10,160,428 Units Each Unit consisting of One Share of Common Stock, par value $0.0001, and One Warrant to Purchase 1.0 Share of Common Stock And up to 10,000,000 Additional Shares of Common Stock FUELCELL ENERGY, INC. PLACEMENT AGENT AGREEMENT
Exhibit 1.1
10,160,428 Units
Each
Unit consisting of One Share of Common Stock, par value $0.0001, and
One Warrant
to Purchase 1.0 Share of Common Stock
to Purchase 1.0 Share of Common Stock
And up to 10,000,000 Additional Shares of Common Stock
FUELCELL ENERGY, INC.
January 10, 2011
LAZARD CAPITAL MARKETS LLC
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Dear Sirs:
1. Introduction. FuelCell Energy, Inc., a Delaware corporation (the “Company”),
proposes to issue and sell to the purchaser, pursuant to the terms and conditions of this Placement
Agent Agreement (this “Agreement”) and the Subscription Agreement in the form of Exhibit A
attached hereto (the “Subscription Agreement”) entered into with the purchaser identified therein
(the “Purchaser”), up to an aggregate of 10,160,428 units (the “Units”) with each Unit consisting
of (i) one share of common stock (each a “Share”), $0.0001 par value per share (the “Common Stock”)
of the Company and (ii) one warrant to purchase 1.0 of a share of Common Stock (each a “Warrant”,
and collectively, the “Warrants”). Units will not be issued or certificated. The Shares and
Warrants are immediately separable and will be issued separately. The terms and conditions of the
Warrants are set forth in the form of Exhibit B attached hereto. The Company hereby
confirms that Lazard Capital Markets LLC acted as Placement Agent (the “Placement Agent”) in
accordance with the terms and conditions hereof.
In addition, subject to the satisfaction of the Equity Conditions (as defined in Section
3.2(c) of Annex I of the Subscription Agreement), at any time during the eleven (11) Trading
Days (as defined below) ending on the nine (9) month anniversary of this Agreement, the Company
will have the right and will exercise such right (the “Additional Purchase Right”) to require the
Investor to purchase up to an additional 10,000,000 shares of Common Stock (the “Additional
Shares”) for up to an aggregate amount of $20,000,000, unless the Company provides notice to the
Investor prior to September 30, 2011 that it does not intend to exercise such Additional Purchase
Right.
The Shares issuable upon exercise of the Warrants are referred to herein as the “Warrant
Shares” and, together with the Units, the Common Stock, the Warrants and the Additional Shares, are
collectively referred to herein as the “Securities.”
2. Delivery and Payment. On the basis of the representations, warranties and
agreements of the Company herein contained, and subject to the terms and conditions set forth in
this Agreement:
2.1 The Company has authorized and hereby acknowledges that the Placement Agent has
acted as its exclusive agent to solicit offers for the purchase of all or part of the
Securities from the Company in connection with the proposed offering of the Securities (the
“Offering”). Until the Closing Date (as defined in Section 4 hereof), the Company
shall not, without the prior written consent of the Placement Agent, solicit or accept
offers to purchase any Securities otherwise than through the Placement Agent. The Placement
Agent may utilize the expertise of Lazard Frères & Co. LLC in connection with the Placement
Agent’s activities.
2.2 The Company hereby acknowledges that the Placement Agent, as agent of the Company,
used its reasonable best efforts to solicit offers to purchase the Units from the Company on
the terms and subject to the conditions set forth in the Prospectus (as defined below). The
Placement Agent shall use reasonable best efforts to assist the Company in obtaining
performance by the Purchaser whose offer to purchase the Units was solicited by the
Placement Agent and accepted by the Company, but the Placement Agent shall not, except as
otherwise provided in this Agreement, be obligated to disclose the identity of any potential
purchaser or have any liability to the Company in the event any such purchase is not
consummated for any reason. Under no circumstances will the Placement Agent be obligated to
underwrite or purchase any Securities for its own account and, in soliciting purchases any
Securities, the Placement Agent acted solely as the Company’s agent and not as principal.
Notwithstanding the foregoing and except as otherwise provided in Section 2.3, it is
understood and agreed that the Placement Agent (or its affiliates) may, solely at its
discretion and without any obligation to do so, purchase Securities as principal.
2.3 Subject to the provisions of this Section 2, offers for the purchase of
Units were solicited by the Placement Agent as agent for the Company at such times and in
such amounts as the Placement Agent deemed advisable. The Placement Agent communicated to
the Company, orally or in writing, each reasonable offer to purchase Units received by it as
agent of the Company. The Company shall have the sole right to accept offers to purchase the
Units and may reject any such offer, in whole or in part. The Placement Agent has the right,
in its discretion reasonably exercised, without notice to the Company, to reject any offer
to purchase any Securities received by it, in whole or in part, and any such rejection shall
not be deemed a breach of this Agreement.
2.4 The Units are being sold to the Purchaser at a price of $1.87 per Unit. The
purchases of the Units by the Purchaser shall be evidenced by the execution of a
Subscription Agreement by the Purchaser and the Company.
2.5 As compensation for services rendered, (a) on the Closing Date (as defined in
Section 4 hereof), the Company shall pay to the Placement Agent by wire transfer of
immediately available funds to an account or accounts designated by the Placement Agent, an
aggregate amount (the “Placement Fee”) equal to five percent (5.0%) of the gross proceeds
received by the Company from the sale of the Units on such Closing Date and (b) on the
closing date of the purchase and sale of the Additional Shares, the Company shall pay to the
Placement Agent by wire transfer of immediately available funds to an account or accounts
designated by the Placement Agent a fee of five percent (5.0%) of the gross proceeds
received by the Company in connection with its exercise of the Additional Purchase Right.
2
2.6 No Units or Additional Shares which the Company has agreed to sell pursuant to this
Agreement and the Subscription Agreement shall be deemed to have been purchased and paid
for, or sold by the Company, until such Shares and Warrants and any Additional Shares shall
have been delivered to the Purchaser thereof against payment by such Purchaser. If the
Company shall default in its obligations to deliver any Securities to the Purchaser, the
Company shall indemnify and hold the Placement Agent harmless against any loss, claim,
damage or expense arising from or as a result of such default by the Company in accordance
with the procedures set forth in Section 8(c) herein.
3. Representations and Warranties of the Company. The Company represents and warrants
to the Placement Agent, as of the date hereof and as of the closing date, and agrees with the
Placement Agent and the Purchaser that:
(a) The Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and published rules and
regulations thereunder (the “Rules and Regulations”) adopted by the Securities and Exchange
Commission (the “Commission”) a “shelf” Registration Statement (as hereinafter defined) on
Form S-3 (File No. 333-164412), which became effective as of September 21, 2010 (the
“Effective Date”), including a base prospectus relating to the Securities (the “Base
Prospectus”), and such amendments and supplements thereto as may have been required up to
the date of this Agreement. The term “Registration Statement” as used in this Agreement
means the registration statement (including all exhibits, financial schedules and all
documents and information deemed to be a part of the Registration Statement pursuant to Rule
430B of the Rules and Regulations), as amended and/or supplemented to the date of this
Agreement, including the Base Prospectus. The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the Prospectus has been issued
by the Commission and no proceedings for that purpose have been instituted or, to the
Company’s knowledge, are threatened by the Commission. The Company, if required by the
Rules and Regulations of the Commission, will file the Prospectus (as defined below), with
the Commission pursuant to Rule 424(b) of the Rules and Regulations. The term “Prospectus”
as used in this Agreement means the Prospectus, in the form in which it is to be filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations, or, if the Prospectus
is not to be filed with the Commission pursuant to Rule 424(b), the Prospectus in the form
included as part of the Registration Statement as of the Effective Date, except that if any
revised prospectus or prospectus
3
supplement
shall be provided to the Placement Agent by the
Company for use in connection with the Offering which differs from the Prospectus (whether
or not such revised prospectus or prospectus supplement is required to be filed by the
Company pursuant to Rule 424(b) of the Rules and Regulations), the term “Prospectus” shall
refer to such revised prospectus or prospectus supplement, as the case may be, from and
after the time it is first provided to the Placement Agent for such use. Any preliminary
prospectus or prospectus subject to completion included in the Registration Statement or
filed with the Commission pursuant to Rule 424 of the Rules and Regulations is hereafter
called a “Preliminary Prospectus.” Any reference herein to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on or before the
last to occur of the Effective Date, the date of the Preliminary Prospectus, or the date of
the Prospectus, and any reference herein to the terms “amend,” “amendment,” or “supplement”
with respect to the Registration Statement, any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include (i) the filing of any document under the Exchange
Act after the Effective Date, the date of such Preliminary Prospectus or the date of the
Prospectus, as the case may be, which is incorporated by reference and (ii) any such
document so filed. If the Company has filed an abbreviated registration statement to
register additional securities pursuant to Rule 462(b) under the Rules and Regulations (the
“462(b) Registration Statement”), then any reference herein to the Registration Statement
shall also be deemed to include such 462(b) Registration Statement.
(b) As of the Applicable Time (as defined below) and as of the Closing Date, neither
(i) any General Use Free Writing Prospectus (as defined below) issued at or prior to the
Applicable Time, and the Pricing Prospectus (as defined below) and the information included
on Schedule A hereto, all considered together (collectively, the “General Disclosure
Package”), (ii) any individual Limited Use Free Writing Prospectus (as defined below), nor
(iii) the bona fide electronic road show (as defined in Rule 433(h)(5) of the Rules and
Regulations), if any, that has been made available without restriction to any person, when
considered together with the General Disclosure Package, included or will include, any
untrue statement of a material fact or omitted or as of the Closing Date will omit, to state
a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however, that the
Company makes no representations or warranties as to information contained in or omitted
from any Issuer Free Writing Prospectus, in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of the Placement Agent specifically for
inclusion therein, which information the parties hereto agree is limited to the Placement
Agent’s Information (as defined in Section 17). As used in this paragraph
(b) and elsewhere in this Agreement:
“Applicable Time” means 8:00 A.M., New York time, on the date of this Agreement.
“General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is
identified on Schedule A to this Agreement.
4
“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433 of the Rules and Regulations relating to the Securities in the form filed or
required to be filed with the Commission or, if not required to be filed, in the form
retained in the Company’s records pursuant to Rule 433(g) of the Rules and Regulations.
“Limited Use Free Writing Prospectuses” means any Issuer Free Writing Prospectus that is not
a General Use Free Writing Prospectus.
“Pricing Prospectus” means the Preliminary Prospectus, if any, and the Base Prospectus, each
as amended and supplemented immediately prior to the Applicable Time, including any document
incorporated by reference therein and any prospectus supplement deemed to be a part thereof.
(c) No order preventing or suspending the use of any Preliminary Prospectus, any Issuer
Free Writing Prospectus or the Prospectus relating to the Offering has been issued by the
Commission, and no proceeding for that purpose or pursuant to Section 8A of the Securities
Act has been instituted or threatened by the Commission, and each Preliminary Prospectus (if
any), at the time of filing thereof, conformed in all material respects to the requirements
of the Securities Act and the Rules and Regulations, and did not contain an untrue statement
of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no representations or
warranties as to information contained in or omitted from any Preliminary Prospectus, in
reliance upon, and in conformity with, written information furnished to the Company by or on
behalf of the Placement Agent specifically for inclusion therein, which information the
parties hereto agree is limited to the Placement Agent’s Information (as defined in
Section 17).
(d) At the time the Registration Statement became or becomes effective, at the date of
this Agreement and at the Closing Date, the Registration Statement conformed and will
conform in all material respects to the requirements of the Securities Act and the Rules and
Regulations and did not and will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the statements
therein not misleading; the Prospectus, at the time the Prospectus was issued and at the
Closing Date, conformed and will conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the foregoing representations and warranties in this
paragraph (d) shall not apply to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of the Placement Agent specifically for
inclusion therein, which information the parties hereto agree is limited to the Placement
Agent’s Information (as defined in Section 17).
5
(e) Each Issuer Free Writing Prospectus, if any, as of its issue date and at all
subsequent times through the completion of the public offer and sale of the Units or until
any earlier date that the Company notified or notifies the Placement Agent as described in
Section 5(e), did not, does not and will not include any information that
conflicted, conflicts or will conflict with the information contained in the Registration
Statement, Pricing Prospectus or the Prospectus, including any document incorporated by
reference therein and any prospectus supplement deemed to be a part thereof that has not
been superseded or modified, or includes an untrue statement of a material fact or omitted
or would omit to state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing sentence does not apply to statements in or omissions
from any Issuer Free Writing Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of the Placement Agent specifically for
inclusion therein, which information the parties hereto agree is limited to the Placement
Agent’s Information (as defined in Section 17).
(f) The documents incorporated by reference in the Prospectus, when they became
effective or were filed with the Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder and none of such documents contained
any untrue statement of a material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and any further documents so filed and
incorporated by reference in the Prospectus, when such documents become effective or are
filed with the Commission, as the case may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they were made,
not misleading.
(g) (i) At the earliest time after the filing of the Registration Statement that the
Company or another offering participant made a bona fide offer (within the meaning of Rule
164(h)(2) under the Securities Act) of the Securities and (ii) at the date hereof, the
Company was not and is not an “ineligible issuer,” as defined in Rule 405 under the
Securities Act. The Company has not, directly or indirectly, distributed and will not
distribute any offering material in connection with the Offering other than any Preliminary
Prospectus, the Prospectus and other materials, if any, permitted under the Securities Act
and consistent with Section 5(b) below. The Company will file with the Commission
all Issuer Free Writing Prospectuses (other than a “road show,” as described in Rule
433(d)(8) of the Rules and Regulations), if any, in the time and manner required under Rules
163(b)(2) and 433(d) of the Rules and Regulations.
6
(h) The Company and each of its subsidiaries (as defined in Section 15) have
been duly organized and are validly existing as corporations or other legal entities in good
standing (or the foreign equivalent thereof) under the laws of their respective
jurisdictions of organization. The Company and each of its subsidiaries are duly qualified
to do business and are in good standing as foreign corporations or other legal entities in
each jurisdiction in which their respective ownership or lease of property or the conduct of
their respective businesses requires such qualification and have all power and authority
(corporate or other) necessary to own or hold their respective properties and to conduct the
businesses in which they are engaged, except where the failure to so qualify or have such
power or authority would not (i) have, singly or in the aggregate, a material adverse effect
on the condition (financial or otherwise), results of operations, assets, properties,
business or prospects of the Company and its subsidiaries taken as a whole, or (ii) impair
in any material respect the ability of the Company to perform its obligations under this
Agreement or to consummate any transactions contemplated by this Agreement, the General
Disclosure Package or the Prospectus (any such effect as described in clauses (i) or (ii), a
“Material Adverse Effect”). The Company owns or controls, directly or indirectly, only the
following corporations, partnerships, limited liability partnerships, limited liability
companies, associations or other entities: (i) FCE FuelCell Energy, Ltd., a Canadian
company, (ii) Alliance Monterey, LLC, a California limited liability company, (iii) Alliance
Chico, LLC, a California limited liability company, (iv) Alliance Star Energy, LLC, a
California limited liability company, (v) Alliance TST Energy, LLC, a California limited
liability company, (vi) Bridgeport Fuel Cell Park, LLC, a Connecticut limited liability
company, (vii) DFC-ERG Milford, LLC, a Connecticut limited liability company, (viii) DFC-ERG
Connecticut, LLC, a Connecticut limited liability company, (ix) FCE Korea, Ltd., a South
Korean company, (x) Star Energy East LLC, and (xi) Long Beach Clean Energy, LLC.
(i) The Company has the full right, power and authority to enter into this Agreement,
and to perform and to discharge its obligations hereunder; and this Agreement has been duly
authorized, executed and delivered by the Company, and constitutes a valid and binding
obligation of the Company enforceable against the Company in accordance with its terms,
except as rights to indemnify hereunder may be limited by federal or state securities laws
and except as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally and subject to
general principles of equity.
(j) The Shares, the Warrants and the Warrant Shares to be issued and sold by the
Company to the Purchaser hereunder, under the Subscription Agreement and Pursuant to the
Warrants have been duly and validly authorized and, when issued and delivered by the Company
against payment therefor as provided herein and therein, the Shares and the Warrant Shares
will be duly and validly issued, fully paid and nonassessable and free of any preemptive or
similar rights, and will conform to the description thereof contained in the General
Disclosure Package and the Prospectus. Following satisfaction of the Equity Conditions (as
defined in Section 3.2(c) of Annex I of the Subscription Agreement), including
without limitation, the approval by the shareholders of the Company at a special or annual
meeting of the Company’s shareholders necessary to amend the Company’s certificate of
incorporation providing for the increase in the number of authorized shares of Common Stock
7
necessary to validly issue the Additional Shares pursuant to the Additional Purchase Right
of the Company set forth in the Subscription Agreement, when issued and delivered by the
Company against payment therefor as provided therein, will be duly and validly issued, fully
paid and nonassessable and free of any preemptive or similar rights, and will conform to the
description thereof contained in the General Disclosure Package and the Prospectus. There
are no preemptive rights or other rights to subscribe for or to purchase any shares of
Common Stock or shares of any other capital stock or other equity interests of the Company
or any of its subsidiaries, or any agreement or arrangement between the Company and any of
the Company’s stockholders or between any of the Company’s subsidiaries and any of such
subsidiary’s stockholders, or to the Company’s knowledge, between or among any of the
Company’s stockholders or any of its subsidiaries’ stockholders, which grant special rights
with respect to any shares of the Company’s or any of its subsidiaries’ capital stock or
which in any way affect any stockholder’s ability or right to alienate freely or vote such
shares (other than rights which have been waived in writing in connection with the issuance
and sale of the Securities and the other transactions contemplated by this Agreement or
otherwise satisfied, ). In connection with this Offering, the Company has received a
written waiver from POSCO Power (“POSCO”) of its investor rights under that certain
Securities Purchase Agreement between POSCO and the Company, dated June 9, 2009 (“Posco
Securities Purchase Agreement”).
(k) The Company has an authorized capitalization as set forth in the Pricing
Prospectus, and all of the issued shares of the Company have been duly and validly
authorized and issued, are fully paid and nonassessable, have been issued in compliance with
federal and state securities laws, and conform to the description thereof contained in the
General Disclosure Package and the Prospectus. As of December 31, 2010, there were
113,031,486 shares of Common Stock, par value $0.0001, issued and outstanding, 64,020 Series
B preferred shares issued and outstanding (the “Series B Preferred Shares”), convertible
into 5,448,512 shares of common stock. There are also 1,000,000 Series 1 preferred shares,
issued and outstanding (the “Series 1 Preferred Shares”), which would be convertible into
193,110 shares of common stock prior to July 31, 2015 and 7,482,703 shares of common stock
issuable to satisfy accrued dividend obligations as of December 31, 2010. There are also
4,788,067 shares of Common Stock were issuable upon the exercise of all options outstanding
as of such date. Since such date, the Company has not issued any securities, other than
Common Stock of the Company issued pursuant to the exercise of stock options previously
outstanding under the Company’s stock plans or the issuance of options or restricted Common
Stock under the Company’s stock plans. All of the stock options, warrants and other rights
to purchase or exchange any securities for shares of the Company’s capital stock have been
duly authorized and validly issued, and were issued in compliance with US federal and state
securities laws. None of the outstanding shares of Common Stock was issued in violation of
any preemptive rights, rights of first refusal or other similar rights to subscribe for or
purchase securities of the Company. There are no authorized or outstanding shares of
capital stock, options, warrants, preemptive rights, rights of first refusal or other rights
to purchase, or equity or debt securities convertible into or exchangeable or exercisable
for, any capital stock of the Company or any of its subsidiaries other than those described
above or accurately described in the General Disclosure Package. The description of the
Company’s stock option, stock bonus and other stock plans or arrangements, and the stock
options or other rights granted thereunder, as described in the General Disclosure Package
and the Prospectus, accurately and fairly present the information required to be shown with
respect to such plans, arrangements, stock options and rights.
8
(l) All the outstanding shares of capital stock or other equity interests of each
subsidiary of the Company have been duly authorized and validly issued, are fully paid and
nonassessable and, except to the extent set forth in the General Disclosure Package or the
Prospectus, are owned by the Company directly or indirectly through one or more wholly-owned
subsidiaries, free and clear of any claim, lien, encumbrance, security interest, restriction
upon voting or transfer or any other claim of any third party.
(m) The execution, delivery and performance of this Agreement, the Warrant and the
Subscription Agreement by the Company, the issuance and sale of the Units and any Additional
Shares by the Company and the consummation of the transactions contemplated hereby and
thereby will not (with or without notice or lapse of time or both) (i) conflict with or
result in a breach or violation of any of the terms or provisions of, constitute a default
or Debt Repayment Triggering Event (as defined below) under, give rise to any right of
termination or other right or the cancellation or acceleration of any right or obligation or
loss of a benefit under, or give rise to the creation or imposition of any lien,
encumbrance, security interest, claim or charge upon any property or assets of the Company
or any subsidiary pursuant to, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, (ii) result in any violation of
the provisions of the charter (other than the need for a shareholder vote to increase the
number of authorized shares of Common Stock relating solely to the Additional Purchase
Right) or by-laws (or analogous governing instruments, as applicable) of the Company or any
of its subsidiaries or (iii) result in any violation of any law, statute, rule, regulation,
judgment, order or decree of any court or governmental agency or body, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of their properties
or assets, except with respect to clauses (i) and (iii) above, to the extent any such
conflict, breach or violation has been waived or would not result in a Material Adverse
Effect. A “Debt Repayment Triggering Event” means any event or condition that gives, or
with the giving of notice or lapse of time would give the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder’s behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such indebtedness by
the Company or any of its subsidiaries.
(n) No consent, approval, authorization or order of, or filing, qualification or
registration with, any court or governmental agency or body, foreign or domestic, which has
not been made, obtained or taken and is not in full force and effect, is required for the
execution, delivery and performance of this Agreement, the Warrant or the Subscription
Agreement by the Company, the offer or sale of the Securities or the consummation of the
transactions contemplated hereby or thereby, except for the registration of the Securities
under the Securities Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable state securities
laws, the Financial Industry Regulatory Authority (“FINRA”) and the NASDAQ Global Market
(the “NASDAQ GM”) in connection with the Offering by the Company, and the listing of the
Shares and Warrant Shares on the NASDAQ GM.
9
(o) KPMG, LLP, who have certified certain financial statements and related schedules
included or incorporated by reference in the Registration Statement, the General Disclosure
Package and the Prospectus, and have audited the Company’s internal control over financial
reporting and management’s assessment thereof, is an independent registered public
accounting firm as required by the Securities Act and the Rules and Regulations and the
Public Company Accounting Oversight Board (United States) (the “PCAOB”). Except as
pre-approved in accordance with the requirements set forth in Section 10A of the Exchange
Act, KPMG, LLP has not been engaged by the Company to perform any “prohibited activities”
(as defined in Section 10A of the Exchange Act).
(p) The financial statements, together with the related notes and schedules, included
or incorporated by reference in the General Disclosure Package, the Prospectus and in the
Registration Statement fairly present the financial position and the results of operations
and changes in stockholders’ equity and cash flows of the Company and its consolidated
subsidiaries and other consolidated entities at the respective dates or for the respective
periods therein specified. Such statements and related notes and schedules have been
prepared in accordance with generally accepted accounting principles in the United States
(“GAAP”) applied on a consistent basis throughout the periods involved except as may be set
forth in the related notes included or incorporated by reference in the General Disclosure
Package. The financial statements, together with the related notes and schedules, included
or incorporated by reference in the General Disclosure Package and the Prospectus comply in
all material respects with the Securities Act, the Exchange Act, and the Rules and
Regulations and the rules and regulations under the Exchange Act. No other financial
statements or supporting schedules or exhibits are required by the Securities Act or the
Rules and Regulations to be described, or included or incorporated by reference in the
Registration Statement, the General Disclosure Package or the Prospectus. There is no pro
forma or as adjusted financial information which is required to be included in the
Registration Statement, the General Disclosure Package, or and the Prospectus or a document
incorporated by reference therein in accordance with the Securities Act and the Rules and
Regulations which has not been included or incorporated as so required.
(q) 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 General
Disclosure Package, 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, otherwise than as set forth or
contemplated in the General Disclosure Package; and, since such date, there has not been any
change in the capital stock or long-term debt of the Company or any of its subsidiaries or
any material adverse changes, or any development involving a prospective material adverse
change, in or affecting the business, assets, general affairs, management, financial
position, prospects, stockholders’ equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or contemplated in the General
Disclosure Package.
10
(r) There are no legal or governmental actions, suits, claims or proceedings pending
or, to the Company’s knowledge, threatened or contemplated to which the Company or any of
its subsidiaries is or would be a party or of which any of their respective properties is or
would be subject at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or agency, or before or by any
self-regulatory organization or other non-governmental regulatory authority which are
required to be described in the Registration Statement, the General Disclosure Package or
the Prospectus or a document incorporated by reference therein and are not so described
therein, or which, singly or in the aggregate, if resolved adversely to the Company or such
subsidiary, would reasonably be likely to result in a Material Adverse Effect or prevent or
materially and adversely affect the ability of the Company to consummate the transactions
contemplated hereby. To the Company’s knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by other third parties.
(s) Neither the Company nor any of its subsidiaries is in (i) violation of its charter
or by-laws (or analogous governing instrument, as applicable), (ii) default in any respect,
and no event has occurred which, with notice or lapse of time or both, would constitute such
a default, in the due performance or observance of any term, covenant, obligation, agreement
or condition contained in any indenture, mortgage, deed of trust, bank loan or credit
agreement, other evidence of indebtedness, or any license, lease, contract or other
agreement or instrument to which it is a party or by which the Company or its subsidiaries
are is bound or to which any of its property or assets is subject or (iii) violation in any
respect of any statute, law, ordinance, governmental rule, regulation, ordinance, or court
order, decree or judgment to which it or its property or assets may be subject except, in
the case of clauses (ii) and (iii) of this paragraph (s), for any violations or defaults
which would not, singly or in the aggregate, have a Material Adverse Effect.
(t) The Company and each of its subsidiaries have made all material filings,
applications and submissions required by, and owns or possess all material approvals,
licenses, certificates, certifications, clearances, consents, exemptions, marks,
notifications, orders, authorizations and permits issued by, and have made all material
declarations and filings with, the appropriate local, state, federal or foreign regulatory
agencies or bodies that are necessary or desirable for the ownership of their respective
properties or the conduct of their respective businesses as described in the General
Disclosure Package and the Prospectus (collectively, the “Governmental Permits”) and is in
compliance in all material respects with the terms and conditions of all such Governmental
Permits, except where any failures to possess or make the same would not, singly or in the
aggregate, have a Material Adverse Effect. All such Governmental Permits are valid and in
full force and effect. All such Governmental Permits are free and clear of any restriction
or condition that are in addition to, or materially different from those normally applicable
to similar licenses, certificates, authorizations and permits. Neither the Company nor any
of its subsidiaries has received any notice of any proceedings relating to revocation or
modification of, any such Permit, which, individually or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have a Material Adverse Effect. Except as
may be required under the Securities Act and state and foreign Blue Sky laws and the rules
and regulations of FINRA, no other Governmental Permits are required for the Company or any
of its subsidiaries to enter into, deliver and perform this Agreement, the Subscription
Agreement or the Warrant and to issue and sell the Units or any Additional Shares to be
issued and sold by the Company hereunder and thereunder.
11
(u) Neither the Company nor any of its subsidiaries is or, after giving effect to the
Offering and the application of the proceeds thereof as described in the General Disclosure
Package and the Prospectus, will be (i) required to register as an “investment company” as
defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”),
and the rules and regulations of the Commission thereunder or (ii) a “business development
company” (as defined in Section 2(a)(48) of the Investment Company Act).
(v) Neither the Company, its subsidiaries nor, to the Company’s knowledge, any of the
Company’s or its subsidiaries’ officers, directors or affiliates has taken or will take,
directly or indirectly, any action designed or intended to stabilize or manipulate the price
of any security of the Company, or which caused or resulted in, or which could in the future
reasonably be expected to cause or result in, stabilization or manipulation of the price of
any security of the Company.
(w) The Company and each of its subsidiaries owns or possesses the right to use all
patents, trademarks, trademark registrations, service marks, service ▇▇▇▇ registrations,
trade names, copyrights, licenses, inventions, software, databases, know-how, Internet
domain names, trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures, and other intellectual property
(collectively, “Intellectual Property”) necessary to carry on their respective businesses as
currently conducted, and as proposed to be conducted and described in the General Disclosure
Package and the Prospectus, and the Company is not aware of any claim to the contrary or
any challenge by any other person to the rights of the Company and its subsidiaries with
respect to the foregoing except for those that would not reasonably be expected to have a
Material Adverse Effect. The Intellectual Property licenses described in the General
Disclosure Package and the Prospectus are valid, binding upon, and enforceable by or against
the parties thereto in accordance with their terms. The Company and each of its
subsidiaries has complied in all material respects with, and is not in breach nor has
received any asserted or threatened claim of breach of, any Intellectual Property license,
and the Company has no knowledge of any breach or anticipated breach by any other person to
any Intellectual Property license. The Company’s and each of its subsidiaries’ businesses
as now conducted and as proposed to be conducted do not and will not infringe or conflict
with any valid and enforceable patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses or other Intellectual Property or franchise
right of any person. Neither
12
the Company nor any of its subsidiaries has received notice of any claim against the
Company or any of its subsidiaries alleging the infringement by the Company or any of its
subsidiaries of any patent, trademark, service ▇▇▇▇, trade name, copyright, trade secret,
license in or other intellectual property right or franchise right of any person. The
Company and each of its subsidiaries has taken all reasonable steps to protect, maintain and
safeguard its rights in all Intellectual Property, including the execution of appropriate
nondisclosure and confidentiality agreements. The consummation of the transactions
contemplated by this Agreement will not result in the loss or impairment of or payment of
any additional amounts with respect to, nor require the consent of any other person in
respect of, the Company’s or any of its subsidiaries’ right to own, use, or hold for use any
of the Intellectual Property as owned, used or held for use in the conduct of the businesses
as currently conducted. The Company and each of its subsidiaries has at all times complied
in all material respects with all applicable laws relating to privacy, data protection, and
the collection and use of personal information collected, used, or held for use by the
Company and any of its subsidiaries in the conduct of the Company’s and its subsidiaries
businesses. No claims have been asserted or threatened against the Company or any of its
subsidiaries alleging a violation of any person’s privacy or personal information or data
rights and, to the knowledge of the Company, the consummation of the transactions
contemplated hereby will not breach or otherwise cause any violation of any law related to
privacy, data protection, or the collection and use of personal information collected, used,
or held for use by the Company or any of its subsidiaries in the conduct of the Company’s or
any of its subsidiaries’ businesses. The Company and each of its subsidiaries takes
reasonable measures to ensure that such information is protected against unauthorized
access, use, modification, or other misuse.
(x) The Company and each of its subsidiaries have good, valid and marketable title in
fee simple to, or have valid rights to lease or otherwise use, all items of real or personal
property which are material to the business of the Company and its subsidiaries taken as a
whole, in each case free and clear of all liens, encumbrances, security interests, claims
and defects that do not, singly or in the aggregate, materially affect the value of such
property and do not interfere with the use made and proposed to be made of such property by
the Company or any of its subsidiaries; and all of the leases and subleases material to the
business of the Company and its subsidiaries, considered as one enterprise, and under which
the Company or any of its subsidiaries holds properties described in the General Disclosure
Package and the Prospectus, are in full force and effect, and neither the Company nor any
subsidiary has received any notice of any material claim of any sort that has been asserted
by anyone adverse to the rights of the Company or any subsidiary under any of the leases or
subleases mentioned above, or affecting or questioning the rights of the Company or such
subsidiary to the continued possession of the leased or subleased premises under any such
lease or sublease.
13
(y) No labor disturbance or dispute with the employees of the Company or any of the
Company’s subsidiaries exists, or, to the best of the Company’s knowledge, is threatened or
imminent, which would reasonably be expected to result in a Material Adverse Effect. The
Company is not aware of any existing or imminent labor disturbance by the employees of any
of its or its subsidiaries’ principal suppliers, manufacturers, customers or contractors
that, singly or in the aggregate, might be expected to have a Material Adverse Effect. The
Company is not aware that any key employee or significant group of employees of the Company
or any of the Company’s subsidiaries plans to terminate employment with the Company or any
of the Company’s subsidiaries. Neither the Company nor any of its subsidiaries has engaged
in any unfair labor practice; except for matters which would not, singly or in the
aggregate, result in a Material Adverse Effect, (i) there is (A) no unfair labor practice
complaint pending or, to the Company’s knowledge, threatened against the Company or any of
its subsidiaries before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under collective bargaining agreements is pending or to the
Company’s knowledge, threatened, (B) no strike, labor dispute, slowdown or stoppage pending
or, to the Company’s knowledge, threatened against the Company or any of its subsidiaries
and (C) no union representation dispute currently existing concerning the employees of the
Company or any of its subsidiaries and (ii) to the Company’s knowledge, no union organizing
activities are currently taking place concerning the employees of the Company or any of its
subsidiaries.
(z) No “prohibited transaction” (as defined in Section 406 of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (“ERISA”), or Section 4975 of the Internal Revenue Code of 1986,
as amended from time to time (the “Code”)) has occurred or could reasonably be expected to
occur with respect to any employee benefit plan of the Company or any of its subsidiaries
which could, singly or in the aggregate, have a Material Adverse Effect. Each employee
benefit plan of the Company or any of its subsidiaries is in compliance in all material
respects with applicable law, including ERISA and the Code. For purposes of this section,
an “employee benefit plan” and an “employee pension benefit plan” are as defined in ERISA
section 3(2), and an employee welfare benefit plan as defined in ERISA section 3(1). The
Company and its subsidiaries have not incurred and could not reasonably be expected to incur
liability under Title IV of ERISA with respect to the termination of, or withdrawal from,
any pension plan (as defined in ERISA). 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, and, to the knowledge of the Company, nothing has
occurred, whether by action or by failure to act, which could, singly or in the aggregate,
cause the loss of such qualification.
14
(aa) The Company and its subsidiaries are and have been in compliance with all foreign,
federal, state and local statute, law (including the common law), ordinance, rule,
regulation, order, judgment, decree or Governmental Permit, relating to the use, treatment,
storage and disposal of hazardous or toxic substances, materials or wastes or the protection
of health and safety or the environment which are applicable to their businesses
(“Environmental Laws”), except where the failure to comply would not, singly or in the
aggregate, have a Material Adverse Effect. There has been no storage, generation,
transportation, handling, treatment, disposal, discharge, emission, or other release of any
kind of hazardous or toxic substances, materials or wastes by, due to, or caused by the
Company or any of its subsidiaries (or, to the Company’s knowledge, any other entity for
whose acts or omissions the Company or any of its subsidiaries is or may otherwise be
liable) upon any of the property now or previously owned, leased or operated by the Company
or any of its subsidiaries, or upon any other property, in violation of, or which would give
rise to any liability under, any Environmental Law, except for any violation or liability
which would not have, singly or in the aggregate with all such violations and liabilities, a
Material Adverse Effect; and there has been no disposal, discharge, emission or other
release of any kind onto such property or into the environment surrounding such property of
any hazardous or toxic substances, materials or wastes with respect to which the Company has
knowledge, except for any such disposal, discharge, emission, or other release of any kind
which would not have, singly or in the aggregate with all such discharges and other
releases, a Material Adverse Effect. In the ordinary course of business, the Company and
its subsidiaries conduct reviews of the effect of Environmental Laws on their businesses and
assets, as part of which they identify and evaluate associated costs and liabilities
(including, without limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws and Governmental Permits issued
thereunder, any related constraints on operating activities and any potential liabilities to
third parties). On the basis of such reviews, the Company and its subsidiaries have
reasonably concluded that such associated costs and liabilities would not have, singly or in
the aggregate, a Material Adverse Effect.
(bb) The Company and its subsidiaries are in compliance in all respects with all
applicable provisions of the Occupational Safety and Health Act of 1970, as amended,
including all applicable regulations thereunder, except for such noncompliance as would not,
singly or in the aggregate, have a Material Adverse Effect.
(cc) The Company and its subsidiaries, each (i) has timely filed all necessary federal,
state, local and foreign tax returns (or timely filed applicable extensions therefor) that
have been required to be filed, and all such returns were true, complete and correct, (ii)
has paid all federal, state, local and foreign taxes, assessments, governmental or other
charges that are due and payable for which it is liable, including, without limitation, all
sales and use taxes and all taxes which the Company or any of its subsidiaries is obligated
to withhold from amounts owing to employees, creditors and third parties, and (iii) does not
have any tax deficiency or claims outstanding or assessed or, to the best of its knowledge,
proposed against any of them, except those, in each of the cases described in clauses (i),
(ii) and (iii) of this paragraph (cc), that would not, singly or in the aggregate,
have a Material Adverse Effect. The Company and its subsidiaries, each has not engaged in
any transaction which is a corporate tax shelter or which could be characterized as such by
the Internal Revenue Service or any other taxing authority. The accruals and reserves on
the books and records of the Company and its subsidiaries in respect of tax liabilities for
any taxable period not yet finally determined are adequate to meet any assessments and
related liabilities for any such period, and since October 31, 2010 the Company and its
subsidiaries each has not incurred any liability for taxes other than in the ordinary
course.
15
(dd) The Company and each of its subsidiaries maintains or is covered by insurance
provided by recognized, financially sound and reputable institutions with insurance policies
in such amounts and covering such risks as is adequate for the conduct of its business and
the value of its properties and as is customary for companies engaged in similar businesses
in similar industries. All such insurance is fully in force on the date hereof and will be
fully in force as of the Closing Date. 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. Neither the
Company nor any of its subsidiaries has been denied any material insurance policy or
coverage for which it has applied. Neither the Company nor any of its subsidiaries insures
risk of loss through any captive insurance, risk retention group, reciprocal group or by
means of any fund or pool of assets specifically set aside for contingent liabilities other
than as described in the General Disclosure Package.
(ee) The Company and its subsidiaries each maintains a system of internal accounting
and other controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management’s general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. Except as
described in the General Disclosure Package, since the end of the Company’s most recent
audited fiscal year, there has been (A) no material weakness in the Company’s internal
control over financial reporting (whether or not remediated) and (B) no change in the
Company’s internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over financial
reporting.
(ff) The Company has established, maintains and evaluates “disclosure controls and
procedures” (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange
Act), which (i) are designed to ensure that material information relating to the Company and
its subsidiaries is made known to the Company’s principal executive officer and its
principal financial officer by others within those entities, particularly during the periods
in which the periodic reports required under the Exchange Act are being prepared, (ii) have
been evaluated for effectiveness as of the end of the last fiscal period covered by the
Registration Statement; and (iii) such disclosure controls and procedures are effective to
perform the functions for which they were established. There are no significant
deficiencies or material weaknesses in the design or operation of internal controls which
could adversely affect the Company’s ability to record, process, summarize, or report
financial data to management and the Board of Directors of the Company. The Company is not
aware of any fraud, whether or not material, that involves management or other employees who
have a role in the Company’s internal controls; and since the date of the most recent
evaluation of such disclosure controls and procedures, there have been no significant
changes in internal controls or in other factors that could significantly affect internal
controls, including any corrective actions with regard to significant deficiencies and
material weaknesses. Except as set forth in the General Disclosure Package, the Audit
Committee of the Board of Directors of the Company (the “Audit Committee”) is not reviewing
or investigating, and neither the Company’s independent auditors nor its internal auditors
have recommended that the Audit Committee review or investigate, (iv) adding to, deleting,
changing the application of or changing the Company’s disclosure with respect to, any of the
Company’s material accounting policies, (v) any manner which could result in a restatement
of the Company’s financial statements for any annual or interim period during the current or
prior three fiscal years, or (iii) a significant deficiency, material weakness, change in
internal control over financial reporting or fraud involving management or other employees
who have a significant role in the internal control over financial reporting.
16
(gg) Except as described in the General Disclosure Package and the Prospectus, there
are no material off-balance sheet transactions (including, without limitation, transactions
related to, and the existence of, “variable interest entities” within the meaning of
Financial Accounting Standards Board Interpretation No. 46), arrangements, obligations
(including contingent obligations), or any other relationships with unconsolidated entities
or other persons, that may have a material current or future effect on the Company’s
financial condition, changes in financial condition, results of operations, liquidity,
capital expenditures, capital resources, or significant components of revenues or expenses.
(hh) The Company’s Board of Directors has validly appointed an audit committee whose
composition satisfies the requirements of Rule 4350(d)(2) of the Rules of NASDAQ and Section
10A-3 of the Exchange Act and the Board of Directors and/or the audit committee has adopted
a charter that satisfies the requirements of Rule 4350(d)(1) of the Rules of NASDAQ and
Section 10A-3 of the Exchange Act. The audit committee has reviewed the adequacy of its
charter within the past twelve months. Neither the Board of Directors nor the audit
committee has been informed, nor is any director of the Company aware, of (i) any
significant deficiencies in the design or operation of the Company’s internal controls that
could adversely affect the Company’s ability to record, process, summarize and report
financial data or any material weakness in the Company’s internal controls; or (ii) any
fraud, whether or not material, that involves management or other employees of the Company
who have a significant role in the Company’s internal controls.
(ii) The minute books of the Company and each of its subsidiaries that would be a
“significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X under the
Exchange Act (such a significant subsidiary of the Company, a “Significant Subsidiary”) have
been made available to the Placement Agent and counsel for the Placement Agent, and such
books (i) contain a complete summary of all meetings and actions of the board of directors
(including each board committee) and stockholders of the Company (or analogous governing
bodies and interest holders, as applicable), and each of its Significant Subsidiaries since
the time of its respective incorporation or organization through the date of the latest
meeting and action, and (ii) accurately in all material respects reflect all transactions
referred to in such minutes.
17
(jj) There is no franchise, lease, contract, agreement or document required by the
Securities Act or by the Rules and Regulations to be described in the General Disclosure
Package and in the Prospectus or a document incorporated by reference therein or to be filed
as an exhibit to the Registration Statement or a document incorporated by reference therein
which is not described or filed therein as required; and all descriptions of any such
franchises, leases, contracts, agreements or documents contained in the Registration
Statement or in a document incorporated by reference therein are accurate and complete
descriptions of such documents in all material respects. Other than as described in the
General Disclosure Package, no such franchise, lease, contract or agreement has been
suspended or terminated for convenience or default by the Company or any of its subsidiaries
or any of the other parties thereto, and neither the Company nor any of its subsidiaries has
received notice nor does the Company have any other knowledge of any such pending or
threatened suspension or termination, except for such pending or threatened suspensions or
terminations that would not, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(kk) No relationship, direct or indirect, exists between or among the Company and any
of its subsidiaries on the one hand, and the directors, officers, stockholders (or analogous
interest holders), customers or suppliers of the Company or any of its subsidiaries or any
of their affiliates on the other hand, which is required to be described in the General
Disclosure Package and the Prospectus or a document incorporated by reference therein and
which is not so described.
(ll) No person or entity has the right to require registration of shares of Common
Stock or other securities of the Company or any of its subsidiaries because of the filing or
effectiveness of the Registration Statement or otherwise, except for persons and entities
who have expressly waived such right in writing or who have been given timely and proper
written notice and have failed to exercise such right within the time or times required
under the terms and conditions of such right. There are no contracts, agreements or
understandings between the Company or any of its subsidiaries and any person granting such
person the right (other than (i) registration rights granted to POSCO under the Posco
Securities Purchase Agreement, which have been satisfied to date, and (ii) rights which have
been waived in writing in connection with the transactions contemplated by this Agreement or
otherwise satisfied) to require the Company or any of its subsidiaries to register any
securities with the Commission.
(mm) Neither the Company nor any of its subsidiaries owns any “margin securities” as
that term is defined in Regulation U of the Board of Governors of the Federal Reserve System
(the “Federal Reserve Board”), and none of the proceeds of the sale of any of the Securities
will be used, directly or indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which might cause
any of the Securities to be considered a “purpose credit” within the meanings of Regulation
T, U or X of the Federal Reserve Board.
18
(nn) At the Applicable Time there were, and as of the Closing Date there will be, no
securities of or guaranteed by the Company that are rated by a “nationally recognized
statistical rating organization,” as that term is defined in Rule 436(g)(2) promulgated
under the Act.
(oo) Neither the Company nor any of its subsidiaries is a party to any contract,
agreement or understanding with any person (other than this Agreement) that would give rise
to a valid claim against the Company or the Placement Agent for a brokerage commission,
finder’s fee or like payment in connection with the offering and sale of any of the
Securities or any transaction contemplated by this Agreement, the Registration Statement,
the General Disclosure Package or the Prospectus.
(pp) No forward-looking statement (within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act) contained in either the General Disclosure Package
or the Prospectus has been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith.
(qq) The Company is subject to and in compliance in all material respects with the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act. The Common Stock
is registered pursuant to Section 12(b) or 12(g) of the Exchange Act and is listed on the
NASDAQ GM, and the Company has taken no action designed to, or reasonably likely to have the
effect of, terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the NASDAQ GM, nor has the Company received any notification
that the Commission, FINRA or the NASDAQ Stock Market LLC is currently contemplating
terminating such registration or listing. The Company has complied in all material respects
with the applicable requirements of the NASDAQ GM for maintenance of inclusion of the Common
Stock thereon. No consent, approval, authorization or order of, or filing, notification or
registration with, the NASDAQ GM is required for the listing and trading of the Shares,
Warrant Shares or Additional Shares on the NASDAQ GM, except for (i) a Notification Form:
Listing of Additional Shares; and (ii) a Notification Form: Change in the Number of Shares
Outstanding.
(rr) The Company has filed in a timely manner all reports required to be filed pursuant
to Sections 13(a), 13(e), 14 and 15(d) of the Exchange Act during the preceding 12 months
(except to the extent that Section 15(d) requires reports to be filed pursuant to Sections
13(d) and 13(g) of the Exchange Act, which shall be governed by the next clause of this
sentence); and the Company has filed in a timely manner all reports required to be filed
pursuant to Sections 13(d) and 13(g) of the Exchange Act since January 1, 2004, except where
the failure to timely file would not reasonably be expected singly or in the aggregate to
have a Material Adverse Effect.
19
(ss) The Company, and to its knowledge, each of the Company’s directors or officers, in
their capacities as such, is, and after giving effect to the Offering will be, in compliance
in all material respects with all applicable effective provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
of 2002 and any related rules and regulations promulgated by the Commission thereunder (the
“▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”). Each of the principal executive officer and the principal financial
officer of the Company (and each former principal executive officer of the Company and each
former principal financial officer of the Company as applicable) has made all certifications
required by Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act with respect to all reports,
schedules, forms, statements and other documents required to be filed by him or her with the
Commission. For purposes of the preceding sentence, “principal executive officer” and
“principal financial officer” shall have the meanings given to such terms in the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(tt) The Company is, and after giving effect to the Offering will be, in compliance
with all applicable corporate governance requirements set forth in the NASDAQ Marketplace
Rules.
(uu) Neither the Company nor any of its subsidiaries nor, to the Company’s knowledge,
any other person associated with or acting on behalf of the Company, including without
limitation any director, officer, agent or employee of the Company or any of its
subsidiaries has, directly or indirectly, while acting on behalf of the Company or any of
its subsidiaries (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity or failed to
disclose fully any contribution in violation of law, (ii) made any payment to any federal or
state governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof, (iii) violated or is in violation of any provision of
the U.S. Foreign Corrupt Practices Act of 1977, as amended or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(vv) Any statistical, industry-related or market-related data included or incorporated
by reference in the Registration Statement, the Prospectus or the General Disclosure
Package, are based on or derived from sources that the Company reasonably and in good faith
believes to be reliable and accurate, and such data agree with the sources from which they
are derived.
(ww) Neither the Company nor any subsidiary nor any of their affiliates (within the
meaning of FINRA’s NASD Conduct Rule 2720(f)(1)) directly or indirectly controls, is
controlled by, or is under common control with, or is an associated person (within the
meaning of Article I, Section 1(ee) of the By-laws of FINRA) of, any member firm of FINRA.
(xx) The operations of the Company and its subsidiaries are and have been conducted at
all times in compliance in all material respects with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the USA PATRIOT Act, applicable money laundering statutes of all jurisdictions and
the applicable rules, related rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of its subsidiaries
with respect to the Money Laundering Laws is pending, or to the best knowledge of the
Company, threatened against the Company or any of its subsidiaries.
20
(yy) Neither the Company nor any of its subsidiaries nor, to the Company’s knowledge,
any director, officer, agent, employee or affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other person or
entity, which, to the Company’s knowledge, will use such proceeds for the purpose of
financing the activities of any person currently subject to any U.S. sanctions administered
by OFAC.
(zz) The Company satisfies the pre-1992 eligibility requirements for the use of a
registration statement on Form S-3 in connection with the Offering contemplated thereby (the
pre-1992 eligibility requirements for the use of the registration statement on Form S-3
include (i) having a non-affiliate, public common equity float of at least $150 million or a
non-affiliate, public common equity float of at least $100 million and annual trading volume
of at least three million shares and (ii) having been subject to the Exchange Act reporting
requirements for a period of 36 months).
(aaa) No approval of the shareholders of the Company under the rules and regulations of
Nasdaq (including Rule 5635 of the Nasdaq Global Marketplace Rules) is required for the
Company to issue and deliver to the Purchaser any of the Securities, other than the approval
by the shareholders of the Company at a special or annual meeting of the Company’s
shareholders necessary to amend the Company’s certificate of incorporation providing for the
increase in the number of authorized shares of Common Stock necessary to validly issue the
Additional Shares pursuant to the Additional Purchase Right of the Company set forth in the
Subscription Agreement (the “Shareholder Approval”). Any certificate signed by or on behalf
of the Company and delivered to the Placement Agent or to counsel for the Placement Agent
shall be deemed to be a representation and warranty by the Company to the Placement Agent as
to the matters covered thereby.
(bbb) Neither the Company nor its subsidiaries are subject to regulation as a “public
utility”, “public service company”, “holding company” or similar designation by any
governmental or regulatory authority, including under the Federal Power Act, as amended or
any applicable state utility laws; and the Company and its subsidiaries are not required to
file with any applicable state or local commissions, governmental authorities or regulatory
bodies that regulate utilities any forms, statements, reports, registrations or documents
required to be filed by the Company or its subsidiaries under such applicable state or local
laws to which the Company or its subsidiaries are subject.
Any certificate signed by or on behalf of the Company and delivered to the Placement
Agent or to counsel for the Placement Agent shall be deemed to be a representation and
warranty by the Company to the Placement Agent as to the matters covered thereby.
21
4. Closing Date. The time and date of closing and delivery of the documents required to be delivered to the
Placement Agent pursuant to Sections 5 and 7 hereof shall be at 10:00 A.M., New
York time, on January 13, 2011 (the “Closing Date”) at the office of ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
5. Further Agreements of the Company. The Company agrees with the Placement Agent:
(a) Subject to the Rules and Regulations, to prepare the Rule 462(b) Registration
Statement, if necessary, in a form approved by the Placement Agent and file such Rule 462(b)
Registration Statement with the Commission on the date hereof; to prepare the Prospectus in
a form approved by the Placement Agent containing information previously omitted at the time
of effectiveness of the Registration Statement in reliance on Rules 430A, 430B and 430C of
the Rules and Regulations and to file such Prospectus pursuant to Rule 424(b) of the Rules
and Regulations not later than the second (2nd) business day following the
execution and delivery of this Agreement or, if applicable, such earlier time as may be
required by Rule 430A of the Rules and Regulations; to notify the Placement Agent
immediately of the Company’s intention to file or prepare any supplement or amendment to the
Registration Statement or to the Prospectus in connection with this Offering and to make no
amendment or supplement to the Registration Statement, the General Disclosure Package or to
the Prospectus to which the Placement Agent shall reasonably object by notice to the Company
after a reasonable period to review; to advise the Placement Agent, promptly after it
receives notice thereof, of the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the General Disclosure Package or the
Prospectus or any amended Prospectus has been filed and to furnish the Placement Agent
copies thereof; to file promptly all material required to be filed by the Company with the
Commission pursuant to Rule 433(d) or 163(b)(2), as the case may be, of the Rules and
Regulations; to file promptly all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as
the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) of
the Rules and Regulations) is required in connection with the offering or sale of the
Securities; to advise the Placement Agent, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus, of
the suspension of the qualification of the Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or
of any request by the Commission for the amending or supplementing of the Registration
Statement, the General Disclosure Package or the Prospectus or for additional information;
and, in the event of the issuance of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus
or suspending any such qualification, and promptly to use its best efforts to obtain the
withdrawal of such order.
22
(b) The Company represents and agrees that, it has not made, and unless it obtains the
prior consent of the Placement Agent, it will not, make any offer relating to the Securities
that would constitute a “free writing prospectus” as defined in Rule 405 of the Rules and
Regulations (each, a “Permitted Free Writing Prospectus”); provided that the prior written
consent of the Placement Agent hereto shall be deemed to have been given in respect of the
Issuer Free Writing Prospectus(es) included in Schedule A hereto. The Company
represents that it has treated and agrees that it will treat each Permitted Free Writing
Prospectus as an Issuer Free Writing Prospectus, comply with the requirements of Rules 164
and 433 of the Rules and Regulations applicable to any Issuer Free Writing Prospectus,
including the requirements relating to timely filing with the Commission, legending and
record keeping and will not take any action that would result in the Placement Agent or the
Company being required to file with the Commission pursuant to Rule 433(d) of the Rules and
Regulations a free writing prospectus prepared by or on behalf of the Placement Agent that
the Placement Agent otherwise would not have been required to file thereunder.
(c) If at any time when a Prospectus relating to the Securities is required to be
delivered under the Securities Act, any event occurs or condition exists as a result of
which 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 light of the circumstances under which they were made, not misleading, or the
Registration Statement, as then amended or supplemented, would include any untrue statement
of a material fact or omit to state a material fact necessary to make the statements therein
not misleading, or if for any other reason it is necessary at any time to amend or
supplement any Registration Statement or the Prospectus to comply with the Securities Act or
the Exchange Act, the Company will promptly notify the Placement Agent, and upon the
Placement Agent’s request, the Company will promptly prepare and file with the Commission,
at the Company’s expense, an amendment to the Registration Statement or an amendment or
supplement to the Prospectus that corrects such statement or omission or effects such
compliance and will deliver to the Placement Agent, without charge, such number of copies
thereof as the Placement Agent may reasonably request. The Company consents to the use of
the Prospectus or any amendment or supplement thereto by the Placement Agent.
(d) If the General Disclosure Package is being used to solicit offers to buy any
Securities at a time when the Prospectus is not yet available to prospective purchasers and
any event shall occur as a result of which, in the judgment of the Company or in the
reasonable opinion of the Placement Agent, it becomes necessary to amend or supplement the
General Disclosure Package in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or to make the statements
therein not conflict with the information contained or incorporated by reference in the
Registration Statement then on file and not superseded or modified, or if it is necessary at
any time to amend or supplement the General Disclosure Package to comply with any law, the
Company promptly will either (i) prepare, file with the Commission (if required) and furnish
to the Placement Agent and any dealers an appropriate amendment or supplement to the General
Disclosure Package or (ii) prepare and file with the Commission an appropriate filing under
the Exchange Act which shall be incorporated by reference in the General Disclosure Package
so that the General Disclosure Package as so amended or supplemented will not, in the light
of the circumstances under which they were made, be misleading or conflict with the
Registration Statement then on file, or so that the General Disclosure Package will comply
with law.
23
(e) If at any time following issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development as a result of which such Issuer Free Writing
Prospectus conflicted or will conflict with the information contained in the Registration
Statement, Pricing Prospectus or Prospectus, including any document incorporated by
reference therein and any prospectus supplement deemed to be a part thereof and not
superseded or modified or included or would include an untrue statement of a material fact
or omitted or would omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they
were made, not misleading, the Company has promptly notified or will promptly notify the
Placement Agent so that any use of the Issuer Free Writing Prospectus may cease until it is
amended or supplemented and has promptly amended or will promptly amend or supplement, at
its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict,
untrue statement or omission. The foregoing sentence does not apply to statements in or
omissions from any Issuer Free Writing Prospectus in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of the Placement Agent
specifically for inclusion therein, which information the parties hereto agree is limited to
the Placement Agent’s Information (as defined in Section 17).
(f) To the extent not available on the Commission’s ▇▇▇▇▇ system or any successor
system, to furnish promptly to the Placement Agent and to counsel for the Placement Agent a
signed copy of the Registration Statement as originally filed with the Commission, and of
each amendment thereto filed with the Commission, including all consents and exhibits filed
therewith.
(g) To the extent not available on the Commission’s ▇▇▇▇▇ system or any successor
system, to deliver promptly to the Placement Agent in New York City such number of the
following documents as the Placement Agent shall reasonably request: (i) conformed copies
of the Registration Statement as originally filed with the Commission (in each case
excluding exhibits), (ii) each Preliminary Prospectus (if any), (iii) any Issuer Free
Writing Prospectus, (iv) the Prospectus (the delivery of the documents referred to in
clauses (i), (ii), (iii) and (iv) of this paragraph (g) to be made not later than
10:00 A.M., New York time, on the business day following the execution and delivery of this
Agreement), (v) conformed copies of any amendment to the Registration Statement
(excluding exhibits), (vi) any amendment or supplement to the General Disclosure Package or
the Prospectus (the delivery of the documents referred to in clauses (v) and (vi) of this
paragraph (g) to be made not later than 10:00 A.M., New York City time, on the
business day following the date of such amendment or supplement) and (vii) any document
incorporated by reference in the General Disclosure Package or the Prospectus (excluding
exhibits thereto) (the delivery of the documents referred to in clause (vi) of this
paragraph (g) to be made not later than 10:00 A.M., New York City time, on the
business day following the date of such document).
24
(h) To make generally available to its stockholders as soon as practicable, but in any
event not later than eighteen (18) months after the effective date of each Registration
Statement (as defined in Rule 158(c) of the Rules and Regulations), an earnings statement of
the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of
the Securities Act and the Rules and Regulations (including, at the option of the Company,
Rule 158); and to furnish to its stockholders after the end of each fiscal year an annual
report (including a balance sheet and statements of income, stockholders’ equity and cash
flows of the Company and its consolidated subsidiaries certified by independent public
accountants) and after each of the first three fiscal quarters of each fiscal year
(beginning with the first fiscal quarter after the effective date of such Registration
Statement), consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail.
(i) To take promptly from time to time such actions as the Placement Agent may
reasonably request to qualify the Securities for offering and sale under the securities or
blue sky laws of such jurisdictions (domestic or foreign) as the Placement Agent may
designate and to continue such qualifications in effect, and to comply with such laws, for
so long as required to permit the offer and sale of Securities in such jurisdictions;
provided that the Company and its subsidiaries shall not be obligated to qualify as foreign
corporations in any jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction.
(j) During the period of five (5) years from the date hereof, to the extent not
available on the Commission’s ▇▇▇▇▇ system or any successor system, to deliver to the
Placement Agent, (i) upon request, copies of all reports or other communications furnished
generally to stockholders, and (ii) upon request, copies of any reports and financial
statements furnished or filed with the Commission or any national securities exchange or
automatic quotation system on which the Common Stock is listed or quoted.
25
(k) That the Company will not, for (1) a period of ninety (90) days from the date of
the Prospectus and (2) a period of ninety (90) days following the Company’s delivery of the
Additional Shares Notice (as defined in the Subscription Agreement) relating to the exercise
of its Additional Purchase Right, without the prior written consent of the Placement Agent,
directly or indirectly offer, sell, assign, transfer, pledge, contract to sell, or otherwise
dispose of, any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, other than (i) the Company’s sale
of the Securities hereunder, (ii) the issuance of Common Stock or options to acquire
Common Stock pursuant to the Company’s employee benefit plans, qualified stock option plans
or other employee compensation plans as such plans are in existence on the date hereof and
described in the Prospectus and the issuance of Common Stock pursuant to the valid exercises
of options, warrants or rights outstanding on the date hereof, (iii) shares issued for the
sole purpose of funding any cash dividends payable in respect of the Series B Preferred
Shares and the Series 1 Preferred Shares during the Lock-Up Period, and (iv) shares issued
to Enbridge, Inc. (or its affiliates) or shares issued to fund any cash payments to
Enbridge, Inc. (or its affiliates), in each case for the sole purpose of paying or settling
any obligation in respect of the Series 1 Preferred Shares that is payable during the
Lock-Up Period. The Company will cause each executive officer and director listed in
Schedule B to furnish to the Placement Agent, prior to the Closing Date, a letter,
substantially in the form of Exhibit A hereto. The Company also agrees that during
such period (other than for the sale of the Securities hereunder), the Company will not file
any registration statement, preliminary prospectus or prospectus, or any amendment or
supplement thereto, under the Securities Act for any such transaction or which registers, or
offers for sale, Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, except for a registration statement on Form S-8 relating to
employee benefit plans. The Company hereby agrees that (i) if it issues an earnings release
or material news, or if a material event relating to the Company occurs, during the last
seventeen (17) days of the Lock-Up Period, or (ii) if prior to the expiration of the Lock-Up
Period, the Company announces that it will release earnings results during the sixteen
(16)-day period beginning on the last day of the Lock-Up Period, the restrictions imposed by
this paragraph (k) or the letter shall continue to apply until the expiration of the
eighteen (18)-day period beginning on the issuance of the earnings release or the occurrence
of the material news or material event; provided, however that such extension will not
apply if, (i) within three business days prior to the 15th calendar day before the last day
of the Lock-Up Period, the Company delivers a certificate, signed by the Chief Financial
Officer or Chief Executive Officer of the Company, certifying on behalf of the Company that
(A) the Company’s Common Stock shares are “actively traded securities” (as defined in
Regulation M), (B) the Company meets the applicable requirements of paragraph (a)(1) of Rule
139 under the Securities Act in the manner contemplated by FINRA Conduct Rule 2711(f)(4),
and (C) the provisions of FINRA Conduct Rule 2711(f)(4) are not applicable to any research
reports relating to the Company published or distributed by any of the Placement Agent
during the 15 days before or after the last day of the Lock-Up Period (before giving effect
to such extension); or (D) FINRA Rule 2711 is amended to permit any of the Placement Agent
to publish or otherwise distribute research reports during the 15 days before or after the
last day of the Lock-Up Period (before giving effect to such extension). The Company will
provide the Placement Agent with prior notice of any such announcement that gives rise to an
extension of the Lock-Up Period.
(l) To supply the Placement Agent with copies of all correspondence to and from, and
all documents issued to and by, the Commission in connection with the registration of the
Securities under the Securities Act or the Registration Statement, any
Preliminary Prospectus or the Prospectus, or any amendment or supplement thereto or
document incorporated by reference therein.
26
(m) Prior to the Closing Date to furnish to the Placement Agent, as soon as they have
been prepared, copies of any unaudited interim consolidated financial statements of the
Company for any periods subsequent to the periods covered by the financial statements
appearing in the Registration Statement and the Prospectus.
(n) Prior to the Closing Date not to issue any press release or other communication
directly or indirectly or hold any press conference with respect to the Company, its
condition, financial or otherwise, or earnings, business affairs or business prospects
(except for routine oral marketing communications in the ordinary course of business and
consistent with the past practices of the Company and of which the Placement Agent is
notified), without the prior written consent of the Placement Agent, unless in the judgment
of the Company and its counsel, and after notification to the Placement Agent, such press
release or communication is required by law or applicable stock exchange rules.
(o) Until the Placement Agent shall have notified the Company of the completion of the
offering of the Securities, that the Company will not, and will cause its affiliated
purchasers (as defined in Regulation M under the Exchange Act) not to, either alone or with
one or more other persons, bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Securities, or attempt to induce any
person to purchase any Securities; and not to, and to cause its affiliated purchasers not
to, make bids or purchases for the purpose of creating actual, or apparent, active trading
in or of raising the price of any Securities.
(p) Not to take any action prior to the Closing Date, which would require the
Prospectus to be amended or supplemented pursuant to Section 5.
(q) To at all times comply with all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act in
effect from time to time.
(r) To apply the net proceeds from the sale of the Securities as set forth in the
Registration Statement, the General Disclosure Package and the Prospectus under the heading
“Use of Proceeds.”
(s) To use its commercially reasonable best efforts to list, subject to notice of
issuance, effect and maintain the quotation and listing of the Common Stock, including any
Warrant Shares and any Additional Shares on the NASDAQ GM.
(t) The Company shall use its reasonable best efforts to cause the Board of Directors
of the Company to recommend to the shareholders that they approve the Resolutions and to
solicit its Shareholders’ Approval of the Resolutions, and the Company shall provide each
shareholder entitled to vote at a special or annual meeting of shareholders of the Company
(the “Shareholder Meeting”), which shall be called and
held not later than March 25, 2011, a proxy statement, soliciting each such
shareholder’s affirmative vote at the Shareholder Meeting for approval of resolutions (the
“Resolutions”) providing for the increase in the number of authorized shares of the
Company’s Common Stock under the Company Certificate of Incorporation necessary to validly
issue all of the Additional Shares described in this Agreement and the Subscription
Agreement, in accordance with applicable law and the rules and regulations of the NASDAQ
Global Market (such affirmative approval being referred to herein as the “Shareholder
Approval”). The Company agrees that no Additional Shares will be issued prior to their due
authorization. The Company will promptly notify the Placement Agent in writing upon
completion of such authorization.
27
(u) To use its commercially reasonable best efforts to assist the Placement Agent with
any filings with FINRA and obtaining clearance from FINRA as to the amount of compensation
allowable or payable to the Placement Agent.
(v) To use its commercially reasonable best efforts to do and perform all things
required to be done or performed under this Agreement by the Company prior to the Closing
Date, and to satisfy all conditions precedent to the delivery of the Securities.
6.
Payment of
Expenses.
The Company agrees to pay, or reimburse if paid by the Placement Agent, upon consummation of
the transactions contemplated hereby: (a) the costs incident to the authorization, issuance, sale,
preparation and delivery of the Securities to the Purchaser and any taxes payable in that
connection; (b) the costs incident to the registration of the Securities under the Securities Act;
(c) the costs incident to the preparation, printing and distribution of the Registration Statement,
the Base Prospectus, any Preliminary Prospectus, any Issuer Free Writing Prospectus, the General
Disclosure Package, the Prospectus, any amendments, supplements and exhibits thereto or any
document incorporated by reference therein and the costs of printing, reproducing and distributing
any transaction document by mail or other means of communications; (d) the reasonable fees and
expenses (including related fees and expenses of counsel for the Placement Agent) incurred in
connection with securing any required review by FINRA of the terms of the sale of the Securities
and any filings made with FINRA; (e) any applicable listing, quotation or other fees; (f) the
reasonable fees and expenses (including related fees and expenses of counsel to the Placement
Agent) of qualifying the Securities under the securities laws of the several jurisdictions as
provided in Section 5(i)5(i) and of preparing, printing and distributing wrappers, “Blue
Sky Memoranda” and “Legal Investment Surveys”; (g) the cost of preparing and printing stock
certificates; (h) all fees and expenses of the registrar and transfer agent of the Shares; (i) the
reasonable fees, disbursements and expenses of counsel to the Placement Agent; and (j) all other
reasonable costs and expenses incident to the Offering or the performance of the obligations of the
Company under this Agreement (including, without limitation, the fees and expenses of the Company’s
counsel and the Company’s independent accountants and the travel and other expenses incurred by
Company’s and Placement Agent’s personnel in connection with any “road show” including, without
limitation, any expenses advanced by the Placement Agent on the Company’s behalf (which will be
promptly reimbursed)).
28
7. Conditions to the Obligations of the Placement Agent, and the Sale of the
Securities. The respective obligations of the Placement Agent hereunder, and the Purchaser under the
Subscription Agreement, and the closing of the sale of the Units, are subject to the accuracy, when
made and as of the Applicable Time and on the Closing Date, of the representations and warranties
of the Company contained herein, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, and to each of the following additional terms and conditions:
(a) No stop order suspending the effectiveness of the Registration Statement or any
part thereof, preventing or suspending the use of any Base Prospectus, any Preliminary
Prospectus, the Prospectus or any Permitted Free Writing Prospectus or any part thereof
shall have been issued and no proceedings for that purpose or pursuant to Section 8A under
the Securities Act shall have been initiated or threatened by the Commission, and all
requests for additional information on the part of the Commission (to be included or
incorporated by reference in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of the Placement Agent; the
Rule 462(b) Registration Statement, if any, each Issuer Free Writing Prospectus, if any, and
the Prospectus shall have been filed with the Commission within the applicable time period
prescribed for such filing by, and in compliance with, the Rules and Regulations and in
accordance with Section 5(a), and the Rule 462(b) Registration Statement, if any,
shall have become effective immediately upon its filing with the Commission; and FINRA shall
have raised no objection to the fairness and reasonableness of the terms of this Agreement
or the transactions contemplated hereby.
(b) The Placement Agent shall not have discovered and disclosed to the Company on or
prior to the Closing Date that the Registration Statement or any amendment or supplement
thereto contains an untrue statement of a fact which, in the opinion of counsel for the
Placement Agent, is material or omits to state any 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 not misleading, or that the General Disclosure Package, any Issuer Free
Writing Prospectus or the Prospectus or any amendment or supplement thereto contains an
untrue statement of fact which, in the opinion of such counsel, is material or omits to
state any fact which, in the opinion of such counsel, is material and is necessary in order
to make the statements, in the light of the circumstances in which they were made, not
misleading.
(c) All corporate proceedings and other legal matters incident to the authorization,
form and validity of each of this Agreement, the Subscription Agreement, the Shares,
Warrants and the Additional Shares, the Registration Statement, the General Disclosure
Package, each Issuer Free Writing Prospectus, if any, and the Prospectus and all other legal
matters relating to this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all material respects to counsel for the Placement Agent, and the
Company shall have furnished to such counsel all documents
and information that they may reasonably request to enable them to pass upon such
matters.
(d) ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP shall have furnished to the Placement Agent such counsel’s
written opinion and negative assurances statement, as counsel to the Company, addressed to
the Placement Agent and dated the Closing Date, in form and substance reasonably
satisfactory to the Placement Agent.
29
(e) The Placement Agent shall have received from Proskauer Rose LLP, counsel for the
Placement Agent, such opinion or opinions and negative assurances statement, dated the
Closing Date, with respect to such matters as the Placement Agent may reasonably require,
and the Company shall have furnished to such counsel such documents as they request for
enabling them to pass upon such matters.
(f) At the time of the execution of this Agreement, the Placement Agent shall have
received from KPMG LLP a letter, addressed to the Placement Agent, executed and dated such
date, in form and substance satisfactory to the Placement Agent (A) confirming that they are
an independent registered accounting firm with respect to the Company and its subsidiaries
within the meaning of the Securities Act and the Rules and Regulations and PCAOB and (B)
stating the conclusions and findings of such firm, of the type ordinarily included in
accountants’ “comfort letters” to underwriters, with respect to the financial statements and
certain financial information contained or incorporated by reference in the Registration
Statement, the General Disclosure Package and the Prospectus.
(g) On the effective date of any post-effective amendment to any Registration Statement
and on the Closing Date, the Placement Agent shall have received a letter (the “Bring-Down
Letter”) from KPMG LLP addressed to the Placement Agent and dated the Closing Date
confirming, as of the date of the Bring-Down Letter (or, with respect to matters involving
changes or developments since the respective dates as of which specified financial
information is given in the General Disclosure Package and the Prospectus, as the case may
be, as of a date not more than three (3) business days prior to the date of the Bring-Down
Letter), the conclusions and findings of such firm, of the type ordinarily included in
accountants’ “comfort letters” to Placement Agent, with respect to the financial information
and other matters covered by its letter delivered to the Placement Agent concurrently with
the execution of this Agreement pursuant to paragraph (g) of this Section 7.
(h) The Company shall have furnished to the Placement Agent a certificate, dated the
Closing Date, of its Chairman of the Board, Chief Executive Officer or its President and its
Chief Financial Officer or a Vice President of Finance, each in his capacity as an officer
of the Company, stating that (i) such officers have carefully examined the Registration
Statement, the General Disclosure Package, any Permitted Free Writing Prospectus and the
Prospectus and, in their opinion, the Registration Statement and each amendment thereto, at
the Applicable Time and as of the date of this Agreement and as of the Closing Date did not
include any untrue statement of a material fact and did
not omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and the General Disclosure Package, as of the
Applicable Time and as of the Closing Date, any Permitted Free Writing Prospectus as of its
date and as of the Closing Date, the Prospectus and each amendment or supplement thereto, as
of the respective date thereof and as of the Closing Date, did not include any untrue
30
statement of a material fact and did not omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances in which they were made, not
misleading, (ii) since the effective date of the Registration Statement, no event has
occurred which should have been set forth in a supplement or amendment to the Registration
Statement, the General Disclosure Package or the Prospectus that has not been so set forth
therein, (iii) to the best of their knowledge after reasonable investigation, as of the
Closing Date, the representations and warranties of the Company in this Agreement are true
and correct, and the Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied hereunder at or prior to the Closing Date, and (iv)
there has not been, subsequent to the date of the most recent audited financial statements
included or incorporated by reference in the General Disclosure Package, any material
adverse change in the financial position or results of operations of the Company and its
subsidiaries or any change or development that, singly or in the aggregate, would involve a
material adverse change or a prospective material adverse change, in or affecting the
condition (financial or otherwise), results of operations, business, assets or prospects of
the Company and its subsidiaries taken as a whole, except as set forth in the Prospectus.
(i) Since the date of the latest audited financial statements included in the General
Disclosure Package or incorporated by reference in the General Disclosure Package as of the
date hereof, (i) neither the Company nor any of its subsidiaries shall have sustained 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, otherwise than as set forth in the General Disclosure Package, and
(ii) there shall not have been any change in the capital stock (other than a change in the
number of outstanding shares of Common Stock due to the issuance of shares upon the exercise
of outstanding options or warrants or the conversion of convertible indebtedness) or
short-term or long-term debt of the Company or any of its subsidiaries, or any change, or
any development involving a prospective change, in or affecting the business, general
affairs, management, financial position, stockholders’ equity or results of operations of
the Company and its subsidiaries otherwise than as set forth in the General Disclosure
Package, the effect of which, in any such case described in clause (i) or (ii) of this
paragraph (i), is, in the judgment of the Placement Agent, so material and adverse
as to make it impracticable or inadvisable to proceed with the sale or delivery of the
Shares and Warrants included in the Units on the terms and in the manner contemplated in the
General Disclosure Package.
(j) No action shall have been taken and no law, statute, rule, regulation or order
shall have been enacted, adopted or issued by any governmental agency or body which would
prevent the issuance or sale of the Units or materially and adversely affect or potentially
materially and adversely affect the business or operations of the Company
or its subsidiaries and no injunction, restraining order or order of any other nature
by any federal or state court of competent jurisdiction shall have been issued which would
prevent the issuance or sale of the Units or materially and adversely affect or potentially
materially and adversely affect the business or operations of the Company or its
subsidiaries.
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(k) Subsequent to the execution and delivery of this Agreement there shall not have
occurred any of the following: (i) trading in securities generally on the New York Stock
Exchange, NASDAQ GM or the American Stock Exchange or in the over-the-counter market, or
trading in any securities of the Company on any exchange or in the over-the-counter market,
shall have been suspended or materially limited, or minimum or maximum prices or maximum
range for prices shall have been established on any such exchange or such market by the
Commission, by such exchange or market or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been declared by Federal
or state authorities or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, (iii) the United States
shall have become engaged in hostilities, or the subject of an act of terrorism, or there
shall have been an outbreak of or escalation in hostilities involving the United States, or
there shall have been a declaration of a national emergency or war by the United States or
(iv) there shall have occurred such a material adverse change in general economic, political
or financial conditions (or the effect of international conditions on the financial markets
in the United States shall be such) as to make it, in the judgment of the Placement Agent,
impracticable or inadvisable to proceed with the sale or delivery of the Units on the terms
and in the manner contemplated in the General Disclosure Package and the Prospectus.
(l) The Company shall have filed a Notification: Listing of Additional Shares with the
NASDAQ GM concerning the Securities and shall have received no objection thereto from the
NASDAQ GM.
(m) The Placement Agent shall have not have received any unresolved objection from the
FINRA as to the fairness and reasonableness of the amount of compensation allowable or
payable to the Placement Agent in connection with the issuance and sale of the Units.
(n) The Placement Agent shall have received the written agreements, substantially in
the form of Exhibit A hereto, of the executive officers and directors of the Company
listed in Schedule B to this Agreement.
(o) The Company shall have entered into the Subscription Agreement with the Purchaser
and such agreement shall be in full force and effect.
(p) The Placement Agent shall have received the written waiver from POSCO Power
(“POSCO”) relating to its notice and participation rights arising under and pursuant to the
terms of that certain Securities Purchase Agreement, dated June 9, 2009 between POSCO and
the Company.
(q) Prior to the Closing Date, the Company shall have furnished to the Placement Agent
such further information, opinions, certificates (including a Secretary’s Certificate),
letters or such other documents as the Placement Agent shall have reasonably requested.
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(r) The sale of the Additional Shares by the Company to the Purchaser shall be subject
to the conditions of paragraphs (a), (b) and (j) of this Section 7 and to such other
conditions as set forth in the Subscription Agreement.
All opinions, letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Placement Agent.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless the Placement Agent, its affiliates
and each of its and their respective directors, officers, members, employees,
representatives and agents (including, without limitation Lazard Frères & Co. LLC, which
will provide services to the Placement Agent) and its affiliates, and each of its and their
respective directors, officers, members, employees, representatives and agents and each
person, if any, who controls Lazard Frères & Co. LLC within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and each person, if any, who controls the
Placement Agent within the meaning of Section 15 of the Securities Act of or Section 20 of
the Exchange Act (collectively, the “Placement Agent Indemnified Parties,” and each a
“Placement Agent Indemnified Party”) against any loss, claim, damage, expense or liability
whatsoever (or any action, investigation or proceeding in respect thereof), joint or
several, to which such Placement Agent Indemnified Party may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, expense, liability,
action, investigation or proceeding arises out of or is based upon (A) any untrue statement
or alleged untrue statement of a material fact contained in any Preliminary Prospectus, any
Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the
Prospectus, or in any amendment or supplement thereto or document incorporated by reference
therein, (B) the omission or alleged omission to state in any Preliminary Prospectus, any
Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the
Prospectus, or in any amendment or supplement thereto or document incorporated by reference
therein, a material fact required to be stated therein or necessary to make the statements
therein not misleading or (C) any breach of the representations and warranties of the
Company contained herein, or the failure of the Company to perform its obligations hereunder
or under the Subscription Agreement or pursuant to any law, and which is included as part of
or referred to in any loss, claim, damage, expense, liability, action, investigation or
proceeding arising out of or based upon matters covered by subclause (A), (B) or (C) above
of this Section 8(a), and shall reimburse the Placement Agent Indemnified Party for any legal fees or other
expenses reasonably incurred by that Placement Agent Indemnified Party in connection with
investigating, or preparing to defend, or defending against, settling, compromising, or
appearing as a third party witness in respect of, or otherwise incurred in connection with,
any such loss, claim, damage, expense, liability, action, investigation or proceeding, as
such fees and expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, expense or liability
arises out of or is based upon an untrue statement or alleged untrue statement in, or
omission or alleged omission from any Preliminary Prospectus, any Registration Statement or
the Prospectus, or any such amendment or supplement thereto, or any Issuer Free Writing
Prospectus made in reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Placement Agent specifically for use therein, which
information the parties hereto agree is limited to the Placement Agent’s Information (as
defined in Section 17). This indemnity agreement is not exclusive and will be in
addition to any liability which the Company might otherwise have and shall not limit any
rights or remedies which may otherwise be available at law or in equity to each Placement
Agent Indemnified Party.
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(b) The Placement Agent shall indemnify and hold harmless the Company and its
directors, its officers who signed the Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act (collectively, the “Company Indemnified Parties,” and each a “Company
Indemnified Party”) against any loss, claim, damage, expense or liability whatsoever (or any
action, investigation or proceeding in respect thereof), joint or several, to which such
Company Indemnified Party may become subject, under the Securities Act or otherwise, insofar
as such loss, claim, damage, expense, liability, action, investigation or proceeding arises
out of or is based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any
“issuer information” filed or required to be filed pursuant to Rule 433(d) of the Rules and
Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or (ii) the omission or alleged omission to state in any Preliminary Prospectus,
any Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the
Prospectus, or in any amendment or supplement thereto, a material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each case only to
the extent that the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information furnished to
the Company by the Placement Agent specifically for use therein, which information the
parties hereto agree is limited to the Placement Agent’s Information as defined in
Section 17, and shall reimburse the Company Indemnified Party for any legal or other
expenses reasonably incurred by such party in connection with investigating or preparing to
defend or defending against or appearing as third party witness in connection with any such
loss, claim, damage, liability, action, investigation or proceeding, as such fees and
expenses are incurred. Notwithstanding the provisions of this Section 8(b), in no
event shall any indemnity by the Placement Agent under this Section 8(b) exceed the total
Placement Fee received by the Placement Agent in connection with Section 2.5.
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(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
such indemnifying party in writing of the commencement of that action; provided, however,
that the failure to notify the indemnifying party shall not relieve it from any liability
which it may have under this Section 8 except to the extent it has been materially
prejudiced by such failure; and, provided, further, that the failure to notify an
indemnifying party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 8. If any such action shall be
brought against an indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume the defense
of such action with counsel reasonably satisfactory to the indemnified party (which counsel
shall not, except with the written consent of the indemnified party, be counsel to the
indemnifying party). After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such action, except as provided herein, the
indemnifying party shall not be liable to the indemnified party under Section 8 for
any legal or other expenses subsequently incurred by the indemnified party in connection
with the defense of such action other than reasonable costs of investigation; provided,
however, that any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense of such action but the fees and expenses of
such counsel (other than reasonable costs of investigation) shall be at the expense of such
indemnified party unless (i) the employment thereof has been specifically authorized in
writing by the Company in the case of a claim for indemnification under Section 8(a)
or Section 2.5 or the Placement Agent in the case of a claim for indemnification
under Section 8(b), (ii) such indemnified party shall have been advised by its
counsel that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party, or (iii) the indemnifying
party has failed to assume the defense of such action and employ counsel reasonably
satisfactory to the indemnified party within a reasonable period of time after notice of the
commencement of the action or the indemnifying party does not diligently defend the action
after assumption of the defense, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the expense of
the indemnifying party, the indemnifying party shall not have the right to assume the
defense of (or, in the case of a failure to diligently defend the action after assumption of
the defense, to continue to defend) such action on behalf of such indemnified party and the
indemnifying party shall be responsible for legal or other expenses subsequently incurred by
such indemnified party in connection with the defense of such action; provided, however,
that the indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified parties (in
addition to any local counsel), which firm shall be designated in writing by the
Placement Agent if the indemnified parties under this Section 8 consist of any
Placement Agent Indemnified Party or by the Company if the indemnified parties under this
Section 8 consist of any Company Indemnified Parties. Subject to this Section
8(c), the amount payable by an indemnifying party under Section 8 shall include,
but not be limited to, (x) reasonable legal fees and expenses of counsel to the indemnified
party and any other expenses in investigating, or preparing to defend or defending against,
or appearing as a third
35
party witness in respect of, or otherwise incurred in connection
with, any action, investigation, proceeding or claim, and (y) all amounts paid in settlement
of any of the foregoing. No indemnifying party shall, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of judgment with
respect to any pending or threatened action or any claim whatsoever, in respect of which
indemnification or contribution could be sought under this Section 8 (whether or not
the indemnified parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified party in
form and substance reasonably satisfactory to such indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any indemnified
party. Subject to the provisions of the following sentence, no indemnifying party shall be
liable for settlement of any pending or threatened action or any claim whatsoever that is
effected without its written consent (which consent shall not be unreasonably withheld or
delayed), but if settled with its written consent, if its consent has been unreasonably
withheld or delayed or if there be a judgment for the plaintiff in any such matter, the
indemnifying party agrees to indemnify and hold harmless any indemnified party from and
against any loss or liability by reason of such settlement or judgment. In addition, if at
any time an indemnified party shall have requested that an indemnifying party reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party agrees that it
shall be liable for any settlement of the nature contemplated herein effected without its
written consent if (i) such settlement is entered into more than forty-five (45) days after
receipt by such indemnifying party of the request for reimbursement, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least thirty (30) days
prior to such settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the date of such
settlement.
(d) If the indemnification provided for in this Section 8 is unavailable or
insufficient to hold harmless an indemnified party under Section 8(a) or Section
8(a), then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid, payable or otherwise incurred by such indemnified
party as a result of such loss, claim, damage, expense or liability (or any action,
investigation or proceeding in respect thereof), as incurred, (i) in such proportion as
shall be appropriate to reflect the relative benefits received by the Company on the one
hand and the Placement Agent on the other hand from the offering of the Securities, or (ii)
if the allocation provided by clause (i) of this Section 8(d) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) of this Section 8(d) but also the relative fault of the Company on the one hand and the
Placement Agent on the other with respect to the statements, omissions, acts or failures to
act which resulted in such loss, claim, damage, expense or liability (or any action,
investigation or proceeding in respect thereof) as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand and the
Placement Agent on the other with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Securities purchased under
this Agreement (before deducting expenses) received by the Company bear to the total
Placement Fee received by the Placement Agent in connection with the Offering, in each case
36
as set forth in the table on the cover page of the Prospectus. The relative fault of the
Company on the one hand and the Placement Agent on the other 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 Agent on the other, the
intent of the parties and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement, omission, act or failure to act; provided that the
parties hereto agree that the written information furnished to the Company by or on behalf
of the Placement Agent for use in any Preliminary Prospectus, any Registration Statement or
the Prospectus, or in any amendment or supplement thereto, consists solely of the Placement
Agent’s Information as defined in Section 17. The Company and the Placement Agent
agree that it would not be just and equitable if contributions pursuant to this Section
8(d) were to be determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim, damage, expense,
liability, action, investigation or proceeding referred to above in this Section
8(d) shall be deemed to include, for purposes of this Section 8(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating, preparing to defend or defending against or appearing as a third party
witness in respect of, or otherwise incurred in connection with, any such loss, claim,
damage, expense, liability, action, investigation or proceeding. Notwithstanding the
provisions of this Section 8(d), no Placement Agent shall be required to contribute
any amount in excess of the total Placement Fee received by the Placement Agent in
connection with the Offering, less the amount of any damages which the Placement Agent has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement,
omission or alleged omission, act or alleged act or failure to act or alleged failure to
act. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
9. Termination. The obligations of the Placement Agent and the Purchaser hereunder and under the
Subscription Agreement may be terminated by the Placement Agent, in its absolute discretion by
notice given to the Company prior to delivery of and payment for the Units if, prior to that time,
any of the events described in Sections 7(i), 7(j), or 7(k) have occurred
or if the Purchaser shall decline to purchase the Units for any reason permitted under this Agreement or the
Subscription Agreement.
10. Reimbursement of Placement Agent’s Expenses. Notwithstanding anything to the contrary in this Agreement, if (a) this Agreement shall
have been terminated pursuant to Section 9, (b) the Company shall fail to tender the Shares
or Warrants included in the Units for delivery to the Purchaser for any reason not permitted under
this Agreement, (c) the Purchaser shall decline to purchase the Units for any reason permitted
under this Agreement or (d) the sale of the Units is not consummated because any condition to the
obligations of the Purchaser or the Placement Agent set forth herein is not satisfied or because of
the refusal, inability or failure on the part of the Company to perform any agreement herein or to
satisfy any condition or to comply with the provisions hereof, then, in addition to the payment of
out-of-pocket expenses in accordance with Section 6, the Company shall reimburse the
Placement Agent for the fees and expenses of the Placement Agent’s counsel and for such other
accountable out-of-pocket expenses as shall have been reasonably incurred by them in connection
with this Agreement and the proposed purchase of the Units, and upon demand the Company shall pay
the full amount thereof to the Placement Agent.
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11. Absence of Fiduciary Relationship. The Company acknowledges and agrees that:
(a) The Placement Agent’s responsibility to the Company is solely contractual in
nature, and the Placement Agent has been retained solely to act as a placement agent in
connection with the Offering and no fiduciary, advisory or agency relationship between the
Company and the Placement Agent has been created in respect of any of the transactions
contemplated by this Agreement, irrespective of whether the Placement Agent or Lazard Frères
& Co. LLC has advised or is advising the Company on other matters;
(b) the price of the Units set forth in this Agreement was established by the Company
following discussions and arms-length negotiations with the Placement Agent, and the Company
is capable of evaluating and understanding, and understands and accepts, the terms, risks
and conditions of the transactions contemplated by this Agreement;
(c) it has been advised that the Placement Agent and Lazard Frères & Co. LLC and each
of their affiliates are engaged in a broad range of transactions which may involve interests
that differ from those of the Company and that the Placement Agent has no obligation to
disclose such interests and transactions to the Company by virtue of any fiduciary, advisory
or agency relationship; and
(d) it waives, to the fullest extent permitted by law, any claims it may have against
the Placement Agent for breach of fiduciary duty or alleged breach of fiduciary duty and
agrees that the Placement Agent shall have no liability (whether direct or
indirect) to the Company in respect of such a fiduciary duty claim or to any person
asserting a fiduciary duty claim on behalf of or in right of the Company, including
stockholders, employees or creditors of the Company.
12. Successors; Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the Placement Agent, the
Company, and their respective successors and assigns. This Agreement shall also inure to the
benefit of Lazard Frères & Co. LLC, the Purchaser and each of their successors and assigns, which
shall be third party beneficiaries hereof. Notwithstanding the foregoing, as provided in the
Subscription Agreement, the determination as to whether any condition in Section 7 hereof
shall have been satisfied, and the waiver of any condition in Section 7 hereof, may be made
by the Placement Agent in its sole discretion, and any such determination or waiver shall be
binding on the Purchaser and shall not require the consent of the Purchaser. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person, other than the
persons mentioned in the preceding sentences, any legal or equitable right, remedy or claim under
or in respect of this Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and exclusive benefit
of such persons and for the benefit of no other person; except that the representations,
warranties, covenants, agreements and indemnities of the Company contained in this Agreement shall
also be for the benefit of the Placement Agent Indemnified Parties and the indemnities of the
Placement Agent shall be for the benefit of the Company Indemnified Parties. It is understood that
the Placement Agent’s responsibility to the Company is solely contractual in nature and the
Placement Agent does not owe the Company, or any other party, any fiduciary duty as a result of
this Agreement.
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13. Survival of Indemnities, Representations, Warranties, etc. The respective indemnities, covenants, agreements, representations, warranties and other
statements of the Company and the Placement Agent, as set forth in this Agreement or made by them
respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Placement Agent, the Purchaser, the Company or any person
controlling any of them and shall survive delivery of and payment for the Securities.
Notwithstanding any termination of this Agreement, including without limitation any termination
pursuant to Section 9, the indemnity and contribution and reimbursement agreements
contained in Sections 8 and 10 and the representations and warranties set forth in
this Agreement shall not terminate and shall remain in full force and effect at all times.
14. Notices. All statements, requests, notices and agreements hereunder shall be in writing, and:
(a) if to the Placement Agent, shall be delivered or sent by mail, facsimile
transmission or email to Lazard Capital Markets LLC, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, Fax: ▇▇▇-▇▇▇-▇▇▇▇; and
(b) if to the Company, shall be delivered or sent by mail, facsimile transmission or
email to: FuelCell Energy, Inc., ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq., Corporate Legal, Fax: (▇▇▇) ▇▇▇-▇▇▇▇; with copies to
(i) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq., Fax: ▇▇▇-▇▇▇-▇▇▇▇, and (ii) ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇;
provided, however, that any notice to the Placement Agent pursuant to Section 8 shall be
delivered or sent by mail or facsimile transmission to the Placement Agent at its address set forth
in its acceptance communication to the Placement Agent, which address will be supplied to any other
party hereto by the Placement Agent upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof, except that any such statement,
request, notice or agreement delivered or sent by email shall take effect at the time of
confirmation of receipt thereof by the recipient thereof.
15. Definition of Certain Terms. For purposes of this Agreement, (a) “business day” means any day on which the New York
Stock Exchange, Inc. is open for trading, (b) “knowledge” means the knowledge of the directors and
officers of the Company after reasonable inquiry and (c) “subsidiary” has the meaning set forth in
Rule 405 of the Rules and Regulations.
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16. Governing Law, Agent for Service and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State
of New York, including without limitation Section 5-1401 of the New York General Obligations Law.
No legal proceeding may be commenced, prosecuted or continued in any court other than the courts of
the State of New York located in the City and County of New York or in the United States District
Court for the Southern District of New York, which courts shall have jurisdiction over the
adjudication of such matters, and the Company and the Placement Agent each hereby consent to the
jurisdiction of such courts and personal service with respect thereto. The Company and the
Placement Agent each hereby waive all right to trial by jury in any legal proceeding (whether based
upon contract, tort or otherwise) in any way arising out of or relating to this Agreement. The
Company agrees that a final judgment in any such legal proceeding brought in any such court shall
be conclusive and binding upon the Company and the Placement Agent and may be enforced in any other
courts in the jurisdiction of which the Company is or may be subject, by suit upon such judgment.
17. Placement Agent’s information. The parties hereto acknowledge and agree that, for all purposes of this Agreement, the
“Placement Agent’s Information” consists solely of the following information in the Prospectus: (i)
the last paragraph on the front cover page concerning the terms of the offering; and (ii) the
statements concerning the Placement Agent contained in the first paragraph, concerning the
Placement Agent and Lazard Frères & Co. LLC in the first paragraph and the sixth paragraph, in
each case under the heading “Plan of Distribution.”
18. Partial Unenforceability. The invalidity or unenforceability of any section, paragraph, clause or provision of this
Agreement shall not affect the validity or enforceability of any other section, paragraph, clause
or provision hereof. If any section, paragraph, clause or provision of this Agreement is for any
reason determined to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and enforceable.
19. General. This Agreement constitutes the entire agreement of the parties to this Agreement and
supersedes all prior written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. In this Agreement, the masculine, feminine
and neuter genders and the singular and the plural include one another. The section headings in
this Agreement are for the convenience of the parties only and will not affect the construction or
interpretation of this Agreement. This Agreement may be amended or modified, and the observance of
any term of this Agreement may be waived, only by a writing signed by the Company and the Placement
Agent.
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20. Research Analyst Independence. The Company acknowledges that the
Placement Agent’s research analysts and research departments are required to be independent from
its investment banking division and are subject to certain regulations and internal policies, and
that the Placement Agent’s research analysts may hold views and make statements or investment
recommendations and/or publish research reports with respect to the Company and/or the offering
that differ from the views of their investment banking division. The Company hereby waives and
releases, to the fullest extent permitted by law, any claims that the Company may have against the
Placement Agent with respect to any conflict of interest that may arise from the fact that the
views expressed by its independent research analysts and research departments may be different from
or inconsistent with the views or advice communicated to the Company by the Placement Agent
investment banking division. The Company acknowledges that the Placement Agent is a full service
securities firm and as such from time to time, subject to applicable securities laws, rules and
regulations, may effect transactions for its own account or the account of its customers and hold
long or short positions in debt or equity securities of the Company; provided, however, that
nothing in this Section 20 shall relieve the Placement Agent of any responsibility or
liability it may otherwise bear in connection with activities in violation of applicable securities
laws, rules or regulations.
21. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon the same
instrument and such signatures may be delivered by facsimile.
41
If the foregoing is in accordance with your understanding of the agreement between the Company
and the Placement Agent, kindly indicate your acceptance in the space provided for that purpose
below.
| Very truly yours, FUELCELL ENERGY, INC. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| Accepted as of the date first above written: LAZARD CAPITAL MARKETS LLC |
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| By: | |||
| Name: | |||
| Title: | |||
[Signature Page to FuelCell Energy Placement Agent Agreement]
42
SCHEDULE A
General Use Free Writing Prospectuses
None.
SCHEDULE B
List of officers and directors subject to Section 5
Board of Directors
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EXHIBIT A
Form of Lock Up Agreement
January 10, 2011
LAZARD CAPITAL MARKETS LLC
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Re: FuelCell Energy, Inc. Offering of Common Stock
Dear Sirs:
In order to induce Lazard Capital Markets LLC (“Lazard”) to enter into a certain Placement
Agent Agreement with FuelCell Energy, Inc., a Delaware corporation (the “Company”), with respect to
the offering (the “Offering”) of shares of the Company’s Common Stock, par value $0.0001 per share
(“Common Stock”) and Warrants to purchase Common Stock, the undersigned hereby agrees that for a
period of ninety (90) days following the date of the final prospectus supplement relating to this
Offering (the “Lock-up Period”), the undersigned will not, without the prior written consent of
Lazard, directly or indirectly, (i) offer, sell, assign, transfer, pledge, contract to sell, or
otherwise dispose of, or announce the intention to otherwise dispose of, any shares of Common Stock
or any securities convertible into or exercisable or exchangeable for Common Stock (including,
without limitation, shares of Common Stock or any such securities which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and regulations promulgated
under the Securities Act of 1933, as the same may be amended or supplemented from time to time
(such shares or securities, the “Beneficially Owned Shares”)), (ii) enter into any swap, hedge or
other agreement or arrangement that transfers in whole or in part, the economic risk of ownership
of any Beneficially Owned Shares, Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock, or (iii) engage in any short selling of any Beneficially Owned
Shares, Common Stock or securities convertible into or exercisable or exchangeable for Common
Stock.
If (i) the Company issues an earnings release or material news or a material event relating to
the Company occurs during the last seventeen (17) days of the Lock-up Period, or (ii) prior to the
expiration of the Lock-up Period, the Company announces that it will release earnings results
during the sixteen (16)-day period beginning on the last day of the Lock-up Period, the
restrictions imposed by this Agreement shall continue to apply until the expiration of the eighteen
(18)-day period beginning on the issuance of the earnings release or the occurrence of the material
news or material event.
Notwithstanding the foregoing, the undersigned may sell or otherwise transfer shares of Common
Stock or Beneficially Owned Shares (i) as a bona fide gift or gifts or pledge, provided that the
undersigned provides prior written notice of such gift or gifts or pledge to Lazard and the donee
or donees or pledgee or pledgees (as the case may be) thereof agree to be bound by the
restrictions set forth herein, (ii) either during the undersigned’s lifetime or on death by
will or intestacy to the undersigned’s immediate family or to a trust, the beneficiaries of which
are exclusively the undersigned and a member or members of the undersigned’s immediate family,
provided that the transferee thereof agrees to be bound by the restrictions set forth herein, (iii)
pursuant to any 10b-5(1) trading plans in effect as of the date of the date of the Offering, or
(iv) with the prior written consent of Lazard in its sole discretion. In addition, if the
undersigned is a partnership, limited liability company, trust, corporation or similar entity, it
may distribute the Common Stock or Beneficially Owned Shares to its partners, members or
stockholders; provided, however, that in each such case, prior to any such transfer, each
transferee shall execute a duplicate form of this letter agreement or execute an agreement,
reasonably satisfactory to Lazard, pursuant to which each transferee shall agree to receive and
hold such Common Stock or Beneficially Owned Shares subject to the provisions hereof, and there
shall be no further transfer except in accordance with the provisions hereof. For the purposes of
this paragraph, “immediate family” shall mean spouse, domestic partner, lineal descendant
(including adopted children), father, mother, brother or sister of the transferor.
In addition, the undersigned hereby waives, from the date hereof until the expiration of the
Lock-up Period, any and all rights, if any, to request or demand registration pursuant to the
Securities Act of 1933, as amended, of any shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock that are registered in the name of the undersigned or
that are Beneficially Owned Shares. In order to enable the aforesaid covenants to be enforced, the
undersigned hereby consents to the placing of legends and/or stop-transfer orders with the transfer
agent of the Common Stock with respect to any shares of Common Stock, securities convertible into
or exercisable or exchangeable for Common Stock or Beneficially Owned Shares owned by the
undersigned.
| [Signatory] |
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| By: | ||||
| Name: | ||||
| Title: | Director FuelCell Energy, Inc. |
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