EXHIBIT 1.1
PLACEMENT AGENCY AGREEMENT
April 3, 2002
X.X. Xxxxxxx & Sons, Inc.
As Representative of the Placement Agents
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
The undersigned, Valence Technology, Inc., a Delaware corporation (the
"COMPANY"), hereby addresses you as the representative (the "REPRESENTATIVE") of
each of the persons, firms and corporations listed on SCHEDULE I hereto
(collectively, the "PLACEMENT AGENTS") and confirms its agreement with you as
follows:
1. DESCRIPTION OF SHARES. The Company has engaged the Representative in
connection with the structuring and issuance of securities of the Company in the
form of common stock, convertible preferred stock, warrants or other equity
linked securities (the "SECURITIES") pursuant to that certain Engagement Letter,
dated February 19, 2002, between the Company and X.X. Xxxxxxx & Sons, Inc. (the
"ENGAGEMENT LETTER"). Pursuant to such engagement, the Company proposes to issue
and sell, to certain investors (collectively, the "INVESTORS"), shares (the
"SHARES") of its Common Stock, par value $0.001 per share, in a public offering
under the registration statement (Registration No. 333-67942) on Form S-3. The
Company desires to engage the Placement Agents as its placement agents in
connection with such issuance and sale. The Shares are more fully described in
the Prospectus hereinafter defined.
2. AGREEMENT TO ACT AS PLACEMENT AGENTS; DELIVERY AND PAYMENT. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Placement Agents agree
to act as the Company's exclusive placement agents to assist the Company, on a
best efforts basis, in connection with the proposed issuance and sale by the
Company of the Shares to the Investors. The Company shall pay to the Placement
Agents concurrently with the Closing (as defined below): (i) 3% of the gross
proceeds received by the Company from any sale of Shares to the investors listed
on SCHEDULE II hereto; and (ii) 6% of the gross proceeds received by the Company
from the sale of Shares to any other Investor (collectively, the "PLACEMENT
FEE").
Prior to the closing of the transactions contemplated by this Agreement,
the Company, the Placement Agents and a bank, trust or escrow company mutually
acceptable to the Company and the Representative, acting as escrow agent (the
"ESCROW AGENT"), shall enter into an Escrow Agreement in form and substance
mutually acceptable to the Company and the Representative (the "ESCROW
AGREEMENT"), pursuant to which an escrow account will be established, at the
Company's expense, for the benefit of the Investors (the "ESCROW ACCOUNT").
Prior to the Closing Date, (i) each of the Investors will deposit in the Escrow
Account an amount equal to the
purchase price of $2.70 per Share multiplied by the number of Shares purchased
by it, and (ii) the Escrow Agent will notify the Company and the Representative
in writing whether the Investors have deposited in the Escrow Account funds in
the amount equal to the proceeds of the sale of 1,851,852 Shares offered by the
Company (the "REQUISITE FUNDS").
After receiving notice from the Escrow Agent that it has received the
Requisite Funds, the Company will deliver definitive certificates for the Shares
at the office of X.X. Xxxxxxx & Sons, Inc., 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
("XXXXXXX' OFFICE"), or such other place as you and the Company may mutually
agree upon, for the accounts of the Investors against payment from the Escrow
Account to the Company of the purchase price for the Shares less the aggregate
Placement Fee and payment from the Escrow Account to the Placement Agents of the
Placement Fee, each as provided in the Escrow Agreement. The closing of the sale
and issuance of the Shares (the "CLOSING") shall occur at Xxx Xxxxx Xxxxxxxxx
Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000, or at such other place as may be agreed upon
between you and the Company (the "PLACE OF CLOSING"), at 10:00 a.m., New York
time, on April 8, 2002, or at such other time and date not later than one full
business day thereafter as you and the Company may agree, such time and date of
payment and delivery being herein called the "CLOSING DATE."
The certificates for the Shares so to be delivered will be made
available to you for inspection at Xxxxxxx' Office (or such other place as you
and the Company may mutually agree upon) at least one full business day prior to
the Closing Date and will be registered in such names and denominations as you
may request at least forty-eight hours prior to the Closing Date.
It is understood that the Company proposes to offer the Shares to the
Investors upon the terms and conditions set forth in the Prospectus hereinafter
defined.
3. [INTENTIONALLY OMITTED]
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY.
(a) The Company represents and warrants to and agrees with the Placement
Agents that:
(i) The Company has filed with the Securities and Exchange
Commission (the "SEC") a registration statement (Registration No.
333-67942) on Form S-3 for the registration of equity securities of the
Company, including the Shares, which has been prepared by the Company
pursuant to and in conformity with the requirements of the Securities
Act of 1933, as amended (the "1933 ACT"), and the rules and regulations
thereunder (the "1933 ACT RULES AND REGULATIONS") of the SEC. Such
registration statement has been declared effective by the SEC. The
Company meets the requirements for use of Form S-3 under the 1933 Act.
Copies of such registration statement, including any amendments thereto,
each related preliminary prospectus (meeting the requirements of Rule
430 or 430A of the 1933 Act Rules and Regulations) contained therein,
and the exhibits, financial statements and schedules thereto have
heretofore been delivered by the
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Company to you. A final prospectus containing information permitted to
be omitted at the time of effectiveness by Rule 430A of the 1933 Act
Rules and Regulations will be filed promptly by the Company with the SEC
in accordance with Rule 424(b) of the 1933 Act Rules and Regulations.
The term "REGISTRATION STATEMENT" as used herein means the registration
statement as amended at the time it became effective under the 1933 Act
(the "EFFECTIVE DATE"), including financial statements and all exhibits
and all documents incorporated by reference therein pursuant to Item 12
of Form S-3 under the 1933 Act and, if applicable, the information
deemed to be included by Rule 430A of the 1933 Act Rules and
Regulations. If an abbreviated registration statement is prepared and
filed with the SEC in accordance with Rule 462(b) under the 1933 Act (an
"ABBREVIATED REGISTRATION STATEMENT"), the term "REGISTRATION STATEMENT"
as used in this Agreement includes the Abbreviated Registration
Statement. The term "PROSPECTUS" as used herein means the prospectus
constituting a part of the Registration Statement and included in the
Registration Statement at the Effective Date, as supplemented by each
prospectus supplement relating to the offering of the Shares, including
any such prospectus supplement filed pursuant to Rule 424(b) of the 1933
Act Rules and Regulations (the "PROSPECTUS SUPPLEMENT") and including
any information and documents included therein by reference pursuant to
Item 12 of Form S-3 under the 1933 Act. The term "PRELIMINARY
PROSPECTUS" as used herein shall mean a preliminary prospectus as
contemplated by Rule 430 or 430A of the 1933 Act Rules and Regulations
included at any time in the Registration Statement, including any such
preliminary prospectus supplement relating to the Shares filed by the
Company pursuant to the 1933 Act containing a "subject to completion"
legend as described in paragraph 10 of Item 501 of Regulation S-K of the
1933 Act Rules and Regulations. For purposes of this Agreement, the
words "AMEND," "AMENDMENT," "AMENDED," "SUPPLEMENT" or "SUPPLEMENTED"
with respect to the Registration Statement or the Prospectus shall mean
amendments or supplements to the Registration Statement or the
Prospectus, as the case may be; as well as documents filed after the
date of this Agreement and prior to the completion of the distribution
of the Shares and incorporated by reference therein as described above.
(ii) Neither the SEC nor any state or other jurisdiction or other
regulatory body has issued, and neither is, to the knowledge of the
Company, threatening to issue, an any stop order under the 1933 Act or
other order suspending the effectiveness of the Registration Statement
(as amended or supplemented) or preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending the qualification
or registration of the Shares for offering or sale in any jurisdiction
nor instituted or, to the knowledge of the Company, threatened to
institute proceedings for any such purpose. Each Preliminary Prospectus
at its date of issue, the Registration Statement and the Prospectus and
any amendments or supplements thereto contain or will contain, as the
case may be, all statements which are required to be stated therein by,
and in all material respects conform or will conform, as the case may
be, to the requirements of, the 1933 Act and the 1933 Act Rules and
Regulations. Neither the Registration Statement nor any amendment
thereto, as of the applicable effective date, contains or will contain,
as the
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case may be, any untrue statement of a material fact or omits or will
omit to state any material fact required to be stated therein or
necessary to make the statements therein, not misleading, and neither
any Preliminary Prospectus, the Prospectus nor any supplement thereto
contains or will contain, as the case may be, any untrue statement of a
material fact or omits or will omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representation or warranty
as to information contained in or omitted from the Prospectus in
reliance upon, and in conformity with, written information relating to
the Placement Agents furnished to the Company by the Placement Agents
expressly for use in the preparation thereof (as provided in SECTION 13
hereof). There is no contract or document required to be described in
the Registration Statement or Prospectus or to be filed as an exhibit to
the Registration Statement which is not described or filed as required.
The documents incorporated by reference in the Prospectus pursuant to
Item 12 of Form S-3 under the 1933 Act, at the time they were filed with
the SEC, complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "1934 ACT"), and the
rules and regulations adopted by the SEC thereunder (the "1934 ACT RULES
AND Regulations"). Any future documents incorporated by reference so
filed, when they are filed, will comply in all material respects with
the requirements of the 1934 Act and the 1934 Act Rules and Regulations.
As of the date filed, no incorporated document contained any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and, when read together and with the other information in
the Prospectus, at the time the Registration Statement became effective
and at the Closing Date, each such incorporated document did not or will
not, as the case may be, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(iii) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
obligation of the Company enforceable against the Company in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally and by
general principles of equity (the "EXCEPTIONS").
(iv) The Company and its subsidiaries have been duly organized and
are validly existing as corporations in good standing under the laws of
the states or other jurisdictions in which they are incorporated, with
full power and authority (corporate and other) to own, lease and operate
their properties and conduct their businesses as described in the
Prospectus and, with respect to the Company, to execute and deliver, and
perform the Company's obligations under, this Agreement; the Company and
its subsidiaries are duly qualified to do business as foreign
corporations in good standing in each state or other jurisdiction in
which their ownership or leasing of property or conduct of business
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legally requires such qualification, except where the failure to be so
qualified, individually or in the aggregate, would not have a Material
Adverse Effect. The term "MATERIAL ADVERSE EFFECT" as used herein means
any material adverse effect on the condition (financial or other), net
worth, business, affairs, management, prospects, results of operations
or cash flow of the Company and its subsidiaries, taken as a whole.
(v) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree. Other than as set
forth in the Prospectus and, since the respective dates as of which
information is given in the Prospectus, there has not been any material
change in the capital stock or long-term debt of the Company or any of
its subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries taken as a
whole, otherwise than as set forth in the Prospectus.
(vi) The issuance and sale of the Shares and the execution, delivery
and performance by the Company of this Agreement, and the consummation
of the transactions herein contemplated, will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any properties or assets of the
Company or any of its subsidiaries under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of the properties or
assets of the Company or any of its subsidiaries is subject, except to
such extent as, individually or in the aggregate, does not have a
Material Adverse Effect, nor will such action result in any violation of
the provisions of the Company's certificate of incorporation or bylaws
or any statute, rule, regulation or other law, or any order or judgment,
of any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement, the issuance
and sale of the Shares or the consummation of the transactions
contemplated hereby, except such as have been, or will be prior to the
Closing Date, obtained under the 1933 Act or as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") and such
consents, approvals, authorizations, registrations or qualifications as
may be required under state securities or blue sky laws in connection
with the purchase of the Shares by the Investors.
(vii) The Company has duly and validly authorized capital stock as
set forth in the Prospectus; all outstanding shares of Common Stock of
the Company and the Shares
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conform, or when issued will conform, to the description thereof in the
Prospectus and have been, or, when issued and paid for in the manner
described herein will be, duly authorized, validly issued, fully paid
and non-assessable; and the issuance of the Shares to be purchased from
the Company hereunder is not subject to preemptive or other similar
rights, or any restriction upon the voting or transfer thereof pursuant
to applicable law or the Company's certificate of incorporation, by-laws
or governing documents or any agreement to which the Company or any of
its subsidiaries is a party or by which any of them may be bound. All
corporate action required to be taken by the Company for the
authorization, issuance and sale of the Shares has been duly and validly
taken. Except as disclosed in the Prospectus, there are no outstanding
subscriptions, rights, warrants, options, calls, convertible securities,
commitments of sale or rights related to or entitling any person to
purchase or otherwise to acquire any shares of, or any security
convertible into or exchangeable or exercisable for, the capital stock
of, or other ownership interest in, the Company. The outstanding shares
of capital stock of the Company's subsidiaries have been duly authorized
and validly issued, are fully paid and non-assessable and, except as
disclosed in the Prospectus, are owned by the Company free and clear of
any mortgage, pledge, lien, encumbrance, charge or adverse claim and are
not the subject of any agreement or understanding with any person and
were not issued in violation of any preemptive or similar rights; and
there are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or instruments
related to or entitling any person to purchase or otherwise acquire any
shares of, or any security convertible into or exchangeable or
exercisable for, the capital stock of, or other ownership interest in
any of the subsidiaries.
(viii) The statements set forth in the Prospectus describing the
Shares and this Agreement, insofar as they purport to describe the
provisions of the laws and documents referred to therein, will be
accurate, complete and fair.
(ix) Except as described in the Prospectus, each of the Company and
its subsidiaries is in possession of and is operating in compliance with
all franchises, grants, authorizations, licenses, certificates, permits,
easements, consents, orders and approvals ("PERMITS") from all state,
federal, foreign and other regulatory authorities, and has satisfied the
requirements imposed by regulatory bodies, administrative agencies or
other governmental bodies, agencies or officials, that are required for
the Company and its subsidiaries lawfully to own, lease and operate
their properties and conduct their businesses as described in the
Prospectus, and, each of the Company and its subsidiaries is conducting
its business in compliance with all of the laws, rules and regulations
of each jurisdiction in which it conducts its business, in each case
with such exceptions, individually or in the aggregate, as would not
have a Material Adverse Effect; each of the Company and its subsidiaries
has filed all notices, reports, documents or other information
("NOTICES") required to be filed under applicable laws, rules and
regulations, in each case, with such exceptions, individually or in the
aggregate, as would not have a Material Adverse Effect; and, except as
otherwise specifically described in the
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Prospectus, neither the Company nor any of its subsidiaries has received
any notification from any court or governmental body, authority or
agency, relating to the revocation or modification of any such Permit,
or to the effect that any additional authorization, approval, order,
consent, license, certificate, permit, registration or qualification
("APPROVALS") from such regulatory authority is needed to be obtained by
any of them, in any case where it could be reasonably expected that
obtaining such Approvals or the failure to obtain such Approvals,
individually or in the aggregate, would have a Material Adverse Effect.
(x) The Company and its subsidiaries have filed all necessary
federal, state and foreign income and franchise tax returns and paid all
taxes shown as due thereon; all such tax returns are complete and
correct in all material respects; all tax liabilities are adequately
provided for on the books of the Company and its subsidiaries except to
such extent as would not have a Material Adverse Effect; the Company and
its subsidiaries have made all necessary payroll tax payments and are
current and up-to-date; and the Company and its subsidiaries have no
knowledge of any tax proceeding or action pending or threatened against
the Company or its subsidiaries which, individually or in the aggregate,
might have a Material Adverse Effect.
(xi) Except as described in the Prospectus: (A) the Company and its
subsidiaries own or possess adequate patents, patent licenses,
copyrights, trademarks, service marks and trade names necessary to
conduct the business now operated by them; (B) neither the Company nor
any of its subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any patents,
patent licenses, copyrights, trademarks, service marks or trade names
which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect; (C) the Company has conducted searches of the United States
patents of record and published foreign patents issued to third parties
that may interfere with any of the Company's or its subsidiaries'
patents or patent applications and it has determined that none of the
Company's or its subsidiaries' patents or patent applications interfere
with any other United States patents or United States patent
applications which correspond to published foreign patents; (D) the
Company has conducted an infringement search and determined that no
patent held by any third party is infringed by the activities of the
Company and its subsidiaries; (E) there are no pending, or to the
Company's knowledge, threatened judicial proceedings or interference
proceedings challenging the Company's or its subsidiaries' rights in or
to or the validity of the scope of any of the Company's or its
subsidiaries' patents, patent applications or proprietary information;
and (F) no other entity or individual has any right or claim in any of
the Company's or its subsidiaries' patents, patent applications or any
patent to be issued therefrom by virtue of any contract, license or
other agreement entered into between such entity or individual and the
Company or by any non-contractual obligation, other than by written
licenses granted by the Company.
Page 7
(xii) The Company and its subsidiaries have good and marketable
title in fee simple to all items of real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances, restrictions and defects
except such as are described in the Prospectus or do not materially
affect the value of such property and do not interfere with the use made
and proposed to be made of such property; and any property held under
lease or sublease by the Company or any of its subsidiaries is held
under valid, subsisting and enforceable leases or subleases with such
exceptions as are not material and do not interfere with the use made
and proposed to be made of such property by the Company and its
subsidiaries; and neither the Company nor any of its subsidiaries has
any notice or knowledge of any material claim of any sort which has
been, or may be, asserted by anyone adverse to the Company's or any of
its subsidiaries rights as lessee or sublessee under any lease or
sublease described above, or affecting or questioning the Company's or
any of its subsidiaries' rights to the continued possession of the
leased or subleased premises under any such lease or sublease in
conflict with the terms thereof.
(xiii) Except as described in the Prospectus, to the best knowledge
of the Company, there is no factual basis for any action, suit or other
proceeding involving the Company or any of its subsidiaries or any of
their material assets for any failure of the Company or any of its
subsidiaries, or any predecessor thereof, to comply with any
requirements of federal, state or local regulation relating to air,
water, solid waste management, hazardous or toxic substances, or the
protection of health or the environment. Except as described in the
Prospectus, none of the property owned or leased by the Company or any
of its subsidiaries is, to the best knowledge of the Company,
contaminated with any waste or hazardous substances, and neither the
Company nor any of its subsidiaries may be deemed an "owner or operator"
of a "facility" or "vessel" which owns, possesses, transports, generates
or disposes of a "hazardous substance" as those terms are defined in
ss.9601 of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. ss.9601 et seq.
(xiv) No labor disturbance exists with the employees of the Company
or any of its subsidiaries or is imminent which, individually or in the
aggregate, would have a Material Adverse Effect. None of the employees
of the Company or any of its subsidiaries is represented by a union and,
to the best knowledge of the Company and its subsidiaries, no union
organizing activities are taking place. Neither the Company nor any of
its subsidiaries has violated any federal, state or local law or foreign
law relating to discrimination in hiring, promotion or pay of employees,
nor any applicable wage or hour laws, or the rules and regulations
thereunder, or analogous foreign laws and regulations, which might,
individually or in the aggregate, result in a Material Adverse Effect.
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(xv) The Company and its 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 and its
subsidiaries would have any liability; the Company and its subsidiaries
have not incurred and do not expect to incur liability under (A) Title
IV of ERISA with respect to termination of, or withdrawal from, any
pension plan or (B) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published
interpretations thereunder (the "CODE"); and each pension plan for which
the Company or any of its subsidiaries would have any liability that is
intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects, and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such
qualification.
(xvi) The Company and its subsidiaries maintain insurance of the
types and in the amounts generally deemed adequate for its business,
including, but not limited to, directors' and officers' insurance,
insurance covering real and personal property owned or leased by the
Company and its subsidiaries against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect. Neither the Company nor any of
its subsidiaries has been refused any insurance coverage sought or
applied for, and the Company has no reason to believe that it and its
subsidiaries will not be able to renew their existing insurance coverage
as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost
that would not have a Material Adverse Effect.
(xvii) Neither the Company nor any of its subsidiaries is, or with
the giving of notice or lapse of time or both would be, in default or
violation with respect to its certificate of incorporation or by-laws.
Neither the Company nor any of its subsidiaries is, or with the giving
of notice or lapse of time or both would be, in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
properties or assets of the Company or any of its subsidiaries is
subject, or in violation of any statutes, laws, ordinances or
governmental rules or regulations or any orders or decrees to which it
is subject, including, without limitation, Section 13 of the 1934 Act,
which default or violation, individually or in the aggregate, would have
a Material Adverse Effect. Neither the Company nor any of its
subsidiaries has, at any time during the past five years, (A) made any
unlawful contributions to any candidate for any political office, or
failed fully to disclose any contribution in violation of law, or (B)
made any payment to any state, federal or foreign government official,
or other person charged with similar public or quasi-public duty (other
than payment required or permitted by applicable law).
Page 9
(xviii) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property of the Company or
any of its subsidiaries is the subject that, if determined adversely to
the Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect or which would materially and
adversely affect the consummation of the transactions contemplated
hereby or which is required to be disclosed in the Prospectus; to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated.
(xix) The Company is not and, after giving effect to the offering
and sale of the Shares, will not be a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a
"holding company" or of a "subsidiary company," as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended
(the "1935 ACT").
(xx) The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 ACT").
(xxi) Deloitte & Touche LLP, the accounting firm which has certified
the financial statements filed with or incorporated by reference in and
as a part of the Registration Statement, is an independent public
accounting firm within the meaning of the 1933 Act and the 1933 Act
Rules and Regulations. PricewaterhouseCoopers LLP, on the dates and
during the periods for which it certified the financial statements filed
with or incorporated by reference in and as a part of the Registration
Statement or Prospectus, was an independent public accounting firm
within the meaning of the 1933 Act and the 1933 Act Rules and
Regulations. The Company and each of its subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable
assurance that: (A) transactions are executed in accordance with
management's general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D)
the recorded accounts for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect
thereto. The consolidated financial statements and schedules of the
Company, including the notes thereto, filed with (or incorporated by
reference) and as a part of the Registration Statement or Prospectus,
are accurate in all material respects and present fairly the financial
condition of the Company and its subsidiaries as of the respective dates
thereof and the consolidated results of operations and changes in
financial position and consolidated statements of cash flow for the
respective periods covered thereby, all in conformity with generally
accepted accounting principles applied on a consistent basis throughout
the periods involved except as otherwise disclosed
Page 10
therein. All adjustments necessary for a fair presentation of results
for such periods have been made. The selected financial data included or
incorporated by reference in the Registration Statement and Prospectus
present fairly the information shown therein and have been compiled on a
basis consistent with that of the audited financial statements. Any
operating or other statistical data included or incorporated by
reference in the Registration Statement and Prospectus comply in all
material respects with the 1933 Act and the 1933 Act Rules and
Regulations and present fairly the information shown therein when read
in connection with the Company's financial statements and the related
notes and other information contained therein.
(xxii) Except as disclosed in the Prospectus, no holder of any
security of the Company has any right to require registration of shares
of Common Stock or any other security of the Company because of the
filing of the Registration Statement or the consummation of the
transactions contemplated hereby and, except as disclosed in the
Prospectus, no person has the right to require registration under the
1933 Act of any shares of Common Stock or other securities of the
Company. No person has the right, contractual or otherwise, to cause the
Company to permit such person to underwrite the sale of any of the
Shares. Except for this Agreement, there are no contracts, agreements or
understandings between the Company or any of its subsidiaries and any
person that would give rise to a valid claim against the Company, its
subsidiaries or the Placement Agents for a brokerage commission,
finder's fee or like payment in connection with the issuance, purchase
and sale of the Shares.
(xxiii) The Company has not distributed and, prior to the later to
occur of (A) the Closing Date and (B) completion of the distribution of
the Shares, will not distribute any offering material in connection with
the offering and sale of the Shares other than the Registration
Statement, the Preliminary Prospectus, the Prospectus or documents
incorporated therein by reference.
(xxiv) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected
to cause or result in stabilization or manipulation of the price of the
Company's Common Stock, and the Company is not aware of any such action
taken or to be taken by affiliates of the Company.
(b) Any certificate signed by any officer of the Company and delivered
to you or to counsel for the Placement Agents shall be deemed a representation
and warranty by the Company to the Placement Agents as to the matters covered
thereby.
5. ADDITIONAL COVENANTS. The Company covenants and agrees with the
Placement Agents that:
Page 11
(a) The Company will timely transmit copies of the Prospectus, and any
amendments or supplements thereto, to the SEC for filing pursuant to Rule 424(b)
of the 1933 Act Rules and Regulations.
(b) The Company has furnished or will deliver to the Placement Agents
and counsel for the Placement Agents, without charge, conformed copies of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference therein) and
conformed copies of all consents and certificates of experts, and will also
deliver to the Placement Agents, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the Placement Agents. The copies of the
Registration Statement and each amendment thereto furnished to the Placement
Agents will be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T or by Rule 424(b) of the 1933 Rules and Regulations. The Company
will promptly notify the Placement Agents of the issuance by the SEC of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or preliminary
prospectus supplement or of the initiation or threatening of any proceedings for
any of such purposes. The Company will use its best efforts to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(c) The Company will not file any amendment or supplement to the
Registration Statement, the Prospectus (or any other prospectus relating to the
Shares filed pursuant to Rule 424(b) of the 1933 Act Rules and Regulations that
differs from the Prospectus as filed pursuant to such Rule 424(b)) and will not
file any document under the 1934 Act before the termination of the offering of
the Shares by the Company if the document would be deemed to be incorporated by
reference into the Registration Statement or the Prospectus, of which the
Placement Agents shall not previously have been advised and furnished with a
copy or to which the Placement Agents shall have reasonably objected or which is
not in compliance with the 1933 Act Rules and Regulations; and the Company will
promptly notify you after it shall have received notice thereof of the time when
any amendment to the Registration Statement becomes effective or when any
supplement to the Prospectus has been filed.
(d) During the period when a prospectus relating to any of the Shares is
required to be delivered under the 1933 Act by any Placement Agent or dealer,
the Company will comply, at its own expense, with all requirements imposed by
the 1933 Act and the 1933 Act Rules and Regulations, as now and hereafter
amended, and by the rules and regulations of the SEC thereunder, as from time to
time in force, so far as necessary to permit the continuance of sales of or
dealing in the Shares during such period in accordance with the provisions
hereof and as contemplated by the Prospectus.
(e) If, during the period when a prospectus relating to any of the
Shares is required to be delivered under the 1933 Act by any Placement Agent or
dealer, (i) any event relating to or
Page 12
affecting the Company or of which the Company shall be advised in writing by the
Placement Agents shall occur as a result of which, in the opinion of the Company
or the Placement Agents, the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or (ii) it shall be
necessary to amend or supplement the Registration Statement or the Prospectus to
comply with the 1933 Act, the 1933 Act Rules and Regulations, the 1934 Act or
the 1934 Act Rules and Regulations, the Company will forthwith at its expense
prepare and file with the SEC, and furnish to the Placement Agents a reasonable
number of copies of, such amendment or supplement or other filing that will
correct such statement or omission or effect such compliance.
(f) During the period when a prospectus relating to any of the Shares is
required to be delivered under the 1933 Act by any Placement Agent or dealer,
the Company will furnish such proper information as may be lawfully required and
otherwise cooperate in qualifying the Shares for offer and sale under the
securities or blue sky laws of such jurisdictions as the Placement Agents may
reasonably designate and will file and make in each year such statements or
reports as are or may be reasonably required by the laws of such jurisdictions;
PROVIDED, HOWEVER, that the Company shall not be required to qualify as a
foreign corporation or shall be required to qualify as a dealer in securities or
to file a general consent to service of process under the laws of any
jurisdiction.
(g) In accordance with Section 11(a) of the 1933 Act and Rule 158 of the
1933 Act Rules and Regulations, the Company will make generally available to its
security holders and to holders of the Shares, as soon as practicable, an
earning statement (which need not be audited) in reasonable detail covering the
12 months beginning not later than the first day of the month next succeeding
the month in which occurred the effective date (within the meaning of Rule 158)
of the Registration Statement.
(h) During the period when a prospectus relating to any of the Shares is
required to be delivered under the 1933 Act by any Placement Agent or dealer,
the Company will file promptly all documents required to be filed with the SEC
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act. The Company will
furnish to its security holders annual reports containing financial statements
audited by independent public accountants and quarterly reports containing
financial statements and financial information which may be unaudited. The
Company will, for a period of five years from the Closing Date, deliver to each
of the Placement Agents at its principal executive office a reasonable number of
copies of annual reports, quarterly reports, current reports and copies of all
other documents, reports and information furnished by the Company to its
shareholders or filed with any securities exchange or market pursuant to the
requirements of such exchange or market or with the SEC pursuant to the 1933 Act
or the 1934 Act. The Company will deliver to the Placement Agents similar
reports with respect to any significant subsidiaries, as that term is defined in
the 1933 Act Rules and Regulations, which are not consolidated in the Company's
financial statements. Any report, document or other
Page 13
information required to be furnished under this paragraph (h) shall be furnished
as soon as practicable after such report, document or information becomes
available.
(i) During the period beginning from the date of this Agreement and
continuing to and including the date that is 30 days after the Closing Date, the
Company will not, without the prior written consent of the Placement Agents,
offer for sale, sell or enter into any agreement to sell, or otherwise dispose
of, any equity securities of the Company, except for the Shares; provided,
however, that the Company may issue, or grant options to purchase, shares of
Common Stock pursuant to any option plan existing on the date hereof.
(j) The Company will apply the proceeds from the sale of the Shares as
set forth in the description under "Use of Proceeds" in the Prospectus, which
description complies in all respects with the requirements of Item 504 of
Regulation S-K.
(k) The Company will promptly provide you with copies of all
correspondence to and from, and all documents issued to and by, the SEC in
connection with the registration of the Shares under the 1933 Act or relating to
any documents incorporated by reference into the Registration Statement or the
Prospectus.
(l) Prior to the Closing Date, the Company will furnish to you, as soon
as they have been prepared, copies of any unaudited interim consolidated
financial statements of the Company and its subsidiaries for any periods
subsequent to the periods covered by the financial statements appearing in the
Registration Statement and the Prospectus or incorporated by reference therein.
(m) Except as required by law, prior to the Closing Date, the Company
will issue no press release or other communication directly or indirectly and
will hold no press conferences with respect to the Company or any of its
subsidiaries, the financial condition, results of operations, business,
properties, assets or liabilities of the Company or any of its subsidiaries, or
the offering of the Shares, without your prior written consent. In the event
that any such disclosure is required by law, the Company will promptly notify
you of such required disclosure prior to issuing any press release or other
communication or holding any press conference, and, to the extent reasonably
practicable, the Company will permit you to comment on any press release or
other communication.
(n) The Company will use its best efforts to obtain approval for, and
maintain the quotation of the Shares on, The Nasdaq National Market.
(o) The Company and its subsidiaries will maintain and keep accurate
books and records reflecting their assets and maintain internal accounting
controls which provide reasonable assurance that (i) transactions are executed
in accordance with management's authorization, (ii) transactions are recorded as
necessary to permit the preparation of the Company's consolidated financial
statements and to maintain accountability for the assets of the Company and its
subsidiaries, (iii) access to the assets of the Company and its subsidiaries is
Page 14
permitted only in accordance with management's authorization, and (iv) the
recorded accounts of the assets of the Company and its subsidiaries are compared
with existing assets at reasonable intervals.
(p) If the Company elects to rely on Rule 462(b) under the 1933 Act, the
Company shall both file an Abbreviated Registration Statement with the SEC in
compliance with Rule 462(b) and pay the applicable fees in accordance with Rule
111 of the 1933 Act by the earlier of (i) 9:00 p.m., St. Louis time, on the date
of this Agreement, and (ii) the time that confirmations are given or sent, as
specified by Rule 462(b)(2).
6. CONDITIONS OF CLOSING. The Closing shall be subject to the accuracy,
in all material respects, as of the date hereof and as of the Closing Date, of
the representations and warranties of the Company contained herein, to the
performance, in all material respects, by the Company of its covenants and
obligations hereunder, and to the following additional conditions, and the
Company shall not issue or sell the Shares unless and until all of the
conditions of this SECTION 6 shall have been satisfied or waived by the
Representative:
(a) The Registration Statement and all post-effective amendments thereto
shall have become effective not later than 1:00 p.m., New York time, on the date
hereof, or, with your consent, at a later date and time, not later than 1:00
p.m., New York time, on the first business day following the date hereof, or at
such later date and time as may be approved by the Placement Agents; if the
Company has elected to rely on Rule 462(b) under the 1933 Act, the Abbreviated
Registration Statement shall have become effective not later than the earlier of
(x) 10:00 p.m. New York time, on the date hereof, or (y) at such later date and
time as may be approved by the Placement Agents. All filings required by Rule
424 and Rule 430A of the 1933 Act Rules and Regulations shall have been made. No
stop order suspending the effectiveness of the Registration Statement, as
amended from time to time, shall have been issued and no proceeding for that
purpose shall have been initiated or, to the knowledge of the Company or the
Placement Agents, threatened or contemplated by the SEC, and any request of the
SEC for additional information (to be included in the Registration Statement or
the Prospectus or otherwise) shall have been complied with to the reasonable
satisfaction of the Placement Agents.
(b) The Placement Agents shall not have advised the Company on or prior
to the Closing Date, that the Registration Statement or Prospectus or any
amendment or supplement thereto contains an untrue statement of fact which, in
the opinion of counsel to the Placement Agents, is material, or omits to state a
fact which, in the opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) On the Closing Date, you shall have received the opinion of Akin,
Gump, Strauss, Xxxxx & Xxxx, L.L.P., counsel for the Company, addressed to you
and dated the Closing Date, to the effect that:
Page 15
(i) The Company is validly existing as a corporation and in good
standing under the laws of the State of Delaware, the jurisdiction of
its organization. The Company has the corporate power and authority to
own and lease its properties and conduct its business as described in
the Prospectus; and the Company is duly qualified and in good standing
as a foreign corporation in the jurisdictions identified on SCHEDULE III
attached hereto.
(ii) The Company has authorized capital stock as set forth under the
caption "General Description of Securities" in the Registration
Statement and the description of the Company's common stock contained in
its registration statement on Form 8-A under Section 12 of the Exchange
Act filed April 2, 1992, including any amendment or reports filed for
the purpose of updating such description. All outstanding shares of
Common Stock of the Company issued by the Company since May 31, 1992 and
the Shares conform, or when issued and paid for in the manner described
in this Agreement, will conform, as to legal matters to the description
thereof in the Registration Statement and have been, or when delivered
and paid for in the manner described in this Agreement, will be duly
authorized, validly issued , fully paid and are non assessable. The
Shares are duly authorized for trading, subject to official notice of
issuance and evidence of satisfactory distribution, on the Nasdaq
National Market. To such counsel's knowledge, except as disclosed in the
Prospectus, no options, warrants or other rights to purchase, agreements
or other obligations to issue, or rights to convert any obligations into
or exchange any securities for, shares of capital stock of or ownership
interests in the Company are outstanding.
(iii) The issuance of the Shares to be purchased from the Company
under this Agreement is not subject to (a) preemptive or similar rights
or (b) any restriction upon the voting or transfer thereof, in each case
pursuant to an Included Law (as hereinafter defined) or the certificate
of incorporation or bylaws of the Company or any contract filed as an
exhibit to the Transaction Documents.
(iv) Other than as described in the Transaction Documents, there are
no contracts, agreements or understandings known to us between the
Company and any person granting such person the right to: (i) require
the Company to file a registration statement under the 1933 Act with
respect to any securities of the Company owned or to be owned by such
person or (ii) require the Company to include such securities in (a) the
securities registered pursuant to the Registration Statement or (b) any
securities being registered pursuant to any other registration statement
filed by the Company under the 1933 Act.
(v) The Company is not and, after giving effect to the offering and
sale of the Shares as described in the Prospectus, will not be an
"investment company" as defined in the Investment Company Act of 1940,
as amended. The Company is not and, after giving effect to the offering
and sale of the Shares as described in the Prospectus, will not be a
"holding company" or a "subsidiary company" of a "holding company," or
an "affiliate"
Page 16
of a "holding company" or of a "subsidiary company," as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended.
(vi) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required under any
of the Included Laws to be obtained or made by the Company for the due
execution and delivery of this Agreement by the Company and the
performance of its obligations thereunder in connection with the sale of
the Shares by the Company, except for (a) such as may be required under
any foreign securities laws, or state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Investors or the Placement Agents, as to which we express no opinion,
(b) such as have been made or obtained under the 1933 Act, (c) such
approvals as may be required by the rules and regulations of the
National Association of Securities Dealers, Inc. and (d) such consents,
approvals, authorizations and orders as have been duly obtained on or
prior to the date hereof and are in full force and effect.
(vii) The execution and delivery of this Agreement by the Company do
not, and the consummation by the Company of the transactions therein
contemplated will not, (a) result in a violation of any Included Law,
(b) result in a violation of any order, writ, judgment or decree issued
by any court or government agency known to us and applicable to the
Company or any of its properties, (c) result in a violation of the
certificate of incorporation or bylaws or similar charter documents of
the Company, (d) breach or result in a default or result in the
acceleration of or entitle any party to accelerate under any contract
filed as an exhibit to the Transaction Documents or (e) result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to any contract filed as an
exhibit to the Transaction Documents.
(viii) The Registration Statement was declared effective under the
1933 Act as of August 27, 2001; any required filing of the Prospectus or
of any supplement thereto pursuant to Rule 424(b) or otherwise has been
made in the manner and within the time period required thereby; and, to
such counsel's knowledge, no stop order suspending the effectiveness of
a Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the 1933 Act, and the Registration Statement and the
Prospectus, and each amendment or supplement thereto, as of their
respective effective or issue dates, appear on their face to comply as
to form in all material respects with the requirements of the applicable
1933 Act Rules and Regulations and the applicable 1934 Act Rules and
Regulations, it being understood that we express no opinion as to the
financial statements or other financial data contained in the
Registration Statement or the Prospectus.
(ix) The descriptions in the Registration Statement under the
caption "General Description of Securities;" "Item 15. Indemnification
of Directors and Officers" in the Company's Annual Report on Form 10-K
for the year ended March 31, 2001, filed July
Page 17
2, 2001, as amended by the amendment thereto on Form 10-K/A filed July
30, 2001 under the captions "Licensing Our Technology," "Third Party
Relationships," "Legal Proceedings," "Executive Compensation," and
"Certain Relationships and Related Transactions;" and in the Prospectus
Supplement under the captions "Cautionary Statements and Risk Factors"
and "Related Party Transactions" in each case insofar as such statements
constitute a summary of the legal matters (with respect to Included
Laws), documents or proceedings referred to therein, fairly present, in
all material respects, the information called for with respect to such
legal matters, documents and proceedings and fairly summarize the
matters referred to therein in all material respects (such counsel need
not express any opinion as to the financial statements or other
financial data contained in the Registration Statement or the Prospectus
or the Prospectus Supplement). To such counsel's knowledge, there are no
Included Laws, contracts or other documents required to be described in
the Registration Statement or to be filed as exhibits to the
Registration Statement by the Regulations which have not been accurately
and completely described or filed as required or incorporated by
reference, it being understood that we express no opinion as to the
financial statements or other financial data contained in the
Registration Statement or the Prospectus.
(x) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding obligation of
the Company. The execution and delivery of this Agreement by the Company
and the performance by the Company of its obligations thereunder have
been duly authorized by all necessary corporate action on the part of
the Company.
(xi) Based solely upon a certificate from an officer of the Company,
and such counsel's review of the Company's Certificate of Incorporation,
the conditions for use of Form S-3, set forth in the General
Instructions thereto, have been satisfied.
(xii) To such counsel's knowledge, the Company is not in violation
or default of its certificate of incorporation or bylaws and is not in
breach of or default of any contract filed as an exhibit to the
Transaction Documents.
(xiii) To such counsel's knowledge, there are no legal or
governmental proceedings pending against the Company which are of a
character required to be described in the Registration Statement and the
Prospectus and which have not been properly described therein.
Such counsel shall confirm that in connection with the preparation of
the Registration Statement and Prospectus, prior to the filing of the
Registration Statement and Prospectus, such counsel participated in conferences
and telephone conversations with representatives of the Company, representatives
of the Placement Agents, and representatives of the independent auditors for the
Company, during which conferences and conversations the contents of the
Registration Statement and the Prospectus and related matters were discussed,
and such counsel reviewed certain corporate records and documents furnished by
the Company. Based on such
Page 18
counsel's participation in such conferences and conversations, such counsel's
review of such records and documents, such counsel's understanding of the U.S.
federal securities laws and the experience gained by such counsel through their
practice thereunder, such counsel shall confirm that no facts have came to their
attention that would lead them to believe (i) that any part of the Registration
Statement (except as to financial statements, statistical data related to such
financial statements and scheduels and other financial data contained therein,
as to which such counsel need not express any opinion), as of the Effective Date
(including the information deemed to be part of the Registration Statement at
the time of effectiveness pursuant to Rule 430A(b)), or any amendment thereof
made prior to the Closing Date as of the date of such amendment, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or (ii) that the Prospectus (except as to the financial statements, statistical
data related to such financial statements and schedules and other financial data
contained therein, as to which such counsel need not express any opinion) as of
its date (or any amendment thereof or supplement thereto made prior to the
Closing Date as of the date of such amendment or supplement) and as of the
Closing Date, contained or contains an untrue statement of a material fact or
omitted or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
In rendering the foregoing opinion, such counsel may rely, (1) as to
matters involving laws of any jurisdiction other than State of Delaware, the
State of California or the United States, upon opinions addressed to the
Placement Agents of other counsel satisfactory to them and Xxxxxx, Xxxx &
Xxxxxxxx LLP, and (2) as to all matters of fact, upon certificates and written
statements of the executive officers of, and accountants for, the Company,
provided, in either case, that such counsel shall state in their opinion that
they and the Placement Agents are justified in relying thereon.
(d) You shall have received on the Closing Date, from Xxxxxx, Xxxx &
Xxxxxxxx LLP, counsel to the Placement Agents, such opinion or opinions, dated
the Closing Date, with respect to such matters as you may reasonably require;
and the Company shall have furnished to such counsel such documents as they
reasonably request for the purposes of enabling them to review or pass on the
matters referred to in this SECTION 6 and in order to evidence the accuracy,
completeness and satisfaction of the representations, warranties and conditions
herein contained.
(e) You shall have received at or prior to the Closing Date from Xxxxxx,
Xxxx & Xxxxxxxx LLP a memorandum or memoranda, in form and substance
satisfactory to you, with respect to the qualification for offering and sale by
the Company of the Shares under state securities or Blue Sky laws of such
jurisdictions as the Placement Agents may have designated to the Company.
(f) On the business day immediately preceding the Closing Date, you
shall have received from Deloitte & Touche LLP and PricewaterhouseCoopers LLP,
letters, dated the business day immediately preceding the Closing Date, in form
and substance satisfactory to you, confirming that they are independent public
accountants with respect to the Company within the
Page 19
meaning of the 1933 Act, the 1933 Act Rules and Regulations, the 1934 Act, and
the 1934 Act Rules and Regulations, and stating to the effect set forth in
Schedule IV hereto.
(g) Except as contemplated in the Prospectus, (i) neither the Company
nor any of its subsidiaries shall have sustained since the date of the latest
audited financial statements included or incorporated by reference in the
Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree; and (ii) subsequent to
the respective dates as of which information is given in the Registration
Statement and the Prospectus, neither the Company nor any of its subsidiaries
shall have incurred any liability or obligation, direct or contingent, or
entered into any transactions, and there shall not have been any change in the
capital stock or short-term or long-term debt of the Company and its
subsidiaries or any change, or any development involving or which might
reasonably be expected to involve a prospective change in the condition
(financial or other), net worth, business, affairs, management, prospects,
results of operations or cash flow of the Company or its subsidiaries, the
effect of which, in any such case described in clause (i) or (ii), is in your
judgment so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares being delivered
on such Closing Date on the terms and in the manner contemplated in the
Prospectus.
(h) There shall not have occurred any of the following: (i) a suspension
or material limitation in trading in securities generally on the New York Stock
Exchange or The Nasdaq National Market or the establishing on such exchanges or
market by the SEC or by such exchanges or markets of minimum or maximum prices
which are not in force and effect on the date hereof; (ii) a suspension or
material limitation in trading in the Company's securities on The Nasdaq
National Market or the establishing on such market by the SEC or by such market
of minimum or maximum prices which are not in force and effect on the date
hereof; (iii) a general moratorium on commercial banking activities declared by
either federal or any state authorities; (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war, which in your judgment makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares in
the manner contemplated in the Prospectus; or (v) any calamity or crisis, change
in national, international or world affairs, act of God, change in the
international or domestic markets, or change in the existing financial,
political or economic conditions in the United States or elsewhere, which in
your judgment makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares in the manner contemplated in the
Prospectus.
(i) You shall have received certificates, dated the Closing Date and
signed by the President and the Chief Financial Officer of the Company, in their
capacities as such, stating that:
(i) the condition set forth in SECTION 6(A) has been fully
satisfied;
Page 20
(ii) they have carefully examined the Registration Statement and the
Prospectus as amended or supplemented and all documents incorporated by
reference therein and nothing has come to their attention that would
lead them to believe that either the Registration Statement or the
Prospectus, or any amendment or supplement thereto or any documents
incorporated by reference therein as of their respective effective,
issue or filing dates, contained, and the Prospectus as amended or
supplemented and all documents incorporated by reference therein and
when read together with the documents incorporated by reference therein,
at such Closing Date, contains any untrue statement of a material fact,
or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(iii) since the Effective Date, there has occurred no event required
to be set forth in an amendment or supplement to the Registration
Statement or the Prospectus which has not been so set forth and there
has been no document required to be filed under the 1934 Act and the
1934 Act Rules and Regulations that upon such filing would be deemed to
be incorporated by reference into the Prospectus that has not been so
filed;
(iv) all representations and warranties made herein by the Company
are true and correct at such Closing Date, with the same effect as if
made on and as of such Closing Date, and all agreements herein to be
performed or complied with by the Company on or prior to such Closing
Date have been duly performed and complied with by the Company;
(v) neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree;
(vi) except as disclosed in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, neither the Company nor any of its
subsidiaries has incurred any liabilities or obligations, direct or
contingent, other than in the ordinary course of business, or entered
into any transactions not in the ordinary course of business, which in
either case are material to the Company or such subsidiary; and there
has not been any material change in the capital stock or material
increase in the short-term debt or long-term debt of the Company or any
of its subsidiaries or any material adverse change or any development
involving or which may reasonably be expected to involve a prospective
material adverse change, in the condition (financial or other), net
worth, business, affairs, management, prospects, results of operations
or cash flow of the Company and its subsidiaries taken as a whole; and
there has been no dividend or distribution of any kind, paid or made by
the Company on any class of its capital stock;
Page 21
(vii) there has not been any change or decrease specified in
paragraphs (iii)(E) or (iii)(F) of the letter or letters delivered to
the Placement Agents referred to in SECTION 6(F) above, except those
changes and decreases that are disclosed therein; and
(viii) covering such other matters as you may reasonably request.
(j) The Company shall have furnished to you at the Closing Date such
further information, opinions, certificates, letters and documents as you may
have reasonably requested.
(k) The Shares shall have been approved for trading upon official notice
of issuance on The Nasdaq National Market.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you and to Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel for the
Placement Agents. The Company will furnish you with such signed and conformed
copies of such opinions, certificates, letters and documents as you may request.
If any of the conditions specified above in this SECTION 6 shall not
have been satisfied at or prior to the Closing Date or waived by you in writing,
this Agreement may be terminated by you on notice to the Company, whereupon the
Company shall not issue or sell the Shares.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company will indemnify and hold harmless the Placement Agents
from and against any losses, damages or liabilities, joint or several, to which
the Placement Agents may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such losses, damages or liabilities (or actions or claims
in respect thereof) arise out of or are based upon (i) an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement, the Prospectus or any other prospectus
relating to the Shares, or any amendment or supplement thereto, or in any blue
sky application or other document executed by the Company or based on any
information furnished in writing by the Company, filed in any state or other
jurisdiction in order to qualify any or all of the Shares under the securities
laws thereof (the "BLUE SKY APPLICATION"), or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Placement Agents for any legal or other expenses incurred by the Placement
Agents in connection with investigating, preparing, pursuing or defending
against or appearing as a third party witness in connection with any such loss,
damage, liability or action or claim, including, without limitation, any
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to the
indemnified party, as such expenses are incurred (including such losses,
damages, liabilities or expenses to the extent of the aggregate amount paid in
settlement of any such action or claim, provided that (subject to SECTION 7(C)
hereof) any such settlement is effected with the written consent of the
Company); PROVIDED, HOWEVER, that the Company shall not be liable in any
Page 22
such case to the extent, but only to the extent, that any such loss, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Prospectus relating to the
Shares in reliance upon and in conformity with written information relating to
the Placement Agents furnished to the Company by the Placement Agents expressly
for use in the preparation thereof (as provided in SECTION 13 hereof).
(b) Each of the Placement Agents, severally and not jointly, will
indemnify and hold harmless the Company from and against any losses, damages or
liabilities to which the Company may become subject, under the 1933 Act, the
1934 Act or otherwise, insofar as such losses, damages or liabilities (or
actions or claims in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus relating to the Shares, or arise out of are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Prospectus
relating to the Shares in reliance upon and in conformity with written
information relating to such Placement Agent furnished to the Company by such
Placement Agent expressly for use in the preparation thereof (as provided in
SECTION 13 hereof), and will reimburse the Company for any legal or other
expenses incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred (including such losses,
damages, liabilities or expenses to the extent of the aggregate amount paid in
settlement of any such action or claim, provided that (subject to SECTION 7(C)
hereof) any such settlement is effected with the written consent of the
Placement Agents).
(c) Promptly after receipt by an indemnified party under SECTION 7(A) or
7(B) hereof of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying party
under SECTION 7(A) or 7(B) hereof, notify each such indemnifying party in
writing of the commencement thereof, but the failure so to notify such
indemnifying party shall not relieve such indemnifying party from any liability
except to the extent that it has been prejudiced in any material respect by such
failure or from any liability that it may have to any such indemnified party
otherwise than under SECTION 7(A) or 7(B) hereof. In case any such action shall
be brought against any such indemnified party and it shall notify each
indemnifying party of the commencement thereof, each such indemnifying party
shall be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party under SECTION 7(A) or 7(B) hereof
similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of such
indemnified party, be counsel to such indemnifying party), and, after notice
from such indemnifying party to such indemnified party of its election so to
assume the defense thereof, such indemnifying party shall not be liable to such
indemnified party under SECTION 7(A) or 7(B) hereof for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. The indemnified party shall have the right to employ its
own counsel in any such action, but the fees and expenses of such counsel shall
be at the expense
Page 23
of such indemnified party unless (i) the employment of counsel by such
indemnified party at the expense of the indemnifying party has been authorized
by the indemnifying party, (ii) the indemnified party shall have been advised by
such counsel that there may be a conflict of interest between the indemnifying
party and the indemnified party in the conduct of the defense, or certain
aspects of the defense, of such action (in which case the indemnifying party
shall not have the right to direct the defense of such action with respect to
those matters or aspects of the defense on which a conflict exists or may exist
on behalf of the indemnified party) or (iii) the indemnifying party shall not in
fact have employed counsel reasonably satisfactory to such indemnified party to
assume the defense of such action, in any of which events such fees and expenses
to the extent applicable shall be borne, and shall be paid as incurred, by the
indemnifying party. If at any time such indemnified party shall have requested
such indemnifying party under SECTION 7(A) or 7(B) hereof to reimburse such
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
SECTION 7(A) or 7(B) hereof effected without its written consent if (A) such
settlement is entered into more than 45 days after receipt by such indemnifying
party of such request for reimbursement, (B) such indemnifying party shall have
received notice of the terms of such settlement at least 30 days prior to such
settlement being entered into and (C) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request for
reimbursement prior to the date of such settlement. No such indemnifying party
shall, without the written consent of such indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not such
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (1) includes an unconditional
release of such indemnified party from all liability arising out of such action
or claim and (2) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any such indemnified party.
In no event shall such indemnifying parties be liable for the fees and expenses
of more than one counsel, including any local counsel, for all such indemnified
parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances.
(d) If the indemnification provided for in this SECTION 7 is by its
terms due and owing but is unavailable or insufficient to indemnify or hold
harmless an indemnified party under SECTION 7(A) or 7(B) hereof in respect of
any losses, damages or liabilities (or actions or claims in respect thereof)
referred to therein, then each indemnifying party under SECTION 7(A) or 7(B)
hereof shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, damages or liabilities (or actions or claims in
respect thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the respective Placement
Agents, on the other hand, from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under SECTION 7(C) hereof and such indemnifying party was prejudiced in a
material respect by such failure, then each such indemnifying party shall
contribute to such amount paid or payable by such indemnified party in
Page 24
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault, as applicable, of the Company, on the one hand, and the
Placement Agents, on the other hand, in connection with the statements or
omissions that resulted in such losses, damages or liabilities (or actions or
claims in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by, as applicable, the Company,
on the one hand, and the respective Placement Agents, on the other hand, shall
be deemed to be in the same proportion as the total net proceeds from such
offering (before deducting expenses) received by the Company bear to the portion
of the total Placement Fee received by each Placement Agent. The relative fault,
as applicable, of the Company, on the one hand, and the Placement Agents, on the
other hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, on the one hand, or the Placement Agents, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Placement
Agents agree that it would not be just and equitable if contribution pursuant to
this SECTION 7(D) were determined by PRO RATA allocation or by any other method
of allocation that does not take account of the equitable considerations
referred to above in this SECTION 7(D). The amount paid or payable by such an
indemnified party as a result of the losses, damages or liabilities (or actions
or claims in respect thereof) referred to above in this SECTION 7(D) shall be
deemed to include any legal or other expenses incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this SECTION 7(D), the Placement Agents shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Shares were sold to the Investors exceeds the amount of
any damages that the Placement Agents have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(e) The obligations of the Company under this SECTION 7 shall be in
addition to any liability that the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director, employee, agent
or other representative and to each person, if any, who controls any of the
Placement Agents within the meaning of the 1933 Act; and the obligations of the
Placement Agents under this SECTION 7 shall be in addition to any liability that
the Placement Agents may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Company who signed the
Registration Statement and to each person, if any, who controls the Company
within the meaning of the 1933 Act
(f) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof, including, without limitation, the
provisions of this SECTION 7, and are fully informed regarding such provisions.
They further acknowledge that the provisions of this SECTION 7 fairly allocate
the risks in light of the ability of the parties to investigate the Company
Page 25
and its business in order to assure that adequate disclosure is made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, and any
supplement or amendment thereof, as required by the 1933 Act.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. The respective
representations, warranties, agreements and statements of the Company and the
Placement Agents, as set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall remain operative and in
full force and effect regardless of any investigation (or any statement as to
the results thereof) made by or on behalf of the Placement Agents or any
controlling person of the Placement Agents, the Company or any of its officers,
directors or any controlling persons, and shall survive the Closing.
9. ENGAGEMENT PERIOD. Pursuant to the Engagement Letter, if the Company
sells or agrees to sell (x) any Securities (including the Shares) within the
six-month period immediately following the Closing Date or the date that this
Agreement is terminated pursuant to SECTION 10 hereof and (y) any Securities
(other than the Shares) prior to, on or within the six month period immediately
following the Closing Date or the date this Agreement is terminated pursuant to
SECTION 10 hereof, then in each case the Company shall pay to the Representative
upon the closing of such sale (public or private) a placement fee equal to the
greater of: (i) $500,000 or (ii) the sum of (A) 3% of the aggregate gross
purchase price of the Securities sold to any of the Investors listed on Schedule
II hereto and (B) 6% of the aggregate gross purchase price of the Securities
sold to any other investors. By way of clarification, the six month period
provided for in this SECTION 9 restates and is not in addition to the six month
period provided for in the Engagement Letter, and the fees and expenses provided
for in this Agreement are in accordance with and not in addition to those
provided for in the Engagement Letter.
10. EFFECTIVE DATE AND TERMINATION.
(a) This Agreement may be terminated: (i) by you at any time at or prior
to the Closing Date by notice to the Company if any condition specified in
SECTION 6 hereof shall not have been satisfied on or prior to the Closing Date
or (ii) by either party if the Escrow Agent does not receive the Requisite Funds
on or before April 9, 2002. Any such termination shall be without liability of
any party to any other party except as provided in SECTION 7, SECTION 9 and
SECTION 11 hereof.
(b) If either party terminates this Agreement as provided in SECTION
10(A), such party shall notify the other party by telephone, facsimile or
telegram, confirmed by letter.
11. COSTS AND EXPENSES. The Company, whether or not the transactions
contemplated hereby are consummated or this Agreement is prevented from becoming
effective under SECTION 10 hereof or is terminated, will bear and pay the costs
and expenses incident to the registration of the Shares and public offering
thereof, including, without limitation, (a) all expenses (including stock
transfer taxes) incurred in connection with the delivery to the several
Investors of the Shares, the filing fees of the SEC, the fees and expenses of
the Company's
Page 26
counsel and accountants and the fees and expenses of counsel for the Placement
Agents, (b) the preparation, printing, filing, delivery and shipping of the
Registration Statement, each Preliminary Prospectus, the Prospectus and any
amendments or supplements thereto and the delivery and shipping of this
Agreement and other offering documents, including the Blue Sky Memoranda, and
any instruments or documents related to any of the foregoing, (c) the furnishing
of copies of such documents to the Placement Agents, (d) the registration or
qualification of the Shares for offering and sale under the securities laws of
the various states and other jurisdictions, (e) the filing fees of the NASD (if
any) and fees and disbursements of counsel to the Placement Agents relating to
any review of the offering by the NASD, (f) all printing and engraving costs
related to preparation of the certificates for the Shares, including transfer
agent and registrar fees, (g) all fees and expenses relating to the
authorization of the Shares for trading on The Nasdaq National Market, (h) all
travel expenses, including air fare and accommodation expenses, of
representatives of the Company in connection with the offering of the Shares,
and (i) all of the other costs and expenses incident to the performance by the
Company of the registration and offering of the Shares; provided, that the
Placement Agents will bear and pay any tombstone advertising costs and expenses
of producing lucites containing a tombstone advertisement that are incurred by
the Placement Agents incident to the public offering of the Shares. The Company
shall reimburse the Placement Agent(s) within 10 days of receiving an invoice
(and such other supporting documentation as may be reasonably requested by the
Company) from any Placement Agent for such costs and expenses.
12. NOTICES. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to the
Placement Agents shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed c/o X.X. Xxxxxxx & Sons, Inc. at Xxx Xxxxx Xxxxxxxxx
Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx Xxxxx, Director, Corporate
Finance, facsimile number (000) 000-0000, with a copy to Xxxx Xxxxxx, General
Counsel, facsimile number (000) 000-0000, or if sent to the Company shall be
mailed, delivered, sent by facsimile transmission, or telegraphed and confirmed
to Valence Technology, Inc., 0000 Xxxxxx Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000, Attention: Xxxxxxx X. Xxxxxxxx, President and Chief Executive Officer,
facsimile number (000) 000-0000.
13. INFORMATION FURNISHED BY PLACEMENT AGENTS. The Company acknowledges
and agrees that the statements set forth under the caption "Plan of
Distribution" in the Prospectus Supplement constitute the only information
furnished by or on behalf of the Placement Agents for use in the preparation of
the Prospectus as referred to in SECTION 4(A)(II) and SECTION 7 hereof.
14. PARTIES. This Agreement shall inure to the benefit of and be binding
upon the Placement Agents, the Company and, to the extent provided in SECTIONS 7
and 8, the officers and directors of the Company and each person who controls
the Company or the Placement Agents and their respective heirs, executors,
administrators, successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, corporation or
other entity any legal or equitable right, remedy or claim under or in respect
of this Agreement
Page 27
or any provision herein contained; this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and their respective successors and assigns and
said controlling persons and said officers and directors, and for the benefit of
no other person, corporation or other entity.
15. COUNTERPARTS. This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same instrument.
16. PRONOUNS. Whenever a pronoun of any gender or number is used herein,
it shall, where appropriate, be deemed to include any other gender and number.
17. TIME OF ESSENCE. Time shall be of the essence of this Agreement.
18. APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Missouri, without giving effect to
the choice of law or conflict of laws principles thereof.
Page 28
If the foregoing is in accordance with your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement between the Company and the Placement
Agents.
VALENCE TECHNOLOGY, INC.
By: /S/ XXXXX XXXXXXXXX
-----------------------------
Title: V.P. OF FINANCE
---------------------------
Accepted in St. Louis,
Missouri as of the date
first above written.
X.X. XXXXXXX & SONS, INC.
as Representative of the Placement Agents
By: /S/ XXXXXX XXXXXX
---------------------------------
Title: MANAGING DIRECTOR
-----------------------------
Page S-1
SCHEDULE I
PLACEMENT AGENTS
X.X. Xxxxxxx & Sons, Inc.
Xx Xxxxx Securities, Incorporated
SCHEDULE II
CERTAIN INVESTORS
SCHEDULE III
FOREIGN QUALIFICATIONS
SCHEDULE IV
Pursuant to SECTION 6(F) of the Placement Agency Agreement, Deloitte &
Touche LLP and PricewaterhouseCoopers LLP shall furnish letters to the Placement
Agents to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the 1933 Act and the
applicable Rules and Regulations thereunder.
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules audited (and, if applicable, pro forma
financial information examined) by them and included or incorporated by
reference in the Prospectus or the Registration Statement comply as to form in
all material respects with the applicable accounting requirements of the 1933
Act and the applicable Rules and Regulations with respect to registration
statements on Form S-3; and, if applicable, they have made a review in
accordance with standards established by the American Institute of Certified
Public Accountants of the unaudited consolidated interim financial statements,
selected financial data, pro forma financial information, prospective financial
statements and/or condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as indicated
in their reports thereon, copies of which have been furnished to the Placement
Agents.
(iii) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a reading
of the unaudited financial statements and other information referred to below,
performing the procedures specified by the AICPA for a review of interim
financial information as discussed in SAS No. 71, Interim Financial Information,
on the latest available interim financial statements of the Company and its
subsidiaries, inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in the
Prospectus, inquiries of officials of the Company and its subsidiaries
responsible for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their attention
that caused them to believe that:
(A) any material modifications should be made to the unaudited
statements of consolidated income, statements of consolidated financial
position and statements of consolidated cash flows included or
incorporated by reference in the Prospectus for them to be in conformity
with generally accepted accounting principles, or the unaudited
statements of consolidated income, statements of consolidated financial
position and statements of consolidated cash flows included in the
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the related
published Rules and Regulations thereunder.
(B) any other unaudited income statement data and balance sheet
items included or incorporated by reference in the Prospectus do not
agree with the corresponding items in the unaudited consolidated
financial statements from which such data and items were derived, and
any such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding amounts in
the audited consolidated financial statements included or incorporated
by reference in the Prospectus.
(C) the unaudited financial statements which were not included or
incorporated by reference in the Prospectus but from which were derived
any unaudited condensed financial statements referred to in Clause (A)
and any unaudited income statement data and balance sheet items included
in the Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included or incorporated by reference
in the Prospectus.
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements.
(E) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the consolidated capital
stock or any increase in the consolidated long-term debt of the Company
and its subsidiaries, or any decreases in consolidated working capital,
net current assets or net assets, or any changes in any other items
specified by the Placement Agents, in each case as compared with amounts
shown in the latest balance sheet included or incorporated by reference
in the Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may occur or
which are described in such letter.
(F) for the period from the date of the latest financial statements
included or incorporated by reference in the Prospectus to the specified
date referred to in Clause (E) there were any decreases in consolidated
net revenues or operating profit or the total or per share amounts of
consolidated net income or any changes in any other items specified by
the Placement Agents, in each case as compared with the comparable
period of the preceding year and with any other period of corresponding
length specified by the Placement Agents, except in each case for
changes, decreases or increases which the Prospectus discloses have
occurred or may occur or which are described in such letter.
(iv) In addition to the audit referred to in their report(s) included or
incorporated by reference in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraph (iii) above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial information specified
by the Placement Agents, which are derived from the general accounting records
of the Company and its subsidiaries for the periods covered by their reports and
any interim or other periods since the latest period covered by their reports,
which appear or are incorporated by reference in the Prospectus, or in Part II
of, or in exhibits and schedules to, the Registration Statement specified by the
Placement Agents, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
