CAPITAL LEASE FUNDING, INC. 2,400,000 SHARES CONTROLLED EQUITY OFFERINGSM SALES AGREEMENT
EXHIBIT
10.2
2,400,000
SHARES
CONTROLLED
EQUITY OFFERINGSM
August
15, 2005
CANTOR
XXXXXXXXXX & CO.
000
Xxxx
00xx Xxxxxx
Xxx
Xxxx,
XX 00000
Ladies
and Gentlemen:
CAPITAL
LEASE FUNDING, INC., a Maryland corporation (the “Company”),
confirms its agreement (this “Agreement”)
with
Cantor Xxxxxxxxxx & Co. (“CF&Co”),
as
follows:
1. Issuance
and Sale of Shares.
The
Company agrees that, from time to time during the term of this Agreement,
on the
terms and subject to the conditions set forth herein, it may issue and sell
through CF&Co, acting as agent and/or principal, (a) up to TWO MILLION, FOUR
HUNDRED THOUSAND (2,400,000) shares of the Company’s common stock, par value
$0.01 per share (the “Common
Stock”);
provided,
however,
that,
in no event shall the aggregate market value of the Common Stock sold in
an “at
the market” offering (as defined in Section
3
below)
exceed $25,000,000; and (b) such preferred stock as the Company may subsequently
designate (the “Preferred
Stock”;
and
together with the Common Stock, the “Shares”).
Notwithstanding anything to the contrary contained herein, the parties hereto
agree that compliance with the limitations set forth in this Section
1
on the
number and aggregate market value of Shares issued and sold under this Agreement
shall be the sole responsibility of the Company, and CF&Co shall have no
obligation in connection with such compliance. The issuance and sale of Shares
through CF&Co will be effected pursuant to the Registration Statement (as
defined below) filed by the Company and declared effective by the Securities
and
Exchange Commission (the “Commission”).
The
Company has filed, in accordance with the provisions of the Securities Act
of
1933, as amended, and the rules and regulations thereunder (collectively,
the
“Securities
Act”),
with
the Commission a registration statement on Form S-3 (File No. 333-124003),
including a base prospectus, with respect to the Shares, and which incorporates
by reference documents that the Company has filed or will file in accordance
with the provisions of the Securities Exchange Act of 1934, as amended, and
the
rules and regulations thereunder (collectively, the “Exchange
Act”).
If
required to do so under the Securities Act, the Company will prepare a
prospectus supplement (the “Prospectus
Supplement”)
to the
base prospectus included as part of such registration statement. Upon request,
the Company will furnish to CF&Co, for use by CF&Co, copies of one or
more prospectuses included as part of such registration statement, as
supplemented by the Prospectus Supplement, if any, relating to the Shares.
Except where the context otherwise requires, such registration statement,
as
amended when it
became
effective, including all documents filed as part thereof or incorporated
by
reference therein, and including any information contained in a Prospectus
(as
defined below) subsequently filed with the Commission pursuant to Rule 424(b)
under the Securities Act and also including any other registration statement
filed pursuant to Rule 462(b) under the Securities Act, collectively, are
herein
called the “Registration
Statement,”
and
the base prospectus, including all documents incorporated therein by reference,
included in the Registration Statement, as it may be supplemented by the
Prospectus Supplement, in the form filed by the Company with the Commission
pursuant to Rule 424(b) under the Securities Act is herein called the
“Prospectus.”
Any
reference herein to the Registration Statement, the Prospectus or any amendment
or supplement thereto shall be deemed to refer to and include the documents
incorporated by reference therein, and any reference herein to the terms
“amend,”“amendment” or “supplement” with respect to the Registration Statement
or the Prospectus shall be deemed to refer to and include the filing after
the
execution hereof of any document with the Commission deemed to be incorporated
by reference therein. For purposes of this Agreement, all references to the
Registration Statement, the Prospectus or to any amendment or supplement
thereto
shall be deemed to include any copy filed with the Commission pursuant to
its
Electronic Data Gathering Analysis and Retrieval System (“XXXXX”).
2. Placements.
Each
time that the Company wishes to issue and sell Shares hereunder (each, a
“Placement”),
it
will notify CF&Co of the proposed terms of such Placement. If CF&Co
wishes to accept such proposed terms (which it may decline to do for any
reason
in its sole discretion) or, following discussions with the Company, wishes
to
accept amended terms, CF&Co will issue to the Company a written notice
setting forth the terms that CF&Co is willing to accept, including without
limitation the number of Shares (“Placement
Shares”)
to be
issued, the type of Shares, the manner(s) in which sales are to be made,
the
date or dates on which such sales are anticipated to be made, any minimum
price
below which sales may not be made, and the capacity in which CF&Co may act
in selling Placement Shares hereunder (as principal, agent or both) (a
“Placement
Notice”),
the
form of which is attached hereto as Schedule
1.
The
amount of any discount, commission or other compensation to be paid by the
Company to CF&Co shall be equal to (a) two and three quarters percent
(2.75%) of the gross proceeds of the first one million two hundred thousand
Placement Shares sold pursuant to this Agreement and (b) two and one-half
percent of the gross proceeds of all Placement Shares sold in excess of one
million two hundred thousand. The terms set forth in a Placement Notice will
not
be binding on the Company or CF&Co unless and until the Company delivers
written notice of its acceptance of all of the terms of such Placement Notice
(an “Acceptance”)
to
CF&Co; provided,
however,
that
neither the Company nor CF&Co will be bound by the terms of a Placement
Notice unless the Company delivers to CF&Co an Acceptance with respect
thereto prior to 4:30 p.m. (New York time) on the Business Day (as defined
below) following the Business Day on which such Placement Notice is received
by
Company in accordance with Section
12
(Notices). It is expressly acknowledged and agreed that neither the Company
nor
CF&Co will have any obligation whatsoever with respect to a Placement or any
Placement Shares unless and until CF&Co delivers a Placement Notice to the
Company and the Company accepts such Placement Notice by means of an Acceptance,
and then only upon the terms specified therein and herein. In the event of
a
conflict between the terms of this Agreement and the terms of a Placement
Notice, the terms of the Placement Notice will control.
3. Sale
of Placement Shares by CF&Co.
Subject
to the terms and conditions herein set forth, upon the Company’s Acceptance of a
Placement Notice, and unless the sale of the Placement Shares described therein
has been suspended or otherwise terminated in accordance with the terms of
this
Agreement, CF&Co will use its commercially reasonable efforts consistent
with its normal trading and sales practices to sell such Placement Shares
up to
the amount specified, and otherwise in accordance with the terms of such
Placement Notice. CF&Co will provide written confirmation to the Company no
later than the opening of the Trading Day (as defined below) next following
the
Trading Day on which it has made sales of Placement Shares hereunder setting
forth the number of Placement Shares sold on such day, the compensation payable
by the Company to CF&Co with respect to such sales, and the Net Proceeds (as
defined below) payable to the Company, with an itemization of deductions
made by
CF&Co (as set forth in Section 5(a)) from gross proceeds for the Placement
Shares that it receives from such sales. CF&Co may sell Placement Shares by
any method permitted by law deemed to be an “at the market” offering as defined
in Rule 415 of the Securities Act, including without limitation sales made
directly on the New York Stock Exchange
(the
“Exchange”),
on
any other existing trading market for the Common Stock or to or through a
market
maker. CF&Co may also sell Placement Shares in privately negotiated
transactions. The Company acknowledges and agrees that (i) there can be no
assurance that CF&Co will be successful in selling Placement Shares, and
(ii) CF&Co will incur no liability or obligation to the Company or any other
person or entity if it does not sell Placement Shares for any reason other
than
a failure by CF&Co to use its commercially reasonable efforts consistent
with its normal trading and sales practices to sell such Placement Shares
as
required under this Section
3.
For the
purposes hereof, “Trading
Day”
means
any day on which Common Stock is purchased and sold on the principal market
on
which the Common Stock is listed or quoted.
-2-
4. Suspension
of Sales.
The
Company or CF&Co may, upon notice to the other party in writing (including
by email correspondence if receipt of such correspondence is actually
acknowledged by the party to whom the notice is sent, other than via auto-reply)
or by telephone (confirmed immediately by verifiable facsimile transmission),
suspend any sale of Placement Shares; provided,
however,
that
such suspension shall not affect or impair either party’s obligations with
respect to any Placement Shares sold hereunder prior to the receipt of such
notice. Each of the Parties agrees that no such notice shall be effective
against the other unless it is made to one of the individuals named on
Schedule
2
hereto,
as such Schedule may be amended from time to time.
5. Settlement.
(a) Settlement
of Placement Shares.
Unless
otherwise specified in the applicable Placement Notice, settlement for sales
of
Placement Shares will occur on the third (3rd)
Business Day (or such earlier day as is industry practice for regular-way
trading) following the date on which such sales are made (each, a “Settlement
Date”).
The
amount of proceeds to be delivered to the Company on a Settlement Date for
the
sale of the Placement Shares sold (the “Net
Proceeds”)
will
be equal to the aggregate sales price received by CF&Co at which such
Placement Shares were sold, after deduction for (i) CF&Co’s commission,
discount or other compensation for such sales payable by the Company pursuant
to
Section
2
hereof,
(ii) any other amounts due and payable by the Company to CF&Co hereunder
pursuant to Section
7(g)
(Expenses) hereof, and (iii) any transaction fees imposed by any governmental
or
self-regulatory organization in respect of such sales.
-3-
(b) Delivery
of Placement Shares.
On or
before each Settlement Date, the Company will, or will cause its transfer
agent
to, electronically transfer the Placement Shares being sold by crediting
CF&Co’s or its designee’s (provided
CF&Co shall have given the Company written notice of such designee prior to
the Settlement Date) account at The Depository Trust Company through its
Deposit
and Withdrawal at Custodian System or by such other means of delivery as
may be
mutually agreed upon by the parties hereto and, upon receipt of such Placement
Shares, which in all cases shall be freely tradable, transferable, registered
shares in good deliverable form, CF&Co will deliver the related Net Proceeds
in same day funds to an account designated by the Company prior to the
Settlement Date. If the Company defaults in its obligation to deliver Placement
Shares on a Settlement Date, the Company agrees that in addition to and in
no
way limiting the rights and obligations set forth in Section
9(a)
(Indemnification) hereto, it will (i) hold CF&Co harmless against any
loss, claim, damage, or expense (including reasonable legal fees and expenses),
as incurred, arising out of or in connection with such default by the Company
and (ii) pay to CF&Co any commission, discount, or other compensation to
which it would otherwise have been entitled absent such default.
6. Representations
and Warranties of the Company.
The
Company represents and warrants to, and agrees with, CF&Co that as of the
date of this Agreement and as of each Representation Date (as defined in
Section
7(m)
below)
on which a certificate is required to be delivered pursuant to Section 7(m)
of
this Agreement, as the case may be:
(a) Registration
Statement and Prospectus.
The
Company meets the requirements for use of Form S-3 under the Securities Act.
The
Registration Statement has been filed with the Commission and has been declared
effective under the Securities Act. The Registration Statement has named
CF&Co as an underwriter, acting as principal and/or agent that the Company
might engage in the section entitled “Plan of Distribution.” The Company has not
received, and has no notice of, any order of the Commission preventing or
suspending the use of the Registration Statement, or threatening or instituting
proceedings for that purpose. Any statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement
or the
Prospectus or to be filed as exhibits to the Registration Statement have
been so
described or filed. Copies of the Registration Statement, the Prospectus,
and
any such amendments or supplements and all documents incorporated by reference
therein that were filed with the Commission on or prior to the date of this
Agreement have been delivered, or made available through XXXXX, to CF&Co and
their counsel. The Company has not distributed and will not distribute any
offering material in connection with the offering or sale of the Placement
Shares other than the Registration Statement and the Prospectus. The Common
Stock is currently listed on the Exchange under the trading symbol
“LSE.”
(b) No
Misstatement or Omission.
Each
part of the Registration Statement, when such part became or becomes effective
or was or is filed with the Commission, and the Prospectus, and any amendment
or
supplement thereto, on the date of filing thereof with the Commission and
at
each Settlement Date, conformed or will conform in all material respects
with
the requirements of the Securities Act. Each part of the Registration Statement,
when such part became or becomes effective or was or is filed with the
Commission, did not, or will 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 not misleading. The Prospectus and any amendment
or
supplement thereto, on the date of filing thereof with the Commission and
at
each Settlement Date, did not or will not include an untrue statement of
a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the foregoing shall not apply to statements in, or
omissions from, any such document made in reliance upon, and in conformity
with,
written information concerning CF&Co that was furnished in writing to the
Company by CF&Co specifically for use in the preparation thereof.
-4-
(c) Conformity
with Securities Act and Exchange Act.
The
documents incorporated by reference in the Registration Statement, the
Prospectus or any amendment or supplement thereto, when they were or are
filed
with the Commission under the Securities Act, conformed or will conform in
all
material respects with the requirements of the Securities Act and the Exchange
Act, as applicable.
(d) Financial
Information.
The
financial statements of the Company, together with the related schedules
and
notes thereto, set forth or included or incorporated by reference in the
Registration Statement and the Prospectus are accurate in all material respects
and fairly present the financial condition of the Company as of the dates
indicated and the results of operations, changes in financial position,
stockholders’ equity and cash flows for the periods therein specified are in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated therein). The
selected financial data included or incorporated by reference in the
Registration Statement and the Prospectus present fairly the information
shown
therein and, to the extent based upon or derived from the financial statements,
have been compiled on a basis consistent with the financial statements presented
therein. Any pro forma financial statements of the Company, and the related
notes thereto, included or incorporated by reference in the Registration
Statement and the Prospectus present fairly the information shown therein,
have
been prepared in accordance with the Commission’s rules and guidelines with
respect to pro forma financial statements and have been properly compiled
on the
basis described therein, and the assumptions used in the preparation thereof
are
reasonable and the adjustments used therein are appropriate to give effect
to
the transactions and circumstances referred to therein. The Company and,
to the
Company’s knowledge, the Subsidiaries (as defined below) do not have any
material liabilities or obligations, direct or contingent (including any
off-balance sheet obligations), not disclosed in the Registration Statement
and
the Prospectus. No other financial statements are required to be set forth
or to
be incorporated by reference in the Registration Statement or the Prospectus
under the Securities Act.
(e) Conformity
with XXXXX Filing.
The
Prospectus delivered to CF&Co for use in connection with the sale of the
Placement Shares pursuant to this Agreement will be identical to the versions
of
the Prospectus created to be transmitted to the Commission for filing via
XXXXX,
except to the extent permitted by Regulation S-T.
(f) Organization.
The
Company has been duly incorporated and is validly existing as a corporation
in
good standing under the laws of the State of Maryland and is duly qualified
to
do business and is in good standing as a foreign corporation in each
jurisdiction in which its ownership or lease of property or assets or the
conduct of its business requires such qualification, except where the failure
to
so qualify would not have a material adverse effect on the business, assets,
prospects, financial condition, or results of operations of the Company and
the
Subsidiaries (as defined below) taken as a whole (a “Material
Adverse Effect”)
and
has full corporate power and authority necessary to own, hold, lease and/or
operate its assets and properties, to conduct the business in which it is
engaged and as described in the Registration Statement and the Prospectus
and to
enter into and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby, and the Company is in compliance in
all
material respects with the laws, orders, rules, regulations and directives
issued or administered by any jurisdictions in which it owns or leases property
or conducts business.
-5-
(g) Subsidiaries.
The
Subsidiaries listed on Schedule 3 attached hereto are the only “significant
subsidiaries” of the Company as such term is defined Rule 1-02 of Regulation S-X
promulgated under the Securities Act (collectively, the "Subsidiaries”).
The
Company does not own, directly or indirectly, any shares of stock or any
other
equity or long-term debt securities of any corporation or have any equity
interest in any firm, partnership, joint venture, association or other entity,
except as otherwise disclosed in the Registration Statement and/or Prospectus
(or where the failure to disclose is either (x) not required under the
Securities Act or the Exchange Act or (y) would not, or would not reasonably
be
expected to, result in a material misstatement or omission). Complete and
correct copies of the articles of incorporation and of the bylaws or other
formation documents of the Company and each of the Subsidiaries, as applicable,
and all amendments thereto have been made available to CF&Co and/or its
counsel. To the Company’s knowledge, each Subsidiary has been duly incorporated
or organized and is validly existing as a corporation, partnership, limited
liability company or business trust in good standing under the laws of the
jurisdiction of its incorporation or formation or organization and is duly
qualified to do business and is in good standing as a foreign corporation,
partnership, limited liability company or business trust in each jurisdiction
where the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified
would
not have a Material Adverse Effect and, to the Company’s knowledge, each
Subsidiary has full corporate, partnership, limited liability company or
other
power and authority, as applicable, necessary to own, hold, lease and/or
operate
its assets and properties and to conduct its business in which it is engaged
and
as described in the Registration Statement and the Prospectus, and, to the
Company’s knowledge, each Subsidiary is in compliance in all material respects
with the laws, orders, rules, regulations and directives issued or administered
by jurisdictions in which it owns or leases property or conducts business;
to
the Company’s knowledge, all of the outstanding shares of capital stock or other
equity interests, as the case may be, of each of the Subsidiaries have been
duly
authorized and validly issued, are fully paid and nonassessable with respect
to
the corporate Subsidiaries, and have been issued in compliance with all federal
and state securities laws and were not issued in violation of any preemptive
right, resale right, right of first refusal or similar right and are not
subject
to any security interest, other encumbrance or adverse claims; and, to the
Company’s knowledge, no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligation into shares of capital stock or ownership interests in the
Subsidiaries are outstanding.
(h) No
Violation of Charter or Agreements.
Neither
the Company nor, to the Company’s knowledge, any of the Subsidiaries is in
breach or violation of or in default under (nor has any event occurred that
with
notice, lapse of time or both would result in any breach or violation of
or
constitute a default under or give the holder of any indebtedness (or a person
acting on such holder’s behalf) the right to require the repurchase, redemption
or repayment of all or a part of such indebtedness under) (i) its respective
charter, bylaws, certificate of formation, partnership agreement or limited
liability company agreement, as the case may be, or (ii) any indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence
of
indebtedness of the Company or any Subsidiary, or any license, lease, contract
or other agreement or instrument to which the Company or any of the Subsidiaries
is a party or by which any of them or any of their respective properties
may be
bound or affected the effect of which breach, violation or default under
clause
(ii) could reasonably be expected to result in a Material Adverse Effect.
The
execution, delivery and performance of this Agreement by the Company, the
issuance and sale of the Placement Shares by the Company and the consummation
of
the transactions contemplated hereby by the Company will not conflict with,
-6-
result
in
any breach or violation of or constitute a default under (nor constitute
any
event that with notice, lapse of time or both would result in any breach
or
violation of or constitute a default under) (x) the charter, bylaws, certificate
of formation, partnership agreement or limited liability company agreement,
as
the case may be, of the Company or, to the Company’s knowledge, any of the
Subsidiaries, or (y) any indenture, mortgage, deed of trust, bank loan or
credit
agreement or other evidence of indebtedness, or any license, lease, contract
or
other agreement or instrument to which the Company or, to the Company’s
knowledge, any of the Subsidiaries, is a party or by which any of them or
any of
their respective properties may be bound or affected, the effect of which
breach, violation or default under clause (y) could reasonably be expected
to
result in a Material Adverse Effect or (z) any federal, state, local or foreign
law, regulation or rule or any decree, judgment or order applicable to the
Company or, to the Company’s knowledge, any of the Subsidiaries.
(i) Capitalization.
As of
December 31, 2004, the Company had an authorized, issued and outstanding
capitalization as set forth in its statements of financial condition included
in
the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
All of the issued and outstanding shares of capital stock of the Company
have
been duly and validly authorized and issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws and were not issued in violation of any preemptive right,
resale
right, right of first refusal or similar right.
(j) Authorization;
Enforceability.
This
Agreement has been duly authorized, executed and delivered by the Company
and is
a legal, valid and binding agreement of the Company enforceable in accordance
with its terms, except to the extent that (i) enforceability may be limited
by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable principles and (ii) the
indemnification and contribution provisions of Section 9 hereof may be limited
by federal or state securities laws and public policy considerations in respect
thereof.
(k) Capital
Stock and Placement Shares in Proper Form.
The
capital stock of the Company, including the Placement Shares, conforms in
all
material respects to the description thereof contained in the Registration
Statement and the Prospectus and such description conforms to the rights
set
forth in the instruments defining the same. The certificates for the Placement
Shares are in due and proper form and the holders of the Shares will not
be
subject to personal liability by reason of being such holders.
-7-
(l) Authorization
of Placement Shares.
The
Placement Shares, when issued and delivered pursuant to the terms approved
by
the Board of Directors or a duly designated committee thereof, against payment
therefor as provided herein, will be duly and validly authorized and issued
and
fully paid and nonassessable, free and clear of any pledge, lien, encumbrance,
security interest or other claim, including any statutory or contractual
preemptive rights, resale rights, rights of first refusal or other similar
rights, and will be registered pursuant to Section 12 of the Exchange
Act.
(m) No
Consents Required.
No
approval, authorization, consent or order of or filing with any national,
state
or local governmental or regulatory commission, board, body, authority or
agency
is required in connection with the issuance and sale of the Placement Shares
or
the consummation by the Company of the transactions contemplated hereby other
than (i) registration of the Placement Shares under the Securities
Act,
(ii) any necessary qualification under the securities or blue sky
laws of
the various jurisdictions in which the Placement Shares are being offered
by
CF&Co, (iii) filing of any reports under the Exchange Act, or (iv) such
approvals obtained or to be obtained in connection with the approval of the
listing of the Placement Shares on the Exchange.
(n) No
Preferential Rights.
Except
as set forth in the Registration Statement and the Prospectus, (i) no person,
as
such term is defined in Rule 1-02 of Regulation S-X promulgated under the
Securities Act (each, a “Person”),
has
the right, contractual or otherwise, to cause the Company to issue or sell
to
such Person any shares of Common Stock or shares of any other capital stock
or
other securities of the Company, (ii) no Person has any preemptive rights,
resale rights, rights of first refusal, or any other rights (whether pursuant
to
a “poison pill” provision or otherwise) to purchase any shares of Common Stock
or shares of any other capital stock or other securities of the Company,
(iii)
no Person has the right to act as an underwriter or as a financial advisor
to
the Company in connection with the offer and sale of the Shares, and (iv)
no Person has the right, contractual or otherwise, to require the Company
to
register under the Securities Act any shares of Common Stock or shares of
any
other capital stock or other securities of the Company, or to include any
such
shares or other securities in the Registration Statement or the offering
contemplated thereby, whether as a result of the filing or effectiveness
of the
Registration Statement or the sale of the Placement Shares as contemplated
thereby or otherwise.
(o) Independent
Public Accountant.
Ernst
& Young LLP, who have audited certain financial statements of the Company
and its Subsidiaries, are independent public accountants with respect to
the
Company, within the meaning of the Securities Act and the Public Accounting
Oversight Board (United States).
(p) Enforceability
of Agreements.
All
agreements between the Company and third parties expressly referenced in
the
Prospectus are legal, valid and binding obligations of the Company enforceable
in accordance with their respective terms, except to the extent that
(i) enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
and by general equitable principles and (ii) the indemnification provisions
of certain agreements may be limited be federal or state securities laws
or
public policy considerations in respect thereof.
(q) No
Litigation.
There
are no actions, suits, claims, investigations, inquiries or proceedings pending
or, to the best of the Company’s knowledge, threatened to which either the
Company or, to the Company’s knowledge, any Subsidiaries or any of their
respective officers or directors is a party or of which any of their respective
properties or other assets is subject at law or in equity, or before or by
any
federal, state, local or foreign governmental or regulatory commission, board,
body, authority or agency that could result in a judgment, decree or order
having individually or in the aggregate a Material Adverse Effect or prevent,
or
interfere in any material respect with the consummation of the transactions
contemplated hereby.
-8-
(r) Securities
Act Filings.
Since
the effective date on May 20, 2005 of the registration statement filed pursuant
to the Securities Act, the Company has timely filed with the Commission all
documents and other material required to be filed pursuant to Sections 13,
14
and 15(d) under the Exchange Act.
(s) Market
Capitalization.
As of
the date of this Agreement, the aggregate market value of the Company’s voting
stock held by nonaffiliates of the Company was equal to or greater than $150
million.
(t) No
Material Changes.
Subsequent to the respective dates as of which information is given in, or
incorporated by reference into, the Registration Statement and the Prospectus,
except as described in the Registration Statement or Prospectus, there has
not
been (i) any change, development, or event that has caused, or would reasonably
be expected to result in, a Material Adverse Effect or (ii) any change in
the
number of authorized shares of capital stock. The Company has no material
contingent obligation (including off-balance sheet obligations) that is not
disclosed in the Registration Statement or the Prospectus.
(u) No
Material Defaults.
No
default or event of default hereunder has occurred and is continuing. The
Company has not defaulted on any installment on indebtedness for borrowed
money
or on any rental on one or more long-term leases, which defaults could
reasonably be expected to have a Material Adverse Effect. The Company has
not
filed a report pursuant to Section 13(a) or 15(d) of the Exchange Act since
the
filing of its last Annual Report on Form 10-K, indicating that it (i) has
failed
to pay any dividend or sinking fund installment on preferred stock or (ii)
has
defaulted on any installment on indebtedness for borrowed money or on any
rental
on one or more long-term leases, which defaults could reasonably be expected
to
have a Material Adverse Effect.
(v) Certain
Market Activities.
Neither
the Company nor, to the Company’s knowledge, any of the Subsidiaries nor any of
their respective directors, officers or controlling persons has taken, directly
or indirectly, any action designed, or that has constituted or might reasonably
be expected to cause or result in, under the Exchange Act or otherwise, the
stabilization or manipulation of the price of any security of the Company
to
facilitate the sale or resale of the Placement Shares.
(w) Broker/Dealer
Relationships.
Except
as set forth on Schedule 4 hereto, neither the Company nor, to its knowledge,
any of its affiliates (i) is required to register as a “broker” or “dealer” in
accordance with the provisions of the Exchange Act or (ii) directly or
indirectly through one or more intermediaries, controls or is a “person
associated with a [NASD] member” or “associated person of a [NASD] member”
(within the meaning of Article I of the Bylaws of the National Association
of
Securities Dealers, Inc. (“NASD”)).
-9-
(x) No
Reliance.
The
Company has not relied upon CF&Co or legal counsel for CF&Co for any
legal, tax or accounting advice in connection with the offering and sale
of the
Placement Shares.
(y) Property.
As of
the date of this Agreement and except as otherwise disclosed in the Prospectus,
the Company has no plan or intention to materially alter its stated investment
policies and operating policies and strategies, as such are described in
the
Prospectus. The Company and, to the Company’s knowledge, the Subsidiaries have
good and marketable title to all properties and assets owned directly by
them,
in each case free and clear of all liens, security interests, pledges, charges,
encumbrances, mortgages and defects (except for any security interest, lien
encumbrance or claim that may otherwise exist under any applicable repurchase
agreement or as otherwise disclosed in the Prospectus), except such as do
not
interfere with the use made or proposed to be made of such asset or property
by
the Company or any Subsidiary, as the case may be. Any real property held
under
lease directly by the Company are held under valid, existing and enforceable
leases, with such exceptions, liens, security interests, pledges, charges,
encumbrances, mortgages and defects as are not material and do not interfere
with the use made or proposed to be made of such property and buildings by
the
Company.
(z) Taxes.
The
Company and, to the Company’s knowledge, each of the Subsidiaries has filed on a
timely basis (taking into account all applicable extensions) all necessary
federal, state, local and foreign income and franchise tax returns, if any
such
returns were required to be filed, through the date hereof and have paid
all
taxes shown as due thereon except for any failure to file or pay which would
not
reasonably be expected to have a Material Adverse Effect. No tax deficiency
has
been asserted against the Company or, to the Company’s knowledge, any of the
Subsidiaries, nor does the Company know of any tax deficiency that is likely
to
be asserted against any such entity that, if determined adversely to any
such
entity, could reasonably be expected to have a Material Adverse Effect. All
tax
liabilities, if any, are adequately provided for on the books of the Company
and, to the Company’s knowledge, the Subsidiaries.
(aa) Intellectual
Property.
The
Company and, to the Company’s knowledge, each Subsidiary owns or possesses
adequate license or other rights to use all patents, trademarks, service
marks,
trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how, if
any
(collectively, “Intangibles”),
necessary to entitle the Company and, to the Company’s knowledge, each
Subsidiary to conduct its business as described in the Prospectus, and neither
the Company nor, to the Company’s knowledge, any Subsidiary has received notice
of infringement of or conflict with (and knows of no such infringement of
or
conflict with) asserted rights of others with respect to any Intangibles
which
could have a Material Adverse Effect.
(bb) Environmental
Laws.
Except
as otherwise disclosed in the Prospectus, the Company has not authorized
or
conducted or has no knowledge of the generation, transportation, storage,
presence, use, treatment, disposal, release, or other handling of any hazardous
substance, hazardous waste, hazardous material, hazardous constituent, toxic
substance, pollutant, contaminant, asbestos, radon, polychlorinated biphenyls,
petroleum product or waste (including crude oil or any fraction thereof),
natural gas, liquefied gas, synthetic gas or other material defined, regulated,
controlled or potentially subject to any remediation requirement under any
environmental law (collectively, “Hazardous
Materials”),
on,
in, under or affecting any real property currently leased or owned or by
any
means controlled by
-10-
the
Company (collectively, the “Real
Property”),
except as would not reasonably be expected to have a Material Adverse Effect.
To
the knowledge of the Company, the Real Property, and the Company’s operations
with respect to the Real Property, are in material compliance with all federal,
state and local laws, ordinances, rules, regulations and other governmental
requirements relating to pollution, control of chemicals, management of waste,
discharges of materials into the environment, health, safety, natural resources,
and the environment (collectively, “Environmental
Laws”).
The
Company is in material compliance with all licenses, permits, registrations
and
government authorizations necessary to operate under all applicable
Environmental Laws. Except as otherwise disclosed in the Prospectus, the
Company
has not received any written or oral notice from any governmental entity
or any
other Person and there is no pending or threatened claim, litigation or any
administrative agency proceeding that (i) alleges a violation of any
Environmental Laws by the Company, (ii) that the Company is a liable
party
or a potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. §§. 9601, et
seq.,
or any
state superfund law; (iii) has resulted in or could result in the
attachment of an environmental lien on any of the Real Property; or
(iv) alleges that the Company is liable for any contamination of the
environment, contamination of the Real Property, damage to natural resources,
property damage, or personal injury based on their activities or the activities
of their predecessors or third parties (whether at the Real Property or
elsewhere) involving Hazardous Materials, whether arising under the
Environmental Laws, common law principles, or other legal
standards.
(cc) Internal
Controls.
The
Company maintains a system of internal accounting controls sufficient to
provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorization, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity
with
generally accepted accounting principles as applied in the United States
and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(dd) No
Violation of Laws.
Neither
the Company nor, to the Company’s knowledge, any Subsidiary is in violation, and
none of them has received notice of any violation with respect to, any
applicable environmental, safety or similar law applicable to its business
and
that could reasonably expect to result in a Material Adverse Effect. The
Company
and, to the Company’s knowledge, each Subsidiary have received all permits,
licenses or other approvals required of them under applicable federal and
state
occupational safety and health and environmental laws and regulations to
conduct
their businesses, and the Company and, to the Company’s knowledge, each
Subsidiary is in compliance with all terms and conditions of any such permit,
license or approval, except any such violation of law or regulation, failure
to
receive required permits, licenses or other approvals or failure to comply
with
the terms and conditions of such permits, licenses or approvals that could
not,
singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(ee) Finder’s
Fees.
The
Company has not incurred any liability for any finder’s fees or similar payments
in connection with the transactions herein contemplated, except as may otherwise
exist with respect to CF&Co pursuant to this Agreement.
-11-
(ff) Labor
Disputes.
There
are no existing or threatened labor disputes with the employees of the Company
or, to the Company’s knowledge, any Subsidiary that could reasonably be expected
to have individually or in the aggregate a Material Adverse Effect.
(gg) REIT.
The
Company is organized in conformity with the requirements for qualification
and
taxation as a “real estate investment trust” (a “REIT”)
under
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended
(the
“Code”).
The
proposed method of operation of the Company as described in the Prospectus
will
enable the Company to continue to meet the requirements for qualification
and
taxation as a REIT under the Code, and no actions have been taken (or not
taken
that are required to be taken) that would cause such qualification to be
lost.
The Company intends to continue to operate in a manner that would permit
it to
qualify as a REIT under the Code. The Company has no intention of changing
its
operations or engaging in activities that would cause it to fail to qualify,
or
make economically undesirable its continued qualification, as a
REIT.
(hh) Investment
Company Act.
The
Company, after giving effect to the offering and sale of the Placement Shares,
will not be an “investment company” or an entity “controlled” by an “investment
company,” as such terms are defined in the Investment Company Act of 1940, as
amended (the “Investment
Company Act”).
(ii) Casualty.
Neither
the Company nor, to the Company’s knowledge, any of the Subsidiaries has
sustained since the date of the last audited financial statements included
in
the Registration Statement, and the Prospectus any loss or interference with
its
respective 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, in each case that is likely either individually
or in
the aggregate to have a Material Adverse Effect.
(jj) Xxxxxxxx-Xxxxx
Compliance.
The
Company is in compliance with all presently applicable provisions of the
Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx
Act”)
and is
actively taking steps to ensure that it will be in compliance with other
applicable provisions of the Xxxxxxxx-Xxxxx Act upon the effectiveness of
such
provisions.
(kk) Underwriter
Agreements.
The
Company is not a party to any agreement with an agent or underwriter for
any
other “at-the-market” or continuous equity transaction other than an agreement
with Xxxxxxx Xxxxxxx Securities Corporation.
(ll) CF&Co
Purchases.
The
Company acknowledges and agrees that CF&Co has informed the Company that
CF&Co may, to the extent permitted under the
Securities Act
and the
Exchange Act, purchase and sell shares of Common
Stock
for its own account while this Agreement is in effect provided
that (i)
no such purchase or sales shall take place while a Placement Notice is in
effect
(except to the extent CF&Co may engage in sales of Placement Shares
purchased or deemed purchased from the Company as a “riskless principal” or in a
similar capacity) and (ii) the Company shall not be deemed to have authorized
or
consented to any such purchases or sales by CF&Co.
(mm) No
Improper Practices.
(i)
Neither the Company nor it Subsidiaries, nor to the Company’s knowledge, any of
the executive officers of the Company or its Subsidiaries has made any
contribution or other payment to any official of, or candidate for, any federal,
state, municipal, or foreign office in violation of any law or of the character
required to be disclosed in the Prospectus; (ii) no relationship, direct
or
indirect, exists between or among the Company or, to the Company’s knowledge,
any Subsidiary or any affiliate of any of them, on the one
-12-
hand,
and
the directors, officers and stockholders of the Company or, to the Company’s
knowledge, any Subsidiary, on the other hand, that is required by the Securities
Act to be described in the Registration Statement and the Prospectus that
is not
so described; (iii) no relationship, direct or indirect, exists between or
among
the Company or any Subsidiary or any affiliate of them, on the one hand,
and the
directors, officers, stockholders or directors of the Company or any Subsidiary,
on the other hand, that is required by the rules of the NASD to be described
in
the Registration Statement and the Prospectus that is not so described; and
(iv)
there are no material outstanding loans or advances or material guarantees
of
indebtedness by the Company or, to the Company’s knowledge, any Subsidiary to or
for the benefit of any of the officers or directors of the Company or any
Subsidiary or any of the members of the families of any of them.
7. Covenants
of the Company.
The
Company covenants and agrees with CF&Co that:
(a) Registration
Statement Amendments.
After
the date of this Agreement and during any period in which a Prospectus relating
to any Placement Shares is required to be delivered by CF&Co under the
Securities Act, (i) the Company will notify CF&Co promptly of the time
when any subsequent amendment to the Registration Statement, other than
documents incorporated by reference, has been filed with the Commission and/or
has become effective or any subsequent supplement to the Prospectus has been
filed and of any request by the Commission for any amendment or supplement
to
the Registration Statement or Prospectus or for additional information,
(ii) the Company will prepare and file with the Commission, promptly
upon
CF&Co’s request, any amendments or supplements to the Registration Statement
or Prospectus that, in CF&Co’s reasonable judgment, may be necessary or
advisable in connection with the distribution of the Placement Shares by
CF&Co (provided,
however,
that the
failure of CF&Co to make such request shall not relieve the Company of any
obligation or liability hereunder, or affect CF&Co’s right to rely on the
representations and warranties made by the Company in this Agreement);
(iii) the Company will not file any amendment or supplement to the
Registration Statement or Prospectus relating to the Placement Shares (except
for documents incorporated by reference) unless a copy thereof has been
submitted to CF&Co a reasonable period of time before the filing and
CF&Co has not reasonably objected thereto (provided,
however,
(A) that the failure of CF&Co to make such objection shall not relieve
the Company of any obligation or liability hereunder, or affect CF&Co’s
right to rely on the representations and warranties made by the Company in
this
Agreement and (B) that the Company has no obligation to provide CF&Co
any advance copy of such filing or to provide CF&Co an opportunity to object
to such filing if such filing does not name CF&Co or does not relate to the
transactions contemplated hereunder) and the Company will furnish to CF&Co
at the time of filing thereof a copy of any document that upon filing is
deemed
to be incorporated by reference into the Registration Statement or Prospectus,
except for those documents available via XXXXX; and (iv) the Company
will
cause each amendment or supplement to the Prospectus to be filed with the
Commission as required pursuant to the applicable paragraph of Rule 424(b)
of
the Securities Act or, in the case of any document to be incorporated therein
by
reference, to be filed with the Commission as required pursuant to the Exchange
Act, within the time period prescribed (the determination to file or not
file
any amendment or supplement with the Commission under this Section
7(a),
based
on the Company’s reasonable opinion or reasonable objections, shall be made
exclusively by the Company).
-13-
(b) Notice
of Commission Stop Orders.
The
Company will advise CF&Co, promptly after it receives notice or obtains
knowledge thereof, of the issuance or threatened issuance by the Commission
of
any stop order suspending the effectiveness of the Registration Statement,
of
the suspension of the qualification of the Placement Shares for offering
or sale
in any jurisdiction, or of the initiation or threatening of any proceeding
for
any such purpose.
(c) Delivery
of Prospectus; Subsequent Changes.
During
any period in which a Prospectus relating to the Placement Shares is required
to
be delivered by CF&Co under the Securities Act with respect to the offer and
sale of the Placement Shares, the Company will comply with all requirements
imposed upon it by the Securities Act, as from time to time in force, and
will
file on or before their respective due dates 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, 15(d) or any other provision
of or under the Exchange Act. If during such period any event occurs as a
result
of which the Prospectus as then amended or supplemented would include an
untrue
statement of a material fact or omit to state a material fact necessary to
make
the statements therein, in the light of the circumstances then existing,
not
misleading, or if during such period it is necessary to amend or supplement
the
Registration Statement or Prospectus to comply with the Securities Act, the
Company will promptly notify CF&Co to suspend the offering of Placement
Shares during such period and the Company will promptly amend or supplement
the
Registration Statement or Prospectus (at the expense of the Company) so as
to
correct such statement or omission or effect such compliance.
(d) Listing
of Placement Shares.
During
any period in which the Prospectus relating to the Placement Shares is required
to be delivered by CF&Co under the Securities Act with respect to the offer
and sale of the Placement Shares, the Company will use its commercially
reasonable efforts to cause the Placement Shares to be listed on the Exchange
and to qualify the Placement Shares for sale under the securities laws of
such
jurisdictions as CF&Co reasonably designates and to continue such
qualifications in effect so long as required for the distribution of the
Placement Shares; provided,
however,
that the
Company shall not be required in connection therewith to qualify as a foreign
corporation or dealer in securities or file a general consent to service
of
process in any jurisdiction.
(e) Delivery
of Registration Statement and Prospectus.
The
Company will furnish to CF&Co and its counsel (at the expense of the
Company) copies of the Registration Statement, the Prospectus (including
all
documents incorporated by reference therein) and all amendments and supplements
to the Registration Statement or Prospectus that are filed with the Commission
during any period in which a Prospectus relating to the Placement Shares
is
required to be delivered under the Securities Act (including all documents
filed
with the Commission during such period that are deemed to be incorporated
by
reference therein), in each case as soon as reasonably practicable and in
such
quantities as CF&Co may from time to time reasonably request and, at
CF&Co’s request, will also furnish copies of the Prospectus to each exchange
or market on which sales of the Placement Shares may be made; provided, however,
that the Company shall not be required to furnish any document (other than
the
Prospectus) to CF&Co to the extent such document is available on XXXXX.
-14-
(f) Earnings
Statement.
The
Company will make generally available to its security holders as soon as
practicable, but in any event not later than 15 months after the end of the
Company’s current fiscal quarter, an earnings statement covering a 12-month
period that satisfies the provisions of Section 11(a) and Rule 158 of the
Securities Act.
(g) Expenses.
The
Company, whether or not the transactions contemplated hereunder are consummated
or this Agreement is terminated, in accordance with the provisions of Section
11
hereunder, will pay all expenses incident to the performance of its obligations
hereunder, including, but not limited to, expenses relating to (i) the
preparation, printing and filing of the Registration Statement and each
amendment and supplement thereto, of each Prospectus and of each amendment
and
supplement thereto, (ii) the preparation, issuance and delivery of the Placement
Shares, (iii) the qualification of the Placement Shares under securities
laws in
accordance with the provisions of Section
7(d)
of this
Agreement, including filing fees and any reasonable fees or disbursements
of
counsel for CF&Co in connection therewith, (iv) the printing and delivery to
CF&Co of copies of the Prospectus and any amendments or supplements thereto,
and of this Agreement, (v) the fees and expenses incurred in connection with
the
listing or qualification of the Placement Shares for trading on the Exchange,
(vi) filing fees and expenses, if any, of the Commission and the NASD Corporate
Finance Department.
(h) Use
of
Proceeds.
The
Company will use the Net Proceeds as described in the Prospectus.
(i) Notice
of Other Sales.
During
either the pendency of any Placement Notice given hereunder, or any period
in
which the Prospectus relating to the Placement Shares is required to be
delivered by CF&Co, the Company shall provide CF&Co notice as promptly
as reasonably possible before it offers to sell, contracts to sell, sells,
grants any option to sell or otherwise disposes of any shares of Common Stock
(other than Placement Shares offered pursuant to the provisions of this
Agreement) or securities convertible into or exchangeable for Common Stock,
warrants or any rights to purchase or acquire Common Stock; provided,
that
such notice shall not be required in connection with the (i) issuance or
sale of
Common Stock, options to purchase shares of Common Stock or Common Stock
issuable upon the exercise of options or other equity awards pursuant to
the
Company’s 2004 Stock Incentive Plan or (ii) the issuance or sale of Common Stock
pursuant to any dividend reinvestment plan that the Company may adopt from
time
to time provided the implementation of such is disclosed publicly in
advance.
(j) Change
of Circumstances.
The
Company will, at any time during the term of this Agreement, as supplemented
from time to time, advise CF&Co immediately after it shall have received
notice or obtained knowledge thereof, of any information or fact that would
alter or affect in any material respect any opinion, certificate, letter
or
other document required to be provided to CF&Co pursuant to this
Agreement.
(k) Due
Diligence Cooperation.
The
Company will cooperate with any due diligence review conducted by CF&Co or
its agents, including, without limitation, providing information and making
available documents and senior corporate officers, during regular business
hours, as CF&Co may reasonably request.
(l) Required
Filings Relating to Placement of Placement Shares.
The
Company agrees that on such dates as the Securities Act shall require, the
Company will (i) file a prospectus supplement with the Commission
under the
applicable paragraph of Rule 424(b) under the Securities Act (each and every
filing under Rule 424(b), a “Filing
Date”),
which
prospectus supplement will set forth, within the relevant period, the amount
of
Placement Shares sold through CF&Co, the Net Proceeds to the Company and the
compensation payable by the Company to CF&Co with respect to such Placement
Shares, and (ii) deliver such number of copies of each such prospectus
supplement to each exchange or market on which such sales were effected as
may
be required by the rules or regulations of such exchange or market.
-15-
(m) Representation
Dates; Certificate.
During
the term of this Agreement, each time the Company (i) files the Prospectus
relating to the Placement Shares or amends or supplements the Registration
Statement or the Prospectus relating to the Placement Shares (other than
a
prospectus supplement filed in accordance with Section 7(l) of this Agreement)
by means of a post-effective amendment, sticker, or supplement but not by
means
of incorporation of document(s) by reference to the Registration Statement
or
the Prospectus relating to the Placement Shares; (ii) files an annual report
on
Form 10-K under the Exchange Act; (iii) files its quarterly reports on Form
10-Q
under the Exchange Act; or (iv) files a report on Form 8-K (other than an
earning release pursuant to Items 2.02 or 7.01 of Form 8-K (each date of
filing
of one or more of the documents referred to in clauses (i) through (iv) shall
be
a "Representation
Date");
the
Company shall furnish CF&Co (but in the case of clause (iv) above only if
CF&Co reasonably determines that the information contained in such Form 8-K
is material) with a certificate, in the form attached hereto as Exhibit
7(m).
The
requirement to provide a certificate under this Section 7(m) shall be waived
for
any Representation Date if the Company does not intend to tender a Placement
Notice to CF&Co or sell Placement Shares prior to the next occurring
Representation Date; provided,
however,
that
such waiver shall not apply for any Representation Date on which the Company
files its annual report on Form 10-K. Notwithstanding the foregoing, if the
Company subsequently decides to tender a Placement Notice or sell Placement
Shares following a Representation Date when the Company relied on such waiver
and did not provide CF&Co with a certificate under this Section
7(m),
then
before CF&Co either accepts the Placement Notice or sells any Placement
Shares, the Company shall provide CF&Co with a certificate, in the form
attached hereto as Exhibit
7(m),
dated
the date of the Placement Notice .
(n) Legal
Opinion.
On the
date of the first Placement Notice given hereunder and thereafter within
five
(5) Trading Days of each Representation Date, the Company shall cause to
be
furnished to CF&Co (but in the case of Section 7(m)(iv) only if requested by
CF&Co in accordance with the provisions of Section 7(m)) with a written
opinion of Hunton & Xxxxxxxx (the “Company
Counsel”),
dated
the
Representation Date, substantially similar to the form attached hereto as
Exhibit
7(n)(1)
(for the
filing of the Prospectus relating to the Placement Shares), and Exhibit
7(n)(2)
(for
subsequent dates), but modified, as necessary, to relate to the Registration
Statement and the Prospectus as then amended or supplemented; provided,
however,
that in
lieu of such opinion, counsel may furnish CF&Co with a letter to the effect
that CF&Co may rely on a prior opinion delivered under this Section 7(n) to
the same extent as if it were dated the date of such letter (except that
statements in such prior opinion shall be deemed to relate to the Registration
Statement and the Prospectus as amended or supplemented at such Representation
Date). The requirement to provide an opinion of Company Counsel under this
Section 7(n) shall be waived for any Representation Date if the Company does
not
intend to tender a Placement Notice to CF&Co or sell Placement Shares prior
to the next occurring Representation Date; provided,
however,
that
such waiver shall not apply for any Representation Date on which the Company
files its annual report on Form 10-K. Notwithstanding the foregoing, if the
Company subsequently decides to tender a Placement Notice or sell Placement
Shares following a Representation Date when the Company relied on such waiver
and did not provide CF&Co with an opinion from Company Counsel under this
Section
7(n),
then
before CF&Co either accepts the Placement Notice or sells any Placement
Shares, the Company shall provide CF&Co with an opinion from Company Counsel
dated the date of the Placement Notice.
-16-
(o) Comfort
Letter.
On the
date of the first Placement Notice given hereunder and thereafter within
five
(5) Trading Days of any Representation Date, (but in the case of Section
7(m)(iv) only if requested by CF&Co in accordance with the provisions of
Section
7(m))
the
Company shall cause its independent accountants to furnish CF&Co letters
(the "Comfort
Letters"),
dated
the date of such Representation Date, in form and substance satisfactory
to
CF&Co, (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01
of
Regulation S-X of the Commission, (ii) stating, as of such date, the conclusions
and findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants' "comfort letters" to underwriters
in
connection with registered public offerings (the first such letter, the
"Initial
Comfort Letter")
and
(iii) updating the Initial Comfort Letter with any information that would
have
been included in the Initial Comfort Letter had it been given on such date
and
modified as necessary to relate to the Registration Statement and the
Prospectus, as amended and supplemented to the date of such letter. The
requirement to provide a Comfort Letter under this Section 7(o) shall be
waived
for any Representation Date if the Company does not intend to tender a Placement
Notice to CF&Co or sell Placement Shares prior to the next occurring
Representation Date; provided,
however,
that
such waiver shall not apply for any Representation Date on which the Company
files its annual report on Form 10-K. Notwithstanding the foregoing, if the
Company subsequently decides to tender a Placement Notice or sell Placement
Shares following a Representation Date when the Company relied on such waiver
and did not provide CF&Co with a Comfort Letter under this Section
7(o),
then
before CF&Co either accepts the Placement Notice or sells any Placement
Shares, the Company shall provide CF&Co with a Comfort Letter dated the date
of the Placement Notice .
(p) Market
Activities.
The
Company will not, directly or indirectly take any action designed to cause
or
result in, or that constitutes or might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security of the Company
to
facilitate the sale or resale of the Placement Shares.
(q) Insurance.
The
Company and its Subsidiaries shall maintain, or caused to be maintained,
insurance in such amounts and covering such risks as is reasonable and customary
for companies engaged in similar businesses in similar industries.
(r) Compliance
with Laws.
The
Company and each of its Subsidiaries shall maintain, or cause to be maintained,
all material environmental permits, licenses and other authorizations required
by federal, state and local law in order to conduct their businesses as
described in the Prospectus, and the Company and each of its Subsidiaries
shall
conduct their businesses, or cause their businesses to be conducted, in
substantial compliance with such permits, licenses and authorizations and
with
applicable environmental laws, except where the failure to maintain or be
in
compliance with such permits, licenses and authorizations could not reasonably
be expected to have a Material Adverse Effect.
-17-
(s) Affirmation.
Each
authorization or Placement Notice issued by the Company to CF&Co to solicit
offers to purchase Placement Shares shall be deemed to be an affirmation
that
the representations and warranties made by it in this Agreement are true
and
correct in all material respects at the time such Placement Notice is issued,
except to the extent such representation and warranty is solely as of a specific
date, and that the Company has complied in all material respects with all
of the
agreements to be performed by it hereunder at or prior to such time.
(t) REIT
Treatment.
The
Company will operate in conformity with the requirements for qualification
and
taxation of the Company as a REIT under the Code, and the Company will take
all
reasonable efforts to enable the Company to continue to meet the requirements
for qualification and taxation as a REIT under the Code for subsequent tax
years.
(u) Investment
Company Act.
The
Company will not be or become, at any time prior to the termination of this
Agreement, an “investment company,” as such term is defined in the Investment
Company Act, assuming no change in the Commission’s current interpretation as to
entities that are not considered an investment company.
(v) Securities
Act and Exchange Act.
The
Company will comply with all requirements imposed upon it by the Securities
Act
and the Exchange Act as from time to time in force, so far as necessary to
permit the continuance of sales of, or dealings in, the Placement Shares
as
contemplated by the provisions hereof and the Prospectus.
(w) Xxxxxxxx-Xxxxx
Act.
The
Company will maintain such controls and other procedures, including, without
limitation, those required by Sections 302 and 906 of the Xxxxxxxx-Xxxxx
Act and
the applicable regulations thereunder, that are designed to ensure that
information required to be disclosed by the Company in the reports that it
files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Commission’s rules and forms,
including, without limitation, controls and procedures designed to ensure
that
information required to be disclosed by the Company in the reports that it
files
or submits under the Exchange Act is accumulated and communicated to the
Company’s management, including its chief executive officer and chief financial
officer, or persons performing similar functions, as appropriate to allow
timely
decisions regarding required disclosure and to ensure that material information
relating to the Company is made known to them by others within those entities,
particularly during any period in which such periodic reports are being
prepared. The Company will comply with all effective applicable provisions
of
the Xxxxxxxx-Xxxxx Act.
8. Conditions
to CF&Co’s Obligations.
The
obligations of CF&Co hereunder with respect to a Placement will be subject
to the continuing accuracy and completeness of the representations and
warranties made by the Company herein, to the due performance by the Company
of
its obligations hereunder, to the completion by CF&Co of a due diligence
review satisfactory to CF&Co in its reasonable judgment, and to the
continuing satisfaction (or waiver by CF&Co in its sole discretion) of the
following additional conditions:
-18-
(a) Registration
Statement Effective.
The
Registration Statement shall have become effective and shall be available
for
the sale of (i) all Placement Shares issued pursuant to all prior Placements
and
not yet sold by CF&Co and (ii) all Placement Shares contemplated to be
issued by the Placement Notice relating to such Placement.
(b) No
Material Notices.
None of
the following events shall have occurred: (i) receipt by the Company of any
request for additional information from the Commission or any other federal
or
state governmental authority during the period of effectiveness of the
Registration Statement, the response to which would require any amendments
or
supplements to the Registration Statement or the Prospectus; (ii) the
issuance by the Commission or any other federal or state governmental authority
of any stop order suspending the effectiveness of the Registration Statement
or
the initiation of any proceedings for that purpose; (iii) receipt by the
Company
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Placement Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the occurrence of any event that makes any statement made in
the
Registration Statement or the Prospectus or any document incorporated or
deemed
to be incorporated therein by reference untrue in any material respect or
that
requires the making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of the Registration Statement,
it
will not contain any untrue statement of a material fact or omit to state
any
material fact required to be stated therein or necessary to make the statements
therein not misleading and, that in the case of the Prospectus, it 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 the light of the circumstances under which they were made, not misleading.
(c) No
Misstatement or Material Omission.
CF&Co shall not have advised the Company that the Registration Statement or
Prospectus, or any amendment or supplement thereto, contains an untrue statement
of fact that in CF&Co’s opinion is material, or omits to state a fact that
in CF&Co’s opinion is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(d) Material
Changes.
Except
as contemplated in the Prospectus, or disclosed in the Company’s reports filed
with the Commission, there shall not have been any material adverse change,
on a
consolidated basis, in the authorized capital stock of the Company or any
Material Adverse Effect, or any development that would reasonably be expected
to
cause a Material Adverse Effect, or a downgrading in or withdrawal of the
rating
assigned to any of the Company’s securities by any rating organization or a
public announcement by any rating organization that it has under surveillance
or
review its rating of any of the Company’s securities, the effect of which, in
the case of any such action by a rating organization described above, in
the
sole judgment of CF&Co (without relieving the Company of any obligation or
liability it may otherwise have), is so material as to make it impracticable
or
inadvisable to proceed with the offering of the Placement Shares on the terms
and in the manner contemplated in the Prospectus.
(e) Legal
Opinion.
CF&Co shall have received the opinion of Company Counsel required to be
delivered pursuant Section
7(n)
on or
before the date on which such delivery of such opinion is required pursuant
to
Section
7(n).
-19-
(f) Comfort
Letter.
CF&Co shall have received the Comfort Letter required to be delivered
pursuant Section
7(o)
on or
before the date on which such delivery of such letter is required pursuant
to
Section
7(o).
(g) Representation
Certificate.
CF&Co shall have received the certificate required to be delivered pursuant
to Section 7(m)
on or
before the date on which delivery of such certificate is required pursuant
to
Section
7(m).
(h) No
Suspension.
Trading
in the Shares shall not have been suspended on the Exchange.
(i) Other
Materials.
On each
date on which the Company is required to deliver a certificate pursuant to
Section
7(m),
the
Company shall have furnished to CF&Co such appropriate further information,
certificates and documents as CF&Co may reasonably request. All such
opinions, certificates, letters and other documents will be in compliance
with
the provisions hereof. The Company will furnish CF&Co with such conformed
copies of such opinions, certificates, letters and other documents as CF&Co
shall reasonably request.
(j) Securities
Act Filings Made.
All
filings with the Commission required by Rule 424 under the Securities Act
to
have been filed prior to the giving of any Placement Notice hereunder shall
have
been made within the applicable time period prescribed for such filing by
Rule
424.
(k) Approval
for Listing.
The
Placement Shares shall either have been (i) approved for listing on the
Exchange, subject only to notice of issuance, or (ii) the Company shall have
filed an application for listing of the Placement Shares on the Exchange
at, or
prior to, the giving of any Placement Notice.
(l) No
Termination Event.
There
shall not have occurred any event that would permit CF&Co to terminate this
Agreement pursuant to Section
11(a).
9. Indemnification
and Contribution.
(a) Company
Indemntification.
The
Company agrees to indemnify and hold harmless CF&Co, the directors,
officers, partners, employees and agents of CF&Co and each person, if any,
who (i) controls CF&Co within the meaning of Section 15 of the
Securities Act
or
Section 20 of the Exchange Act, or (ii) is controlled by or is under
common
control with CF&Co (a “CF&Co
Affiliate”)
from
and against any and all losses, claims, liabilities, expenses and damages
(including, but not limited to, any and all legal and other expenses reasonably
incurred in connection with, and any and all amounts paid in settlement (in
accordance with Section 9(a)) of, any action, suit or proceeding between
any of
the indemnified parties and any indemnifying parties or between any indemnified
party and any third party, or otherwise, or any claim asserted), as and when
incurred, to which CF&Co, or any such person, may become subject under
the
Securities Act,
the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, liabilities, expenses or
damages arise out of or are based, directly or indirectly, on (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or any amendment or supplement to
the
Registration Statement or the Prospectus, or (ii) the omission or alleged
omission to state in such document a material fact required to be stated
in it
or necessary to make the statements in it not misleading; provided,
however,
that
this indemnity agreement shall not apply to the extent that such loss, claim,
liability, expense or damage arises from the sale of the Placement Shares
pursuant to this Agreement and is caused directly or indirectly by an untrue
statement or omission made in reliance on and in conformity with information
relating to CF&Co and furnished in writing to the Company by CF&Co
expressly stating that such information is intended for inclusion in any
document described in clause (a)(i) above. This indemnity agreement will
be in
addition to any liability that the Company might otherwise have.
-20-
(b) CF&Co
Indemnification.
CF&Co agrees to indemnify and hold harmless the Company and its directors
and each officer of the Company who signed the Registration Statement, and
each
person, if any, who (i) controls the Company within the meaning of
Section
15 of the
Securities Act
or
Section 20 of the Exchange Act or (ii) is controlled by or is under common
control with the Company (a “Company
Affiliate”)
against any and all loss, liability, claim, damage and expense described
in the
indemnity contained in Section
9(a),
as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendments thereto) or the Prospectus (or any amendment or supplement thereto)
in reliance upon and in conformity with written information relating to
CF&Co and furnished to the Company by CF&Co expressly stating that such
information is intended for inclusion in any document as described in
Section
9(a)(i).
(c) Procedure.
Any
party that proposes to assert the right to be indemnified under this
Section
9 will,
promptly after receipt of notice of commencement of any action against such
party in respect of which a claim is to be made against an indemnifying party
or
parties under this Section
9,
notify
each such indemnifying party of the commencement of such action, enclosing
a
copy of all papers served, but the omission so to notify such indemnifying
party
will not relieve the indemnifying party from (i) any liability that it might
have to any indemnified party otherwise than under this Section
9
and (ii)
any liability that it may have to any indemnified party under the foregoing
provision of this Section
9
unless,
and only to the extent that, such omission results in the forfeiture of
substantive rights or defenses by the indemnifying party. If any such action
is
brought against any indemnified party and it notifies the indemnifying party
of
its commencement, the indemnifying party will be entitled to participate
in and,
to the extent that it elects by delivering written notice to the indemnified
party promptly after receiving notice of the commencement of the action from
the
indemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel reasonably satisfactory
to the
indemnified party, and after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying
party
will not be liable to the indemnified party for any legal or other expenses
except as provided below. The indemnified party will have the right to employ
its own counsel in any such action, but the fees, expenses and other charges
of
such counsel will be at the expense of such indemnified party unless (1)
the
employment of counsel by the indemnified party has been authorized in writing
by
the indemnifying party, (2) the indemnified party has reasonably concluded
(based on advice of counsel) that there may be legal defenses available to
it or
other indemnified parties that are materially different from or in addition
to
those available to the indemnifying party, (3) a conflict or potential conflict
exists (based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party (in which case the indemnifying
party will not have the right to direct the defense of such action on behalf
of
the indemnified party), (4) the indemnifying party has not in fact employed
counsel to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, or (5) the claim
is one
which could result in criminal sanctions against or criminal liability of
the
indemnified party, in each of which cases the reasonable fees, disbursements
and
other charges of counsel will be at the expense of the indemnifying party
or
parties. It is understood that the indemnifying party or parties shall not,
in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements and other charges of more
than
one separate firm admitted to practice in such jurisdiction at any one time
for
all such indemnified party or parties. All such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as they are
incurred. An indemnifying party will not, in any event, be liable for any
settlement of any action or claim effected without its written consent. No
indemnifying party shall, without the prior written consent of each indemnified
party, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding relating to the matters
contemplated by this Section
9
(whether
or not any indemnified party is a party thereto), unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising or that may arise out of such claim, action
or
proceeding, provided
that the
indemnified party’s consent shall be required if any such judgment or settlement
imposes an injunction or other equitable relief on the indemnified party,
results in criminal sanctions against or criminal liability of the indemnified
party, or includes a statement or admission of fault, culpability or a failure
to act by the indemnified party.
-21-
(d) Contribution.
In
order to provide for just and equitable contribution in circumstances in
which
the indemnification provided for in the foregoing paragraphs of this
Section
9
is
applicable in accordance with its terms but for any reason is held to be
unavailable from the Company or CF&Co, the Company and CF&Co will
contribute to the total losses, claims, liabilities, expenses and damages
(including any legal and other expenses reasonably incurred in connection
with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted, but after deducting any contribution received by the Company
from persons other than CF&Co, such as persons who control the Company
within the meaning of the
Securities Act,
officers of the Company who signed the Registration Statement and directors
of
the Company, who also may be liable for contribution) to which the Company
and
CF&Co may be subject in such proportion as shall be appropriate to reflect
the relative benefits received by the Company on the one hand and CF&Co on
the other. The relative benefits received by the Company on the one hand
and
CF&Co on the other hand shall be deemed to be in the same proportion as the
total net proceeds from the sale of the Placement Shares (before deducting
expenses) received by the Company bear to the total compensation (before
deducting expenses) received by CF&Co from the sale of Placement Shares on
behalf of the Company. If, but only if, the allocation provided by the foregoing
sentence is not permitted by applicable law, the allocation of contribution
shall be made in such proportion as is appropriate to reflect not only the
relative benefits referred to in the foregoing sentence but also the relative
fault of the Company, on the one hand, and CF&Co, on the other, with respect
to the statements or omission that resulted in such loss, claim, liability,
expense or damage, or action in respect thereof, as well as any other relevant
equitable considerations with respect to such offering. Such relative fault
shall be determined by reference to, among other things, whether the untrue
or
alleged untrue statement of a material fact or omission or alleged omission
to
state a material fact relates to information supplied by the Company or
CF&Co, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and CF&Co agree that it would not be just and equitable if
contributions pursuant to this Section
9(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,
liability, expense, or damage, or action in respect thereof, referred to
above
in this Section
9(d)
shall be
deemed to include, for the purpose of this Section
9(d),
any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim to the
extent consistent with Section
9(c)
hereof.
Notwithstanding the foregoing provisions of this Section
9(d),
CF&Co shall not be required to contribute any amount in excess of the
commissions received by it under this Agreement and no person found guilty
of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the
Securities Act)
will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section
9(d),
any
person who controls a party to this Agreement within the meaning of the
Securities Act,
and any
officers, directors, partners, employees or agents of CF&Co, will have the
same rights to contribution as that party, and each officer of the Company
who
signed the Registration Statement will have the same rights to contribution
as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any
action
against such party in respect of which a claim for contribution may be made
under this Section
9(d),
will
notify any such party or parties from whom contribution may be sought, but
the
omission to so notify will not relieve that party or parties from whom
contribution may be sought from any other obligation it or they may have
under
this Section
9(d)
except
to the extent that the failure to so notify such other party materially
prejudiced the substantive rights or defenses of the party from whom
contribution is sought. Except for a settlement entered into pursuant to
the
last sentence of Section
9(c)
hereof,
no party will be liable for contribution with respect to any action or claim
settled without its written consent if such consent is required pursuant
to
Section
9(c)
hereof.
10. Representations
and Agreements to Survive Delivery.
All
representations and warranties of the Company herein or in certificates
delivered pursuant hereto shall survive, as of their respective dates,
regardless of (i) any investigation made by or on behalf of CF&Co, any
controlling persons, or the Company (or any of their respective officers,
directors or controlling persons), (ii) delivery and acceptance of the Placement
Shares and payment therefor or (iii) any termination of this
Agreement.
11. Termination.
(a) CF&Co
shall have the right by giving notice as hereinafter specified at any time
to
terminate this Agreement if (i) any Material Adverse Effect, or any development
that has actually occurred and that is reasonably expected to cause a Material
Adverse Effect has occurred that, in the reasonable judgment of CF&Co, may
materially impair the ability of CF&Co to sell the Placement Shares
hereunder, (ii) the Company shall have failed, refused or been unable to
perform
any agreement on its part to be performed hereunder; provided,
however,
in the
case of any failure of the Company to deliver (or cause another person to
deliver) any certification, opinion, or letter required under Sections 7(m),
7(n),
or
7(o),
CF&Co’s right to terminate shall not arise unless such failure to deliver
(or cause to be delivered) continues for more than thirty (30) days from
the
date such delivery was required; (iii) any other condition of CF&Co’s
obligations hereunder is not fulfilled, or (iv) any suspension or limitation
of
trading in the Placement Shares or in securities generally on the Exchange
shall
have occurred. Any such termination shall be without liability of any party
to
any other party except that the provisions of Section
7(g)
(Expenses), Section
7(u)
(Investment Company), Section
9
(Indemnification), Section
10
(Survival of Representations), Section
16
(Applicable Law; Consent to Jurisdiction) and Section
17
(Waiver
of Jury Trial) hereof shall remain in full force and effect notwithstanding
such
termination. If CF&Co elects to terminate this Agreement as provided in this
Section
11(a),
CF&Co shall provide the required notice as specified in Section
12
(Notices).
-22-
(b) The
Company shall have the right, by giving thirty (30) days notice as hereinafter
specified to terminate this Agreement in its sole discretion at
any
time following the period of three (3) months after the date of this
Agreement.
Any
such termination shall be without liability of any party to any other party
except that the provisions of Section
7(g),
Section
7(u),
Section
9,
Section
10,
Section
16
and
Section
17
hereof
shall remain in full force and effect notwithstanding such
termination.
(c) CF&Co
shall have the right, by giving thirty (30) days notice as hereinafter specified
to terminate this Agreement in its sole discretion
at any
time following the period of three (3) months after the date of this
Agreement.
Any
such termination shall be without liability of any party to any other party
except that the provisions of Section
7(g),
Section
7(u),
Section
9,
Section
10,
Section
16
and
Section
17
hereof
shall remain in full force and effect notwithstanding such
termination.
(d) This
Agreement shall remain in full force and effect unless terminated pursuant
to
Sections
11(a),
(b),
or
(c)
above or
otherwise by mutual agreement of the parties; provided,
however, that
any
such termination by mutual agreement shall in all cases be deemed to provide
that Section
7(g),
Section
7(u),
Section
9,
Section
10,
Section
16
and
Section
17
shall
remain in full force and effect.
(e) Any
termination of this Agreement shall be effective on the date specified in
such
notice of termination; provided,
however,
that
such termination shall not be effective until the close of business on the
date
of receipt of such notice by CF&Co or the Company, as the case may be. If
such termination shall occur prior to the Settlement Date for any sale of
Placement Shares, such Placement Shares shall settle in accordance with the
provisions of this Agreement.
12. Notices.
All
notices or other communications required
or permitted to be given by any party to any other party pursuant to the
terms
of this Agreement shall
be
in writing and if sent to CF&Co, shall be delivered to CF&Co at Cantor
Xxxxxxxxxx & Co., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, fax no.
(000) 000-0000, Attention: ITD-Investment Banking, with copies to Xxxxxxx
Xxxxxx, General Counsel, at the same address, and DLA Xxxxx Xxxxxxx Xxxx
Xxxx US
LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000, fax no. (000) 000-0000,
Attention: Xxxx X. Xxxxxxx; or if sent to the Company, shall be delivered
to
Capital Lease Funding, Inc., 000 Xxxxxx Xxxx, Xxx Xxxx, XX 00000, Attention:
General Counsel, fax no. (000) 000-0000, with a copy to Hunton &
Xxxxxxxx LLP, Riverfront Plaza, East Tower, 000 X. Xxxx Xxxxxx, Xxxxxxxx,
XX,
00000-0000 fax no. (000) 000-0000, Attention: Xxxxx X. Xxxxxx. Each party
to
this Agreement may change such address for notices by sending to the parties
to
this Agreement written notice of a new address for such purpose.
Each
such notice or other communication shall be deemed given (i) when delivered
personally or by verifiable facsimile transmission (with an original to follow)
on or before 4:30 p.m., New York City time, on a Business Day or, if such
day is
not a Business Day, on the next succeeding Business Day, (ii) on the next
Business Day after timely delivery to a nationally-recognized overnight courier
and (iii) on the Business Day
actually received if deposited in the U.S. mail (certified or registered
mail,
return receipt requested, postage prepaid). For purposes of this Agreement,
“Business
Day”
shall
mean any day on which the Exchange and commercial banks in the City of New
York
are open for business.
-23-
13. Successors
and Assigns.
This
Agreement shall inure to the benefit of and be binding upon the Company and
CF&Co and their respective successors and the affiliates, controlling
persons, officers and directors referred to in Section
9
hereof.
References to any of the parties contained in this Agreement shall be deemed
to
include the successors and permitted assigns of such party. Nothing
in this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and permitted
assigns any rights, remedies, obligations or liabilities under or by reason
of
this Agreement, except as expressly provided in this Agreement. Neither party
may assign its rights or obligations under this Agreement without the prior
written consent of the other party.
14.
Adjustments for Stock Splits.
The
parties acknowledge and agree that all share-related numbers contained in
this
Agreement shall be adjusted to take into account any stock split, stock dividend
or similar event effected with respect to the Placement Shares.
15. Entire
Agreement; Amendment; Severability.
This
Agreement (including all schedules and exhibits attached hereto and placement
notices issued pursuant hereto) constitutes the entire agreement and supersedes
all other prior and contemporaneous agreements and undertakings, both written
and oral, among the parties hereto with regard to the subject matter
hereof.
Neither
this Agreement nor any term hereof may be amended except pursuant to a written
instrument executed by the Company and CF&Co. In the event that any one or
more of the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
16. Applicable
Law; Consent to Jurisdiction.
This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the principles of conflicts
of
laws. Each
party hereby irrevocably submits to the non-exclusive jurisdiction of the
state
and federal courts sitting in the City of New York, borough of Manhattan,
for
the adjudication of any dispute hereunder or in connection with any transaction
contemplated hereby, and hereby irrevocably waives, and agrees not to assert
in
any suit, action or proceeding, any claim that it is not personally subject
to
the jurisdiction of any such court, that such suit, action or proceeding
is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service
of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof (certified or registered mail, return
receipt requested) to such party at the address in effect for notices to
it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.
17. Waiver
of Jury Trial.
The
Company and CF&Co each hereby irrevocably waives any right it may have to a
trial by jury in respect of any claim based upon or arising out of this
agreement or any transaction contemplated hereby.
18. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. Delivery of an executed Agreement by one party to the other may
be
made by facsimile transmission.
[Remainder
of Page Intentionally Blank]
-24-
If
the
foregoing correctly sets forth the understanding between the Company and
CF&Co, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and CF&Co.
Very
truly yours,
CAPITAL
LEASE FUNDING, INC.
By:
/s/
Xxxx X. XxXxxxxx
|
Name:
Xxxx X. XxXxxxxx
|
|
Title:
Chief Executive Officer
|
ACCEPTED
as of the date
first-above
written:
CANTOR
XXXXXXXXXX & CO.
By:
/s/
Xxxxxxx Xxxxx
Xxxxxxx
Xxxxx
Managing
Director
-25-
SCHEDULE
1
CANTOR
XXXXXXXXXX & CO.
000
Xxxx 00xx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Date
_______________, 200[5]
Capital
Lease Funding, Inc.
000
Xxxxxx Xxxx
Xxx
Xxxx,
XX 00000
Attn:
[Name],
[Title]
VIA
FACSIMILE
FORM
OF PLACEMENT NOTICE
Dear
_________:
This
confirms our agreement to sell up to ______________ shares of [Common
Stock]/[Preferred Stock], par value $0.01 per share of CAPITAL
LEASE FUNDING, INC.,
a
Maryland corporation (the “Company”),
pursuant to the CONTROLLED
EQUITY OFFERINGSM Sales
Agreement executed between the Company and Cantor Xxxxxxxxxx & Co.
(“CF&Co”)
on
August 15, 2005 (the “Agreement”).
Terms
used herein but not defined herein shall have the meanings set forth in the
Agreement.
|
Number
of Shares to be Sold:
|
|
|
Minimum
Price per share at which Shares may be Sold:
|
|
|
Date(s)
on which Shares may be Sold:
|
|
|
Underwriting
Discount/Commission per share:
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|
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Manner
and capacity in which Shares are to be Sold :
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By
executing this draw down notice, the parties agree to comply with the
aforementioned agreements, and to execute the transaction as described
herein:
Placements.
The
terms set forth in this Placement Notice will not be binding on the Company
or
CF&Co unless and until the Company delivers written notice of its acceptance
of all of the terms of such Placement Notice (an “Acceptance”);
provided,
however,
that
neither the Company nor CF&Co will be bound by the terms of a Placement
Notice unless the Company delivers to CF&Co an Acceptance with respect
thereto prior to 4:30 p.m. (New York City time) on the Business Day following
the Business Day on which such Placement Notice is received to the Company
in
accordance with Section
12
(Notices) of the Agreement. In the event of a conflict between the terms
of the
Agreement and the terms of a Placement Notice, the terms of this Placement
Notice will control.
Sale
of Placement Shares by CF&Co.
Subject
to the terms and conditions of the Agreement, upon the Acceptance of a Placement
Notice, and unless the sale of the Placement Shares described therein has
been
suspended or otherwise terminated in accordance with the terms of the Agreement,
CF&Co will use its commercially reasonable efforts consistent with its
normal trading and sales practices to sell such Placement Shares up to the
amount specified, and otherwise in accordance with the terms of this Placement
Notice.
CF&Co
will provide written confirmation to the Company no later than the opening
of
the Trading Day next following the Trading Day on which it has made sales
of
Placement Shares hereunder setting forth the number of Placement Shares sold
on
such day, the compensation payable by the Company to CF&Co with respect to
such sales, and the Net Proceeds (as defined below) payable to the Company.
The
Company acknowledges and agrees that (i) there can be no assurance that
CF&Co will be successful in selling Placement Shares, and (ii) CF&Co
will incur no liability or obligation to the Company or any other person
or
entity if it does not sell Placement Shares for any reason other than a failure
by CF&Co to use its commercially reasonable efforts consistent with its
normal trading and sales practices to sell such Placement Shares. For the
purposes hereof, “Trading Day”
means
any day on which the Common
Stock is
purchased and sold on the principal market on which the Common
Stock is
listed or quoted.
Suspension
of Sales.
The
Company or CF&Co may, upon notice to the other party in writing or by
telephone (confirmed immediately by verifiable facsimile transmission), suspend
any sale of Placement Shares; provided,
however,
that
such suspension shall not affect or impair either party’s obligations with
respect to any Placement Shares sold hereunder prior to the receipt of such
notice. The Company agrees that no such notice shall be effective against
CF&Co unless it is made to one of the individuals named on Schedule 2 to the
Agreement, as such Schedule may be amended from time to time.
Settlement
of Placement Shares.
Unless
otherwise specified herein, settlement for sales of Placement Shares will
occur
on the third (3rd)
Business Day (or such earlier day as is industry practice for regular-way
trading) following the date on which such sales are made (each a “Settlement
Date”).
The
amount of proceeds to be delivered to the Company on a Settlement Date for
the
sale of the Placement Shares sold (the “Net
Proceeds”)
will
be equal to the aggregate sales price received by CF&Co at which such
Placement Shares were sold, after deduction for (i) CF&Co’s commission,
discount, or other compensation for such sales payable by the Company pursuant
to Section
2
of the
Agreement, (ii) any other amounts due and payable by the Company to CF&Co
pursuant to Section
7(g)
(Expenses) of the Agreement, and (iii) any transaction fees imposed by any
governmental or self-regulatory organization in respect of such sales.
-2-
Delivery
of Placement Shares.
On or
before each Settlement Date, the Company will, or will cause its transfer
agent
to, electronically transfer the Placement Shares being sold by crediting
CF&Co’s or its designee’s account at The Depository Trust Company through
its Deposit Withdrawal Agent Commission System or by such other means of
delivery as may be mutually agreed upon by the parties hereto and, upon receipt
of such Placement Shares, which in all cases shall be freely tradable,
transferable, registered shares in good deliverable form, CF&Co will deliver
the related Net Proceeds in same day funds to an account designated by the
Company prior to the Settlement Date. If the Company defaults in its obligation
to deliver Placement Shares on a Settlement Date, the Company agrees that
in
addition to and in no way limiting the rights and obligations set forth in
Section
9(a)
(Indemnification) of the Agreement, it will (i) hold CF&Co harmless against
any loss, claim, damage, or expense (including reasonable legal fees and
expenses), as incurred, arising out of or in connection with such default
by the
Company and (ii) pay to CF&Co any commission, discount, or other
compensation to which it would otherwise have been entitled absent such
default.
Very
truly yours,
CANTOR
XXXXXXXXXX & CO
By:
__________________________
-3-
[FORM
OF
ACCEPTANCE]
CAPITAL
LEASE FUNDING, INC.
000
XXXXXX XXXX
XXX
XXXX,
XXX XXXX 00000
[Date]
[SENIOR
EXECUTIVE]
Cantor
Xxxxxxxxxx & Co.
000
X.
00xx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
VIA
FACSIMILE
This
confirms our acceptance of the Placement Notice received by us on [_____],
200_
(the “Placement
Notice”)
to
sell up to [_____] shares of our [Common Stock][Preferred Stock], par value
$0.01 per share, of CAPITAL
LEASE FUNDING, INC.,
a
Maryland corporation (the “Company”),
pursuant to the CONTROLLED
EQUITY OFFERINGSM Sales
Agreement executed between the Company and Cantor Xxxxxxxxxx & Co.
(“CF&Co”)
on
August 15, 2005 (the “Agreement”).
Terms
used herein but not defined shall the meanings set forth in the
Agreement.
By
executing this Acceptance the undersigned certifies that (i) all of the
representations and warranties contained in the Agreement are true and correct
on the date hereof as if made on the date hereof, (ii) the Board of Directors
or
a duly appointed committee thereof has approved the general terms and conditions
of the Placement Notice, (iii) the Company is in full compliance with its
obligations under the Agreement and (iv) all of the conditions precedent
to the
consummations of the sales contemplated by the Placement Notice have been
satisfied. The undersigned undertakes to promptly notify CF&Co in the event
that the above certification shall cease to be true and correct during any
period in which sales may be made under the Placement Notice.
ACCEPTED
as of the date
first-above
written:
CAPITAL
LEASE FUNDING, INC.
By:
__________________________
Name:
Title:
-4-
SCHEDULE
2
CANTOR
XXXXXXXXXX & CO.
Xxxx
Xxxxxx
Xxxx
X.
Xxxxxx
Xxxx
Xxxxx
Xxxxxxx
XxXxxxxx
CAPITAL
LEASE FUNDING, INC.
Xxxx
X.
XxXxxxxx
Xxxxxxx
X. Xxxxxxx.
Xxxxx
X.
Xxxxx
Xxxxxx
X.
Xxxxx
Xxxx
X.
Xxxxxx
SCHEDULE
3
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Entity
|
State
of Incorporation or Formation
|
|
Caplease,
LP
|
Delaware
|
|
CLF
0000 Xxxxxxxxx Xxxxxx LLC
EVA
LLC
Caplease
CDO 2005-1, Ltd
Caplease
Credit LLC
|
Delaware
Delaware
Cayman
Islands
Delaware
|
SCHEDULE
4
The
Company’s chairman, Xxxxx X. Xxxxxxx, is an advisor to Signature Securities
Group, A NASD member and wholly-owned subsidiary of Signature Bank.
Xx.
Xxxxxxx is a Chairman and a control person of Five Mile Capital Partners
LLC,
which owns and controls Five Mile Securities, LLC (formerly known as East
Hills
Trading, LLC), a NASD member. Xx. Xxxxxxx has no involvement in the day-to-day
operations of Five Mile Securities, LLC.
Exhibit
7(n)
MATTERS
TO BE COVERED BY INITIAL OPINION
OF
HUNTON
& XXXXXXXX LLP
| (i) |
As
of December 31, 2004, the Company had an authorized capitalization
as set
forth in its statements of financial condition included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2004.
All of
the outstanding shares of Common Stock have been duly authorized
and
validly issued and are fully paid and non-assessable and conform,
in all
material respects, to the description thereof contained in the
Prospectus.
|
| (ii) |
The
Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Maryland.
The
Company has full corporate power and authority to own its assets
and to
conduct its business as described in the Prospectus.
|
| (iii) |
To
the knowledge of such counsel, the Company is duly qualified or registered
as a foreign corporation to transact business in each jurisdiction
set
forth on Schedule 1 hereto in which the failure, individually or
in the
aggregate, to be so qualified could reasonably be expected to have
a
Material Adverse Effect. To the knowledge of such counsel, other
than the
Company’s interests in the Subsidiaries, the Company does not own,
directly or indirectly, any capital stock or other equity securities
of
any other corporation or any ownership interest in any limited liability
company, partnership, joint venture or other association, except
for any
securities held in the Investment
Portfolio.
|
| (iv) |
The
execution, delivery and performance of the Sales Agreement by the
Company
and the consummation by the Company of the transactions contemplated
thereby do not conflict with, or result in any breach of, or constitute
a
default under (nor constitute an event that with notice, lapse of
time or
both would constitute a breach of or default under), (i) the charter
or
by-laws of the Company, (ii) any agreement listed on Schedule 2 hereto
or
(iii) to our knowledge, any Applicable Law or any decree, judgment
or
order applicable to the Company (other than state and foreign securities
or blue sky laws, as to which we express no opinion), except in the
case
of clauses (ii) and (iii) for such conflicts, breaches or defaults,
which
individually or in the aggregate could not be reasonably expected
to have
a Material Adverse Effect.
|
| (v) |
The
Company has full corporate power and authority to enter into, and
to
perform its obligations under, the Sales Agreement and to consummate
the
transactions contemplated therein. The execution and delivery of
the Sales
Agreement has been duly authorized by all necessary corporate action
on
the part of the Company and the Sales Agreement has been duly executed
and
delivered by the Company.
|
| (vi) |
No
approval, authorization, consent or order of, or filing with, any
federal
or state governmental or regulatory commission, board, body, authority
or
agency is required under Applicable Law in connection with the execution,
delivery and performance of the Sales Agreement, or the consummation
of
the transactions contemplated thereby, by the Company, other than
such as
have been obtained or made under the Securities Act or the Securities
Exchange Act of 1934, as amended, and such approvals as have been
obtained
in connection with the listing of the Placement Shares on the New
York
Stock Exchange; provided,
however,
that we do not express any opinion as to any necessary qualification
under
the securities or blue sky laws of the various jurisdictions in which
the
Placement Shares are being offered by CF&Co or any approval of the
underwriting terms and arrangements relating to the offering of the
Placement Shares by the NASD.
|
| (vii) |
The
Placement Shares have been duly authorized by the Company for issuance
and
sale pursuant to the Sales Agreement. The Placement Shares, when
issued
and delivered by the Company in accordance with such authorization
and
pursuant to the Sales Agreement against payment of the consideration
specified in the Sales Agreement, will be validly issued, fully paid
and
nonassessable under the MGCL.
|
| (viii) |
The
issuance and sale of the Placement Shares by the Company is not subject
to
preemptive or other similar rights arising by operation of the MGCL,
under
the charter or by-laws of the Company or under any agreement known
to us
to which the Company is a party.
|
| (ix) |
To
our knowledge, except as otherwise described in the Registration
Statement, the Prospectus, the documents incorporated therein by
reference
or the exhibits filed in connection therewith, there are no persons
with
registration or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by
the
Company under the Securities Act.
|
| (x) |
The
form of certificate used to evidence the Placement Shares complies
in all
material respects with all applicable statutory requirements of the
MGCL,
the charter and by-laws of the Company.
|
| (xi) |
At
the time the Registration Statement became effective, the Registration
Statement and, as of the date of the Sales Agreement and the date
hereof,
the Prospectus (in each case, other than the financial statements,
financial schedules and other financial and statistical data included
or
incorporated by reference in, or excluded from, the Registration
Statement
and the Prospectus, as to which we express no opinion) complied as
to form
in all material respects with the requirements of the Securities
Act and
the rules and regulations promulgated thereunder.
|
| (xii) |
The
statements under the caption “Description of Stock” in the Prospectus,
insofar as such statements constitute a summary of the legal matters
referred to therein, constitute accurate summaries thereof in all
material
respects.
|
| (xiii) |
To
our knowledge, there are no actions, suits or proceedings or inquiries
or
investigations, pending or threatened, against the Company or any
of its
officers and directors or to which the Company’s assets (excluding the
Company’s direct or indirect interests in the Subsidiaries) are subject,
at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority, arbitration
panel or agency that are required to be described in the Prospectus
or the
documents incorporated therein by reference but are not so described.
|
| (xiv) |
The
Company is not an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of
1940, as amended, as those terms are currently interpreted by the
Commission.
|
| (xv) |
Commencing
with its taxable year ended December 31, 2004, the Company was organized
in conformity with the requirements for qualification and taxation
as a
REIT under the Code and its method of operation as described in the
Prospectus and as set forth in a certificate of representations from
the
Company has enabled it to meet the requirements for qualification
as a
REIT under the Code, and the Company’s proposed method of operation as
described in the Prospectus and the certificate of representations
will
enable the Company to continue to so
qualify.
|
| (xvi) |
The
statements under the caption “Federal Income Tax Considerations” in the
Prospectus Supplement and Prospectus, insofar as such statements
constitute a summary of the legal matters referred to therein, constitute
accurate summaries thereof in all material
respects.
|
The
Registration Statement became effective under the Securities Act on May [
],
2005 and, to our knowledge, no stop order suspending the effectiveness of
the
Registration Statement has been issued under the Securities Act or proceedings
therefor initiated or threatened by the Commission.
In
addition, we have reviewed the Registration Statement and the Prospectus
and
participated in the preparation of the Prospectus Supplement and in conferences
with officers and other representatives of the Company, representatives of
independent public accountants for the Company at which the contents of the
Registration Statement and the Prospectus and related matters were discussed,
and we have reviewed certain corporate records, documents and proceedings
and,
on the basis of the foregoing, nothing has come to our attention that leads
us
to believe that the Registration Statement, at the time such Registration
Statement became effective, contained an untrue statement of a material fact
or
omitted to state a material fact required to be stated therein or necessary
to
make the statements therein not misleading or that the Prospectus, as of
the
date of the Sales Agreement or the date hereof, included or includes an untrue
statement of a material fact or omitted or omits 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 (it being understood
that we express no belief with respect to the financial statements, financial
schedules and other financial data included or incorporated by reference
in, or
excluded from, the Registration Statement or the Prospectus).
The
limitations inherent in the independent verification of factual matters and
the
character of determinations involved in the preparation of a disclosure document
are such, however, that we do not assume any responsibility, except as otherwise
stated in opinion (xiii) above, for the accuracy, completeness or fairness
of
the statements contained in the Registration Statement or Prospectus or any
amendments or supplements thereto (including any of the documents incorporated
by reference therein).
Exhibit
7(n)(2)
Matters
to be covered by subsequent Company Counsel Opinions
The
Registration Statement, when it became effective, and the Prospectus and
any
amendment or supplement thereto, on the date of filing thereof with the
Commission, complied as to form in all material respects with the requirements
for registration statements on Form S-3 under the Securities Act and the
rules
and regulations of the Commission thereunder, and each of the documents
incorporated by reference in the Registration Statement or the Prospectus,
or
any amendment or supplement thereto, on the date of filing thereof with the
Commission, complied as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations of the Commission thereunder;
it being understood, however, that we express no opinion with respect to
the
financial statements, schedules or other financial data included or incorporated
by reference in, or omitted from, the Registration Statement or the Prospectus
or any other document. In passing upon the compliance as to form of the
Registration Statement and the Prospectus and any other document, we have
assumed that the statements made and incorporated by reference therein are
correct and complete.
(a) The
Registration Statement has become effective under the
Securities Act
and, to
the best of our knowledge, no stop order suspending the effectiveness of
the
Registration Statement has been issued and no proceeding for that purpose
has
been instituted by the Commission.
(b) To
our
knowledge and other than as set forth in the Prospectus, there are no legal
or
governmental proceedings, pending or threatened, to which the Company is
a party
required to be described in the Prospectus that are not described as
required.
(c) The
Company has qualified as a real estate investment trust (“REIT”)
under
the Internal Revenue Code (the “Code”)
for
the taxable years ended December 31, [ ], [ ] and the Company is organized
and
operates in a manner that will enable it to qualify to be taxed as a REIT
under
the Code, for the taxable year ended [December 31, 200_] provided
that it
continues to meet the asset composition, source of income, shareholder
diversification, distribution, record keeping and other requirements of the
Code
that are necessary for the Company to qualify as a REIT.
In
addition, we have participated in conferences with officers and other
representatives of the Company, representatives of the independent public
accountants for the Company, and your representatives, at which the contents
of
the Registration Statement and the Prospectus and related matters were discussed
and, although we are not passing upon, and do not assume any responsibility
for,
the accuracy, completeness or fairness of the statements contained or
incorporated by reference in the Registration Statement and the Prospectus,
during the course of such participation, no facts came to our attention that
caused us to believe that the Registration Statement, at the time it became
effective, contained an untrue statement of a material fact or omitted to
state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus (including the
Incorporated Documents), as of its date, contained an untrue statement of
a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; it being understood that we express no belief with
respect
to the financial statements, schedules and other financial and statistical
data
included or incorporated by reference in the Registration Statement or the
Prospectus.
*
Note:
“Registration Statement” and “Prospectus” will be defined to include documents
incorporated by reference therein (“Incorporated
Documents”).
Exhibit
7(m)
OFFICER
CERTIFICATE
The
undersigned, the duly qualified and elected _______________________, of
CAPITAL
LEASE FUNDING, INC. (“Company”),
a
Maryland corporation, does hereby certify in such capacity and on behalf
of the
Company, pursuant to Section
7(m)
of the
Sales Agreement dated August 15, 2005 (the “Sales
Agreement”)
between the Company and Cantor Xxxxxxxxxx & Co., that to the best of the
knowledge of the undersigned.
(i) Except
for non-material exceptions as may be set forth on Annex A hereto, the
representations and warranties of the Company in Section
6
of the
Sales Agreement are true and correct on and as of the date hereof, except
for
those representations and warranties that speak solely as of a specific date
and
which were true and correct as of such date, with the same force and effect
as
if expressly made on and as of the date hereof; and
(ii) The
Company has complied with all agreements and satisfied all conditions on
its
part to be performed or satisfied pursuant to the Sales Agreement at or prior
to
the date hereof.
By:
Name:
Title:
Date:
