement (except to the extent provided in Section 8 hereof).
8. Indemnity.
(a) The Company agrees to indemnify, defend and hold harmless FBR and its
affiliates, and their respective directors, officers, representatives and agents,
and any person who controls FBR within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, from and against any loss, expense, liability
or claim (including the reasonable cost of investigation) which, jointly or
severally, FBR or any such controlling person may incur under the Securities Act,
the Exchange Act or otherwise, insofar as such loss, expense, liability or claim
arises out of or is based upon (i) any untrue statement or alleged untrue statement
made by the Company herein, (ii) any breach by the Company of any covenant set forth
herein, or (iii) any untrue statement or alleged untrue statement of a material fact
contained in the Disclosure Package or the Final Memorandum, or arises out of or is
based upon any omission or alleged omission to state a material fact that would be
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading, except insofar as any such loss,
expense, liability or claim arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in and in conformity with
information furnished in writing by FBR to the Company expressly for use in the
Disclosure Package or the Final Memorandum (that information being limited to that
described in the last sentence of Section 8(b) hereof) or the information set forth
on pages ii through and including x in the Preliminary Memorandum, Disclosure
Package and the Final Memorandum.
(b) FBR agrees to indemnify, defend and hold harmless the Company and its
directors and officers and any person who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against
any loss, expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, the Company or any such person may incur
under the Securities Act, the Exchange Act or otherwise, insofar as such loss,
expense, liability or claim arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in and made in reliance upon
and in conformity with information furnished in writing by FBR to the Company
expressly for use in the Disclosure Package or Final Memorandum (or in any amendment
or supplement thereof by the Company),
- 30 -
such information being limited to the following: information provided by FBR
to the Company as disclosed in the paragraph on the cover page immediately preceding
FBR’s name at the bottom of the page and the second, seventh (solely with respect to
the forth sentence) and eighth paragraphs of the section entitled “Plan of
Distribution” in the Disclosure Package and the Final Memorandum.
(c) If any action is brought against any person or entity (each an
“Indemnified Party”), in respect of which indemnity may be sought
pursuant to Section 8(a) or (b) above, the Indemnified Party shall promptly notify
the party obligated to provide such indemnity (each an “Indemnifying Party”)
in writing of the institution of such action and the Indemnifying Party shall assume
the defense of such action, including the employment of counsel and payment of
expenses; provided that the failure so to notify the Indemnifying Party will not
relieve the Indemnifying Party from any liability which the Indemnifying Party may
have to any Indemnified Party unless and to the extent such failure results in the
forfeiture by the Indemnifying Party of rights and defenses that would have had
material value in the defense. The Indemnified Party(ies) shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Party unless the employment of
such counsel shall have been authorized in writing by the Indemnifying Party in
connection with the defense of such action or the Indemnifying Party shall not have
employed counsel to have charge of the defense of such action within a reasonable
time or such Indemnified Party(ies) shall have reasonably concluded (based on the
advice of counsel) that counsel selected by the Indemnifying Party has an actual
conflict of interest or there may be defenses available to the Indemnified
Party(ies) which are different from or additional to those available to the
Indemnifying Party that are not being pursued (in which case the Indemnifying Party
shall not have the right to direct the defense of such action on behalf of the
Indemnified Party(ies)), in any of which events such fees and expenses shall be
borne by the Indemnifying Party and paid as incurred (it being understood, however,
that the Indemnifying Party shall not be liable for the fees and expenses of more
than one separate firm or counsel (in addition to local counsel) for the Indemnified
Parties in any one action or series of related actions in the same jurisdiction
representing the Indemnified Parties who are parties to such action). Anything in
this paragraph to the contrary notwithstanding, the Indemnifying Party shall not be
liable for any settlement of any such claim or action effected without its written
consent. The Indemnifying Party shall have the right to settle any such claim or
action for itself and any Indemnified Party so long as the Indemnifying Party pays
any settlement payment and such settlement (i) includes a complete and unconditional
release of the Indemnified Party from all losses, expenses, claims, damages,
injunctions, liability and other obligations with respect to any claims that are the
subject matter of such action and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act by or on behalf of the
Indemnified Party.
(d) If the indemnification provided for in this Section 8 is unavailable to an
Indemnified Party under subsections (a) and (b) of this Section 8 in respect of any
losses, expenses, liabilities or claims referred to therein, then each
- 31 -
applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such indemnified party as a result
of such losses, expenses, liabilities or claims (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and FBR, on the other hand, from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of the Company, on the one hand, and
of FBR, on the other hand, in connection with the statements or omissions which
resulted in such losses, expenses, liabilities or claims, as well as any other
relevant equitable considerations. The relative benefits received by the Company,
on the one hand, and FBR, on the other hand, shall be deemed to be in the same
proportion as the total proceeds from the offering (net of initial purchaser
discounts and commissions and placement fees but before deducting expenses) received
by the Company bear to the discounts and commissions received by FBR. The relative
fault of the Company, on the one hand, and of FBR, on the other hand, shall be
determined by reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or omission or alleged omission relates
to information supplied by the Company or by FBR and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages and liabilities referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any claim or action.
(e) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to in subsection (d) above. Notwithstanding the provisions
of this Xxxxxxx 0, XXX shall not be required to contribute any amount in excess of
the sum of (i) the aggregate amount of any Placement Fee actually received by FBR
with respect to the Regulation D Shares and the Placed Option Shares and (ii) the
aggregate amount of FBR’s discount on the 144A/Regulation S Shares and the Purchased
Option Shares (as described in the Final Memorandum). No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this Section 8 and
the covenants, warranties and representations of the Company contained in this
Agreement shall remain in full force and effect regardless of any investigation made
by or on behalf of FBR or its affiliates, or their respective directors, officers,
representatives and agents, or any person who controls FBR within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, or by or on
behalf of the Company or its directors and officers or any person who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and shall survive any
- 32 -
termination of this Agreement or the sale and delivery of the Shares. Each
party to this Agreement agrees promptly to notify the other party of the
commencement of any litigation or proceeding against it and, in the case of the
Company, against any of its officers and directors, in connection with the sale and
delivery of the Shares, or in connection with the both the Disclosure Package and/or
Final Memorandum.
9. Notices. Except as otherwise herein provided, all statements, requests,
notices and agreements shall be in writing delivered by facsimile (with receipt confirmed),
overnight courier or registered or certified mail, return receipt requested, or by telegram
and:
(a) if to FBR, shall be sufficient in all respects if delivered or sent to
Friedman, Billings, Xxxxxx & Co., Inc., 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxx 00000, Attention: Compliance Department, (facsimile: 703-312-9698); with a
copy to Xxxxxx Xxxxxxx Xxxxx & Scarborough LLP, 000 Xxxxxxxxxxxx Xxxxxx, X.X. Xxxxx
000, Xxxxxxxxxx, XX 00000, Attention: Xxxxxxxx X. Xxxxxxx (facsimile:
202-712-2856); and
(b) if to the Company, shall be sufficient in all respects if delivered to the
Company at the offices of the Company at 0000 Xxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxx
00000, Attention: Xxxxxxx X. Xxxxxx (facsimile: 847-689-9099); with a copy to Mayer,
Brown, Xxxx & Maw LLP, 00 Xxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention:
Xxxxx X. Xxxxxxxx (facsimile: 312-706-8157).
10. Duties. Nothing in this Agreement shall be deemed to create a
partnership, joint venture or agency relationship between the parties. FBR undertakes to
perform such duties and obligations only as expressly set forth herein. Such duties and
obligations of FBR with respect to the Shares shall be determined solely by the express
provisions of this Agreement, and FBR shall not be liable except for the performance of
such duties and obligations with respect to the Shares as are specifically set forth in
this Agreement. The Company acknowledges and agrees that: (i) the purchase and sale of the
Shares pursuant to this Agreement, including the determination of the offering price of the
Shares and any related discounts and commissions, is an arm’s-length commercial transaction
between the Company, on the one hand, and FBR, on the other hand, and the Company is
capable of evaluating and understanding and understands and accepts the terms, risks and
conditions of the transactions contemplated by this Agreement; (ii) in connection with each
transaction contemplated hereby and the process leading to such transaction FBR is and has
been acting solely as a principal and is not the financial advisor, agent or fiduciary of
the Company or its affiliates, stockholders, creditors or employees or any other party;
(iii) FBR has not assumed and will not assume an advisory or fiduciary responsibility in
favor of the Company with respect to any of the transactions contemplated hereby or the
process leading thereto (irrespective of whether FBR has advised or is currently advising
the Company on other matters); and (iv) FBR and its affiliates may be engaged in a broad
range of transactions that involve interests that differ from those of the Company and that
FBR has no obligation to disclose any of such interests. The Company acknowledges that FBR
disclaims any implied duties (including
- 33 -
any fiduciary duty), covenants or obligations arising from its performance of the
duties and obligations expressly set forth herein. The Company hereby waives and releases,
to the fullest extent permitted by law, any claims that the Company may have against FBR
with respect to any breach or alleged breach of fiduciary duty.
11. GOVERNING LAW; HEADINGS. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER
STATE. The section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
12. Parties at Interest. The Agreement herein set forth has been and is made
solely for the benefit of FBR and the Company and the controlling persons, directors and
officers referred to in Section 8 hereof, and their respective successors, assigns,
executors and administrators. No other person, partnership, association or corporation
(including a purchaser, in its capacity as such, from FBR) shall acquire or have any right
under or by virtue of this Agreement.
13. Counterparts. This Agreement may be signed by the parties in
counterparts, which together shall constitute one and the same agreement among the parties.
[SIGNATURE PAGE FOLLOWS]
- 34 -
If the foregoing correctly sets forth the understanding among the Company and FBR, please
so indicate in the space provided below for the purpose, whereupon this letter shall constitute a
binding agreement between the Company and FBR.
| Very truly yours, XXXXXXX CABLE, INC. |
||||
| /s/ Xxxxxxx X. Xxxxxx | ||||
| Xxxxxxx X. Xxxxxx | ||||
| Executive Vice President, Chief Financial Officer, Secretary and Treasurer |
||||
[SIGNATURE PAGE TO PURCHASE/PLACEMENT AGREEMENT]
Accepted and agreed to as
of the date first above written:
of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
/s/ Xxxxx X. Xxxxxxxxx
|
||
Xxxxx X. Xxxxxxxxx |
||
Senior Managing Director |
[SIGNATURE PAGE TO PURCHASE/PLACEMENT AGREEMENT]
SCHEDULE A
WRITTEN COMMUNICATIONS
None.
A-1
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
A-1
EXHIBIT B
SUBSTANCE OF OPINION OF COMPANY COUNSEL
B-1
EXHIBIT C
FORM OF LOCK-UP AGREEMENT
C-1
