3,000,000 Shares
XXXXXX & XXXXXX GROUP, INC.
Common Stock
UNDERWRITING AGREEMENT
New York, New York
June 30, 2004
ThinkEquity Partners LLC
00 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
as Representative of the Several Underwriters
Ladies and Gentlemen:
Xxxxxx & Xxxxxx Group, Inc., a New York corporation (the
"Company"), proposes, subject to the terms and conditions stated
herein, to issue and sell an aggregate of 3,000,000 shares of
common stock, $0.001 par value per share (the "Firm Shares"), of
the Company to the several underwriters named in Schedule I
hereto (the "Underwriters"), for whom ThinkEquity Partners LLC,
acting as representative (the "Representative"). The Company
also proposes to sell upon the terms and conditions contained in
Section 2 hereof, up to 450,000 additional common shares (the
"Additional Shares", which together with the Firm Shares are
hereinafter collectively referred to as the "Shares").
The Company wishes to confirm as follows its agreement with you
in connection with the purchases of the Shares from the Company.
1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission
(the "Commission") in accordance with the provisions of the
Securities Act of 1933 (the "1933 Act"), the Investment Company
Act of 1940 (the "1940 Act"), and the rules and regulations of
the Commission promulgated under the 1933 Act (the "1933 Act
Rules and Regulations") and the 1940 Act (the "1940 Act Rules
and Regulations" and, together with the 1933 Act Rules and
Regulations, the "Rules and Regulations"), a registration
statement on Form N-2 (File Nos. 333-112862 and 814-176), under
the 1933 Act and the 1940 Act including a prospectus, relating
to seven million shares of the Company's common stock, a
statement of additional information relating to the Shares and
an election to be treated as a business development company
under the 1940 Act. References herein to the term "Registration
Statement" as of any given date shall mean such registration
statement, as amended or supplemented to such date, including
all documents incorporated by reference therein as of such date
pursuant to General Instruction F of Form N-2 ("Incorporated
Documents"). References herein to the term "Prospectus" as of
any given date shall mean the prospectus and statement of
additional information in the form included in the Registration
Statement, as supplemented by a prospectus supplement relating
to the Shares proposed to be issued and sold hereunder filed
pursuant to Rule 497(c) of the 1933 Act Rules and Regulations
("Rule 497"), and as further amended or supplemented as of such
date, including all Incorporated Documents. Any Prospectus used
prior to the execution hereof shall be referred to as a
"Prepricing Prospectus." References herein to the term
"Effective Date" shall be deemed to refer to the time and date
that the Registration Statement was declared effective.
References herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement or any
Prospectus shall be deemed to refer to and include the filing of
any document under the Securities Exchange Act of 1934 (the
"1934 Act") deemed to be incorporated therein by reference. The
Company will next file with the Commission a Prospectus in
accordance with Rule 497. As filed, the Prospectus shall
contain all required information, and, except to the extent the
Representative shall agree in writing to a modification, shall
1
be in all substantive respects in the form furnished to the
Representative prior to the execution hereof or, to the extent
not completed at such time, shall contain only such specific
additional information and other changes as the Company has
advised the Representative, prior to the such time, will be
included or made therein.
2. Agreements to Sell and Purchase. The Company hereby agrees
to sell the Firm Shares to the respective Underwriters and, upon
the basis of the representations, warranties and agreements of
the Company herein contained and subject to all the terms and
conditions set forth herein, each of the Underwriters, severally
and not jointly, agrees to purchase from the Company at a
purchase price of $10.58 per Share (the "purchase price per
Share"), the number of Firm Shares set forth opposite such
Underwriter's name in Schedule I hereto.
The Company hereby also agrees to sell to the Underwriters, and
upon the basis of the representations, warranties and agreements
of the Company herein contained and subject to all the terms and
conditions set forth herein, the Underwriters shall have the
right for 30 days from the date of the Prospectus to purchase
from the Company up to 450,000 Additional Shares at the purchase
price per Share for the Firm Shares. The number of shares of
the Additional Shares to be purchased by each Underwriter shall
be the same percentage of the total number of shares of the
Additional Shares to be purchased by the several Underwriters as
such Underwriter is purchasing of the Firm Shares, subject to
such adjustments as the Representative in its absolute
discretion shall make to eliminate any fractional shares. The
Additional Shares may be purchased solely for the purpose of
covering over-allotments, if any, made in connection with the
offering of the Firm Shares.
3. Terms of Public Offering. The Company has been advised by
the Underwriters that they propose to make a public offering of
the Shares as soon after this Agreement has been executed and
delivered as in their judgment is advisable, and initially to
offer the Shares upon the terms set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to
the Underwriters of the Firm Shares and payment therefor shall
be made at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, Four Times Square, New York, New York, at 10:00 a.m., New
York, New York time, on July 7, 2004 (the "Closing Date"). The
place of closing for the Firm Shares and the Closing Date may be
varied by agreement between the Representative and the Company.
Delivery to the Underwriters of and payment for any Additional
Shares to be purchased by the Underwriters shall be made at the
offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Four Times
Square, New York, New York, at 10:00 a.m., New York, New York
time, on such date or dates (the "Additional Closing Date")
(which may be the same as the Closing Date but shall in no event
be earlier than the Closing Date nor earlier than three nor
later than ten business days after the giving of the notice
hereinafter referred to) as shall be specified in a written
notice from the Representative to the Company of the
Underwriters' determination to purchase a number, specified in
such notice, of Additional Shares. You may give such notice to
the Company at any time within 30 days after the date of the
Prospectus. The place of closing for the Additional Shares and
the Additional Closing Date may be varied by agreement between
the Representative and the Company.
Certificates for the Firm Shares and for any Additional Shares
to be purchased hereunder shall be registered in such names and
in such denominations as the Representative shall request prior
to 1:00 p.m., New York, New York time (or such other time as the
parties agree), not later than the second full business day
preceding the Closing Date or the Additional Closing Date, as
the case may be. Such certificates shall be made available to
the Representative in New York, New York for inspection and
packaging not later than 9:30 a.m., New York, New York time, on
the business day immediately preceding the Closing Date or the
Additional Closing Date, as the case may be. The certificates
evidencing the Firm Shares and any Additional Shares to be
purchased hereunder shall be delivered to the Representative on
the Closing Date or the Additional Closing Date, as the case may
be, against payment of the purchase price therefor by wire
transfer immediately available funds to the account specified in
writing, not later than the close of business two days next
preceding the Closing Date or the Additional Closing Date, as
the case may be. Payment for the Firm Shares sold by the
Company hereunder shall be delivered by the Representative to
the Company.
2
5. Covenants and Agreements of the Company. The Company
covenants and agrees with each of the Underwriters as follows:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for a post-effective amendment to the
Registration Statement to be declared effective under the 1933
Act before the offering of the Shares may commence, the Company
will use its best efforts to cause such post-effective amendment
to become effective under the 1933 Act as soon as possible. The
Company will file a Prospectus pursuant to Rule 497, as promptly
as practicable, but no later than the fifth business day
following the date hereof. The Company will advise the
Representative promptly and, if requested by the Representative,
will confirm such advice in writing (i) when such post-effective
amendment has become effective or (ii) when the Prospectus has
been timely filed pursuant to Rule 497.
(b) The Company will advise you promptly and, if requested
by the Representative, will confirm such advice in writing: (i) of
any request made by the Commission for amendment of or a
supplement to the Registration Statement, including a Rule
462(b) Registration Statement, the Prospectus or any Prepricing
Prospectus (or any amendment or supplement to any of the
foregoing) or for additional information, (ii) of the issuance
by the Commission, any state securities commission, any national
securities exchange, any arbitrator, any court or any other
governmental, regulatory, self-regulatory or administrative
agency or any official of any order suspending the effectiveness
of the Registration Statement, prohibiting or suspending the use
of the Prospectus, any Prepricing Prospectus or any Sales
Material (as hereinafter defined), of any notice pursuant to
Section 8(e) of the 1940 Act, of the suspension of qualification
of the Shares for offering or sale in any jurisdiction, or the
initiation or contemplated initiation of any proceeding for any
such purposes, (iii) of receipt by (A) the Company, any
affiliate of the Company or attorney of the Company of any other
material communication from the Commission, or (B) the Company,
any affiliate of the Company or attorney of the Company of any
other material communication from the Commission, any state
securities commission, any national securities exchange, any
arbitrator, any court or any other governmental, regulatory,
self-regulatory or administrative agency or any official
relating, in the case of either clause (A) or (B), to the
Company (if such communication relating to the Company is
received by such person within three years after the date of
this Agreement), the Registration Statement, the Form N-8A, the
Prospectus, any Prepricing Prospectus, any Sales Material (or
any amendment or supplement to any of the foregoing) or this
Agreement, and (iv) within the period of time referred to in
paragraph (f) below, of any material, adverse change in the
condition (financial or other), business, business prospects,
properties, net assets or results of operations of the Company
(other than as a result of changes in market conditions
generally) or of the happening of any event known to the Company
which makes any statement of a material fact made in the
Registration Statement, the Prospectus, any Prepricing
Prospectus or any Sales Material (or any amendment or supplement
to any of the foregoing) untrue or which requires the making of
any additions to or changes in the Registration Statement, the
Prospectus, any Prepricing Prospectus or any Sales Material (or
any amendment or supplement to any of the foregoing) in order to
state a material fact required by the 1933 Act, the 1940 Act or
the Rules and Regulations to be stated therein or necessary in
order to make the statements therein (in the case of a
prospectus or any Sales Material, in light of the circumstances
under which they were made) not misleading or of the necessity
to amend or supplement the Registration Statement, the
Prospectus, any Prepricing Prospectus or any Sales Material (or
any amendment or supplement to any of the foregoing) to comply
with the 1933 Act, the 1940 Act, the Rules and Regulations or
any other law or order of any court or regulatory body. If at
any time the Commission shall issue any order suspending the
effectiveness of the Registration Statement, prohibiting or
suspending the use of the Prospectus or any Sales Material (or
any amendment or supplement to any of the foregoing) or
suspending the qualification of the Shares for offering or sale
in any jurisdiction, the Company will use its best efforts to
obtain the withdrawal of such order at the earliest possible
time. If at any time any national securities exchange, any
state securities commission, any arbitrator, any court or any
other governmental, regulatory, self-regulatory or
administrative agency or any official shall issue any order
suspending the effectiveness of the Registration Statement,
prohibiting or suspending the use of the Prospectus or any Sales
Material (or any amendment or supplement to any of the
foregoing) or suspending the qualification of the Shares for
offering or sale in any jurisdiction, the Company will use its
reasonable best efforts to obtain the withdrawal of such order
at the earliest possible time.
3
(c) Within five years from the date hereof, the Company will
not (i) file any amendment (except any post-effective amendment
required by Rule 8b-16 of the 1940 Act which is filed with the
Commission after the later of (x) one year from the date of this
Agreement or (y) the date on which the distribution of the
Shares is completed) to the Registration Statement or make any
amendment or supplement to the Prospectus, any Prepricing
Prospectus or any Sales Material (or any amendment or supplement
to any of the foregoing) unless (i) the Representative shall
have been previously advised thereof and been given a reasonable
opportunity to review such filing, amendment or supplement or
(ii) so long as, in the opinion of counsel for the Underwriters,
a Prospectus is required to be delivered in connection with
sales of Shares by an Underwriter or dealer, file any
information, documents or reports pursuant to the 1933 Act, the
1940 Act or the 1934 Act, without delivering a copy of such
information, documents or reports to the Representative, prior
to or concurrently with such filing.
(d) Prior to the execution and delivery of this Agreement, the
Company has delivered to the Representative, without charge, in
such quantities as it has reasonably requested, copies of each
form of any Prepricing Prospectus. The Company consents to the
use, in accordance with the provisions of the 1933 Act and with
the securities or Blue Sky laws of the jurisdictions in which
the Shares are offered by each of the Underwriters and by
dealers, prior to the date of the Prospectus, of each Prepricing
Prospectus so furnished by the Company.
(e) As soon after the execution and delivery of this Agreement
as reasonably possible and thereafter from time to time, for
such period as in the opinion of counsel for the Underwriters a
prospectus is required by the 1933 Act to be delivered in
connection with sales of Shares by each of the Underwriters, the
Company will promptly deliver to each of the Underwriters and
each dealer, without charge, as many copies of the Prospectus
(and of any amendment or supplement thereto) as the
Representative may reasonably request. The Company consents to
the use of the Prospectus (and of any amendments or supplements
thereto) in accordance with the provisions of the 1933 Act and
with the securities or Blue Sky laws of the jurisdictions in
which the Shares are offered by the Underwriters and by all
dealers to whom Shares may be sold, both in connection with the
offering or sale of the Shares and for such period of time
thereafter as the Prospectus is required by law to be delivered
in connection with sales of Shares by the Underwriters or any
dealer. If during such period of time any event shall occur
that in the judgment of the Company or in the opinion of counsel
for the Underwriters is required to be set forth in the
Registration Statement or the Prospectus (as then amended or
supplemented) or should be set forth therein in order to make
the statements therein (in the case of the Prospectus, in light
of the circumstances under which they were made) not misleading
in any material respect or if it is necessary to supplement or
amend the Registration Statement or the Prospectus to comply
with the 1933 Act, the 1940 Act, the Rules and Regulations or
any other applicable law, rule or regulation, the Company will
forthwith notify the Representative of such event, prepare and,
subject to the provisions of paragraph 1 above, promptly file
with the Commission and use its best efforts to cause to become
effective as promptly as possible an appropriate amendment or
supplement thereto and will furnish as promptly as reasonably
possible to each of the Underwriters and dealers, without
charge, such number of copies thereof as they may reasonably
request; provided, however, that if such amendment or supplement
is required solely as a result of a material misstatement in or
material omission from the information furnished in writing by
or on behalf of each of the Underwriters to the Company
expressly for use in the Registration Statement or the
Prospectus (such information, as described in Section 12 of this
Agreement, being referred to herein as the "Underwriter
Information"), then the Company shall deliver such amendment or
supplement at cost.
(f) The Company will cooperate with the Representative and with
counsel for the Underwriters in connection with any registration
or qualification of the Shares for offering and sale by each of
the Underwriters and by dealers as may be required under the
applicable securities or Blue Sky laws of such jurisdictions as
the Representative may designate and will file such consents to
service of process or other documents necessary or appropriate
in order to effect such registration or qualification for so
long as required to complete the distribution of the Shares;
provided, however, that the foregoing shall not apply to the
extent that the Shares are "covered securities" that are exempt
from state regulation of securities offerings pursuant to
Section 18 of the 1933 Act.
4
(g) As soon as practicable, but in no event later than the last
day of the 15th full calendar month following the end of the
calendar quarter in which the effective date of the Registration
Statement falls, the Company will make generally available to
its security holders an earnings statement, which need not be
audited, which earnings statement shall satisfy the provisions
of Section 11(a) of the 1933 Act and Rule 158 of the 1933 Act
Rules and Regulations.
(h) During the period of three years hereafter, the Company
will furnish or will have furnished to the Representative and,
upon your request, to each of the other Underwriters, as soon as
available, (i) a copy of each report of the Company mailed to
shareholders or filed with the Commission (other than reports on
Form N-SAR) or furnished to the NASD or any national securities
exchange or (ii) from time to time such other information
concerning the Company as the Representative may reasonably
request.
(i) If this Agreement shall terminate or be terminated after
execution pursuant to any provisions hereof or if this Agreement
shall be terminated by the Underwriters because of any
inability, failure or refusal on the part of the Company to
comply with any material terms in this Agreement or because any
of the conditions in Section 10 of this Agreement required to be
complied with or fulfilled by it are not satisfied, then the
Company agrees to reimburse each of the Underwriters for all
out-of-pocket expenses (including reasonable fees and expenses
of counsel for the Underwriters) incurred by the Underwriters in
connection herewith.
(j) The Company will direct the investment of the net proceeds
of the offering of the Shares in accordance in all material
respects with the statements under the caption "Use of Proceeds"
set forth in the Prospectus.
(k) The Company will file the requisite copies of the
Prospectus with the Commission in a timely fashion pursuant to
Rule 497 and will advise you of the time and manner of such
filing.
(l) The Company will use its best efforts to have the Shares
approved, subject to notice of issuance, for trading on the NASD
National Market concurrently with the effectiveness of the
Registration Statement and to comply with the rules or
regulations of the NASD in relation thereto.
(m) Except to the Underwriters as provided in this Agreement or
pursuant to any dividend reinvestment plan of the Company
described in the Prospectus, the Company will not directly or
indirectly issue, sell, contract to sell or otherwise dispose
of, any common shares of the Company or any securities
convertible into or exercisable or exchangeable for common
shares of the Company or grant any rights, options or warrants
to purchase common shares of the Company, for a period of 90
days after the date of the Prospectus, without the prior written
consent of the Representative; provided, that following the sale
by each Underwriter of its allotment of Shares and the
termination of stabilizing activities, if any, the Company may,
without the prior written consent of any of the Underwriters,
sell shares of its common stock that are registered under the
Registration Statement but are not being sold pursuant to this
Agreement.
(n) Except as stated in this Agreement and in the Prospectus,
the Company will not take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of the
Shares in violation of federal securities laws.
(o) For a period of one year following the Closing Date, the
Company will direct the investment of the proceeds of the
offering of the Shares so as to comply with the requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), to qualify as a regulated investment company under
the Code.
(p) The Company will comply with all applicable securities and
other applicable laws, rules and regulations, including, without
limitation, the Xxxxxxxx-Xxxxx Act of 2002, and will use its
best efforts to cause the Company's directors and officers, in
their capacities as such, to comply with such laws, rules and
regulations, including, without limitation, the provisions of
the Xxxxxxxx-Xxxxx Act of 2002.
5
(q) The Company will comply with all provisions of any
undertakings contained in the Registration Statement.
6. Representations and Warranties of the Company. The Company
hereby represents and warrants to each of the Underwriters on
the date hereof, and shall be deemed to represent and warrant to
each of the Underwriters on the Closing Date and the Additional
Closing Date, that:
(a) Each Prepricing Prospectus filed pursuant to Rule 497 of
the 1933 Act Rules and Regulations, complied when so filed in
all material respects with the provisions of the 1933 Act, the
1940 Act and the Rules and Regulations (except that this
representation and warranty does not apply to statements in or
omissions from the Prepricing Prospectus (and any amendment or
supplement thereto) made in reliance upon and in conformity with
the Underwriter Information) and the Commission has not issued
any order preventing or suspending the use of the Prepricing
Prospectus.
(b) The Registration Statement has been declared effective by
the Commission and no stop order suspending such effectiveness
has been issued under the 1933 Act or the 1940 Act and no
proceedings for that purpose have been instituted or are pending
or, to the knowledge of the Company, threatened by the
Commission. None of the shares of the Company's common stock
registered with the Commission pursuant to such registration
statement have been previously issued. The Registration
Statement, in the form in which it became or becomes effective
and also in such form as it may be when any post-effective
amendment thereto shall become effective, the Prospectus and any
amendment or supplement thereto when filed with the Commission
under Rule 497 and at the Closing Date or any Additional Closing
Date and the Form N-8A when originally filed with the Commission
and any amendment or supplement thereto when filed with the
Commission complied or will comply in all material respects with
the provisions of the 1933 Act, the 1940 Act and the Rules and
Regulations and each of the Registration Statement, and the
Prospectus (or any supplement or amendment to any of them) did
not or will not at any such times contain an untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein (in
the case of the Prospectus, in light of the circumstances under
which they were made) not misleading; except that this
representation and warranty does not apply to statements in or
omissions from the Registration Statement and the Prospectus
(and any amendment or supplement to either of them) made in
reliance upon and in conformity with the Underwriter
Information.
(c) All the outstanding shares of capital stock of the Company
have been duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar rights;
the Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in
accordance with the terms hereof, will be validly issued, fully
paid and nonassessable and free of any preemptive or similar
rights; except as set forth in the Prospectus, the Company is
not a party to or bound by any outstanding options, warrants, or
similar rights to subscribe for, or contractual obligations to
issue, sell, transfer or acquire, any of its capital stock or
any securities convertible into or exchangeable for any of such
capital stock; and the capital stock of the Company conforms in
all respects to the description thereof in the Registration
Statement or the Prospectus (or any amendment or supplement to
either of them). Except for the Shares and the shares of common
stock issued in accordance with Section 14(a) of the 1940 Act,
no other shares of capital stock are issued or outstanding and
the capitalization of the Company conforms to the description
thereof in the Registration Statement and the Prospectus (or any
amendment or supplement to either of them) as of the date set
forth therein.
(d) The Company has been duly formed and is validly existing in
good standing as a corporation under the laws of the State of
New York, with full corporate power and authority to own, lease
and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus (and
any amendment or supplement to either of them) and is duly
registered and qualified to conduct business and is in good
standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such
registration or qualification, except where the failure so to
register or to qualify does not or would not have a material,
adverse effect on the condition (financial or other), business,
business prospects, properties, net assets or results of
operations of the Company (a "Material Adverse Effect").
6
(e) There are no legal or governmental proceedings pending or,
to the knowledge of the Company, threatened, against the
Company, or to which the Company or any of its properties is
subject, (i) that are required to be described in the
Registration Statement or the Prospectus (and any amendment or
supplement to either of them) but are not described therein or
(ii) which might individually or in the aggregate prevent the
transactions contemplated by this Agreement, and there are no
agreements, contracts, indentures, leases or other instruments
that are required to be described in the Registration Statement
or the Prospectus (or any amendment or supplement to either of
them) or to be filed as an exhibit to the Registration Statement
that are not described therein or filed as an exhibit thereto.
The contracts so filed as exhibits are accurate and complete in
all respects. All such contracts to which the Company is a
party have been duly authorized, executed and delivered by the
Company, constitute valid and binding agreements of the Company
and are enforceable against the Company in accordance with the
terms thereof, except as enforceability thereof may be limited
by (A) the application of bankruptcy, reorganization, insolvency
and other laws affecting creditors' rights generally, (B)
equitable principles being applied at the discretion of a court
before which any proceeding may be brought and (C) limitations
of public policy and a court's discretion with respect to the
enforceability of any indemnification rights. The Company has
not received notice or been made aware that any other party is
in breach of or default under any such contracts.
(f) The Company is not (i) in violation of its Certificate of
Incorporation, bylaws or other organizational documents, (ii) in
violation of any law, ordinance, administrative or governmental
rule or regulation applicable to the Company or of any decree of
the Commission, any state securities commission, any national
securities exchange, any arbitrator, any court or any other
governmental, regulatory, self-regulatory or administrative
agency or any other agency or any body or official having
jurisdiction over the Company or (iii) in breach or default in
the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any material agreement, indenture, lease or
other instrument to which the Company is a party or by which it
or any of its properties may be bound, except, in the case of
(ii) and (iii) above, for violations, breaches or defaults that
do not or would not have, either individually or in the
aggregate, a Material Adverse Effect on the Company; and there
does not exist any state of facts which constitute an event of
default on the part of the Company as defined in such documents
or which, with notice or lapse of time or both, would constitute
such an event of default (except for any such event of default
that would not have a Material Adverse Effect).
(g) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or any of the Stock
Transfer Agency Agreement or Corporate Safekeeping Account
Agreement by the Company, nor the consummation by the Company of
the transactions contemplated hereby or thereby (i) requires any
consent, approval, authorization or order of or registration or
filing with the Commission, any state securities commission, any
national securities exchange, any arbitrator, any court,
regulatory body, administrative agency or other governmental
body, agency or official having jurisdiction over the Company
(except (A) such as have been obtained or made prior to the date
of this Agreement, (B) for compliance with the securities or
Blue Sky laws of various jurisdictions which have been or will
be effected in accordance with this Agreement and (C) for
compliance with the filing requirements of the NASD Division of
Corporate Finance) or conflicts or will conflict with or
constitutes or will constitute a breach of the Certificate of
Incorporation, bylaws, or other organizational documents of the
Company or (ii) (A) conflicts or will conflict with or
constitutes or will constitute a breach of or a default under
any agreement, indenture, lease or other instrument to which the
Company is a party or by which it or any of its properties may
be bound or (B) violates or will violate any statute, law,
regulation or filing or judgment, injunction, order or decree
applicable to the Company or any of its properties or will
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant
to the terms of any agreement or instrument to which it is a
party or by which it may be bound or to which any of the
property or assets of the Company is subject except, in the case
of (ii) above, for conflicts, breaches, defaults, violations or
encumbrances that do not or would not have, either individually
or in the aggregate, a Material Adverse Effect. As of the date
hereof, the Company is not subject to any order of any court or
of any arbitrator, governmental authority or administrative
agency that has or would have, either individually or in the
aggregate, a Material Adverse Effect.
(h) Since the date as of which information is given in the
Registration Statement and the Prospectus (and any amendment or
supplement to either of them), except as otherwise stated
7
therein, (i) there has been no change that has or would have a
Material Adverse Effect; (ii) there have been no material
transactions entered into by the Company other than those in the
ordinary course of its business or described in the Prospectus
(and any amendment or supplement thereto); and (iii) there has
been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its common stock.
(i) PricewaterhouseCoopers LLP, who have audited the Statement
of Assets and Liabilities included in, and whose report appears
in, the Registration Statement and the Prospectus (and any
amendment or supplement to either of them), are independent
public accountants with respect to the Company as required by
the 1933 Act, the 1940 Act and the Rules and Regulations and is
a registered public accounting firm within the meaning of the
Xxxxxxxx-Xxxxx Act of 2002. To the best of the Company's
knowledge and belief, Xxxxxx Xxxxxxxx LLP, who previously
expressed their opinions on certain of the audited financial
statements included in the Registration Statements and the
Prospectus (but have not consented to inclusion of such opinions
in the registration statements), at all times at which they
served as public accountants, were independent public
accountants with respect to the Company within the meaning of
the Securities Act and the applicable Rules and Regulations.
(j) The financial statements, together with related schedules
and notes, included or incorporated by reference in the
Registration Statement or the Prospectus (or any amendment or
supplement to either of them) present fairly the financial
position of the Company on the basis stated in the Registration
Statement at the respective dates or for the respective periods
to which they apply; such statements and related schedules and
notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the
periods involved except as disclosed therein; and the other
financial and statistical information and data included in the
Registration Statement or the Prospectus (or any amendment or
supplement thereto) are accurately derived from such financial
statements and the books and records of the Company. No other
financial statements or schedules are required to be included in
the Registration Statement.
(k) The Company, subject to the filing of the Prospectus under
Rule 497, has taken all action required to be taken by it under
the 1933 Act, the 1940 Act and the Rules and Regulations to make
the public offering and consummate the sale of the Shares as
contemplated by this Agreement.
(l) The execution and delivery of and the performance by the
Company of its obligations under this Agreement and the Company
Agreements have been duly and validly authorized by the Company
and this Agreement and each of the Company Agreements have been
duly executed and delivered by the Company and (assuming due and
valid authorization, execution and delivery by the other parties
hereto and thereto) this Agreement and each Company Agreement
constitutes the valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its
terms, except as rights to indemnity and contribution hereunder
may be limited by federal or state securities laws and subject
to the qualification that the enforceability of the Company's
obligations hereunder and thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors'
rights generally and by general equitable principles (regardless
of whether enforcement is sought in a proceeding in equity or at
law).
(m) Except as disclosed in or contemplated by the Registration
Statement or the Prospectus (or any amendment or supplement to
either of them), subsequent to the respective dates as of which
such information is given in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them),
the Company has not incurred any debt, liability or obligation,
indirect, direct or contingent, and there has not been any
change in the capital stock or capitalization of the Company.
(n) The Company has not distributed without the
Representative's consent any offering material in connection
with the offering and sale of the Shares other than the
Registration Statement, the Prepricing Prospectus, the
Prospectus and the Sales Material (or any other material, if
any, permitted by the 1933 Act, the 1940 Act or the Rules and
Regulations).
8
(o) (i) The Company has such licenses, permits, and
authorizations of governmental or regulatory authorities
("permits") as are necessary to own its property and to conduct
its business in the manner described in the Prospectus (and any
amendment or supplement thereto); (ii) the Company has fulfilled
and performed all its obligations with respect to such permits
and no event has occurred which allows or, after notice or lapse
of time, would allow, revocation or termination thereof or
results in any other impairment of the rights of the Company
under any such permit, subject in each case to such
qualification as may be set forth in the Prospectus (and any
amendment or supplement thereto); and, (iii) except as described
in the Prospectus (and any amendment or supplement thereto),
none of such permits contains any restriction that is materially
burdensome to the Company; except where the failure to obtain or
perform its obligations with respect to such permits, or the
restrictions set forth in such permits, as set forth in clauses
(i), (ii) and (iii), either individually or in the aggregate,
does or would not have a Material Adverse Effect.
(p) The Company has maintained and continues to maintain a
system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in
accordance with the Board of Directors' general or specific
authorization and with the investment policies and restrictions
of the Company and the applicable requirements of the 1940 Act,
the 1940 Act Rules and Regulations and the Code; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted
accounting principles, to calculate net asset value and fee
accruals, to maintain accountability for assets and to maintain
compliance with the books and records requirements under the
1940 Act and the 1940 Act Rules and Regulations; (iii) access to
assets is permitted only in accordance with the Board of
Directors' general or specific authorization; and (iv) the
recorded account for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with
respect to any differences.
(q) The conduct by the Company of its business (as described in
the Prospectus) does not require it to be the owner, possessor,
licensee of, or otherwise require it to have the right to use,
any patents, patent licenses, trademarks, service marks or trade
names (collectively, "Intellectual Property") which it does not
own, possess, license or otherwise have the right to use, except
where the failure to own, possess, license or otherwise have the
right to use such Intellectual Property, individually or in the
aggregate, does or would not have a Material Adverse Effect.
(r) Except as stated in this Agreement and in the Prospectus
(and any amendment or supplement thereto), the Company has not
taken and will not take, directly or indirectly, any action
designed to or which could cause or result in or which will
constitute stabilization or manipulation of the price of the
Shares in violation of federal securities laws and, to the
Company's knowledge, no such action has been, or will be, taken
by any affiliates of the Company.
(s) The Company has duly elected to be a business development
company under the 1940 Act and the Rules and Regulations; no
order of suspension or revocation of such election under the
1940 Act and the Rules and Regulations has been issued or
proceedings therefor initiated or, to the knowledge of the
Company, threatened by the Commission. The Company is, and at
all times through the completion of the transactions
contemplated hereby, will be, in compliance in all material
respects with the 1933 Act and the 1940 Act. No person is
serving as an officer, director, trustee or investment adviser
of the Company except in accordance with the provisions of the
1940 Act and the 1940 Act Rules and Regulations. The Company
has not received any notice from the Commission pursuant to
Section 8(e) of the 1940 Act with respect to the 1940 Act
Notification or the Registration Statement (or any amendment or
supplement to either of them).
(t) All advertising, sales literature, "prospecting letters,"
"prospectus wrappers," envelopes, prospectuses omitted from the
Registration Statement pursuant to the 1933 Act Rules and
Regulations or other promotional material prepared or authorized
in writing by the Company for use or distribution to the public
for use in connection with the offering and sale of the Shares
(collectively, "Sales Material") complied and comply in all
respects with the applicable requirements of the 1933 Act, the
1933 Act Rules and Regulations and the rules and interpretations
of the NASD and no Sales Material contained or contains an
untrue statement of a material fact or omitted or omits to state
a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading (except that this
representation and warranty does not apply to statements in or
omissions from the Sales Material made in reliance upon and in
conformity with the Underwriter Information).
9
(u) No holder of any security of the Company has any right to
require registration of any Shares, capital stock or any other
security of the Company because of the filing of the
registration statement or consummation of the transactions
contemplated by this Agreement.
(v) The Company intends to direct the investment of the
proceeds of the offering of the Shares in such a manner as to
comply with the requirements of Subchapter M of the Code.
(w) None of the promotional material for use by brokers in
connection with the marketing of the Shares (including any
"broker kits," "road show slides," "road show scripts," "broker
post-cards" and "broker reference cards" authorized in writing
by or prepared by the Company for use in connection with the
offering and sale of the Shares (collectively, "Broker
Material") when read together with the Prospectus, contained or
contains an untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (except
that this representation and warranty does not apply to
statements in or omissions from the Broker Material made in
reliance upon and in conformity with the Underwriter
Information), and no Broker Material was or has been made
available by the Company by means of an Internet web site or
similar electronic means.
(x) The Commission has not issued any order preventing or
suspending the use of any Prepricing Prospectus or the
Prospectus.
(y) Except as disclosed in the Registration Statement or the
Prospectus (or any amendment or supplement to either of them),
to the Company's knowledge, after due inquiry, no director of
the Company is an "interested person" (as defined in the 0000
Xxx) of the Company or an "affiliated person" (as defined in the
0000 Xxx) of an Underwriter.
(z) The Shares have been approved for trading on the NASD
National Market.
(aa) The officers and directors of the Company are insured by
insurers of recognized financial responsibility against such
losses and risks and in such amounts as are prudent and
customary, in the judgment of the Company, for directors" and
officers" liability insurance of a public company of the size
and nature of business of the Company, including in connection
with public offerings of securities; and the Company has no
reason to believe that it will not be able to renew its existing
directors" and officers" liability insurance coverage as and
when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to cover its officers and
directors.
(bb) The registration and issuance of the Company's transferable
rights pursuant to the Company's registration statement on Form
N-2 (File No. 333-87032) was made in compliance with the 1933
Act, the 1940 Act, the Rules and Regulations and all other
applicable state and federal laws or regulations, except to the
extent any noncompliance would not have a Material Adverse
Effect.
(cc) To the Company's knowledge, all federal, state, local and
foreign tax returns required to be filed by or on behalf of the
Company (and its predecessors) with respect to the six full
fiscal years ended prior to the date of this Agreement have been
filed (or are the subject of valid extension) with the
appropriate federal, state, local and foreign authorities and
all such tax returns, as filed, are accurate in all material
respects. To the Company's knowledge, all federal, state, local
and foreign taxes (including estimated tax payments) required to
be shown on all such tax returns or claimed to be due from or
with respect to the business of the Company (and its
predecessors) with respect to such six full fiscal years have
been paid or reflected as a liability on the financial
statements of the Company for appropriate periods, except for
those taxes or claims therefor which are being contested by the
Company in good faith and for which appropriate reserves are
10
reflected in the Company's financial statements. All
deficiencies asserted as a result of any federal, state, local
or foreign tax audits have been paid or finally settled and no
issue has been raised in any such audit which, by application of
the same or similar principles, reasonably could be expected to
result in a proposed deficiency for any other period not so
audited. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any
federal, state, local or foreign tax return for any period. On
the Closing Date, and Additional Closing Date, if any, all stock
transfer and other taxes which are required to be paid in
connection with the sale of the shares to be sold by the Company
to each of the Underwriters will have been fully paid by the
Company and all laws imposing such taxes will have been complied
with.
(dd) Except as set forth in the Prospectus, there are no
transactions with "affiliates" (as defined in Rule 405
promulgated under the 0000 Xxx) or any officer, director or
security holder of the Company (whether or not an affiliate)
which are required by the 1933 Act, the 1940 and the Rules and
Regulations thereunder to be disclosed in the Registration
Statement.
(ee) The Company has procured lock-up agreements from each of
Xxxxxxx X. Xxxxxx, Xxx X. Xxxxxxxxxx and Xxxxxxx X. Xxxxxxx.
(ff) To the Company's knowledge, no officer, director or 10%
shareholder of the Company has a direct or indirect affiliation
or association with any member of the NASD, except as discussed
in the questionnaires delivered by the Company to each of the
Underwriters or disclosed in the Prospectus.
(gg) The statistical and market-related data included in the
Prospectus is based on or derived from sources which the Company
believes to be reliable and accurate in all material respects.
7. Expenses. Whether or not the transactions contemplated
hereby are consummated or this Agreement becomes effective or is
terminated, the Company will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the
Company's counsel and accountants in connection with the
registration of the Shares under the 1933 Act and the 1940 Act
and all other expenses in connection with the preparation,
printing and filing of the Registration Statement and the
Prospectus and amendments and supplements thereto and the
mailing and delivering of copies thereof and of any Prepricing
Prospectus to each of the Underwriters and dealers; (ii) the
printing and delivery (including, without limitation, postage,
air freight charges and charges for counting and packaging) of
such copies of the Registration Statement, the Prospectus, each
Prepricing Prospectus, the Blue Sky memoranda, the Power of
Attorney and Custody Agreement, the Master Agreement among
Underwriters, this Agreement and all amendments or supplements
to any of them as may be reasonably requested for use in
connection with the offering and sale of the Shares; (iii) all
expenses in connection with the qualification of the Shares for
offering and sale under state securities laws or Blue Sky laws,
including the reasonable attorneys" fees and out-of-pocket
expenses of the counsel for the Underwriters in connection
therewith; (iv) the filing fees incident to securing any
required review by the NASD of the fairness of the terms of the
sale of the Shares and the reasonable fees and disbursements of
the Underwriters" counsel relating thereto; (v) the cost of
preparing stock certificates; (vi) the costs and charges of any
transfer agent or registrar; (vii) the cost of the tax stamps,
if any, in connection with the issuance and delivery of the
Shares to each of the Underwriters; (viii) all other fees, costs
and expenses referred to in Item 26 of the Registration
Statement, (ix) the transportation, lodging, graphics and other
expenses incidental to the Company's preparation for and
participation in the "roadshow" for the offering contemplated
hereby, and (x) all other costs and expenses incident to the
performance of the obligations of the Company hereunder which
are not otherwise specifically provided for in this Section 7.
Notwithstanding the foregoing, in the event that the proposed
offering is terminated for the reasons set forth in Section 11
hereof, the Company agrees to reimburse each of the Underwriters
as provided in this Section 7.
8. Indemnification and Contribution. Subject to the
limitations in this paragraph below and to the other limitations
set forth in this Section 8, the Company agrees to indemnify and
hold harmless each Underwriter and each Underwriter's directors,
officers, employees and agents, and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the Exchange Act from and against any
and all losses, claims, damages, liabilities and expenses,
including, without limitation, reasonable costs of investigation
and attorneys" fees and expenses (collectively, "Damages")
arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing
Prospectus or in the Registration Statement or the Prospectus or
11
in any amendment or supplement thereto, or any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except to the extent that any such Damages arise out
of or are based upon an untrue statement or omission or alleged
untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the
information furnished in writing to the Company by the
Representative or on behalf of any Underwriter through the
Representative expressly for use in connection therewith, or
(ii) any inaccuracy in or breach of the representations and
warranties of the Company contained herein or any failure of the
Company to perform its respective obligations hereunder or under
law; provided, however, that with respect to any untrue
statement or omission made in any Prepricing Prospectus, the
indemnity agreement contained in this paragraph shall not inure
to the benefit of any Underwriter (or to the benefit of any
person controlling such Underwriter or to any officer, director,
employee or agent of such Underwriter) from whom the person
asserting any such losses, claims, damages or liabilities
purchased the Shares concerned if both (y) a copy of the
Prospectus was not sent or given to such person at or prior to
the written confirmation of the sale of such Shares to such
person as required by the 1933 Act, and (z) the untrue statement
or omission in the Prepricing Prospectus was corrected in the
Prospectus. This indemnification shall be in addition to any
liability that the Company may otherwise have.
In addition to its other obligations under this Section 8, the
Company agrees that, as an interim measure during the pendency
of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any
inaccuracy in the representations and warranties of the Company
herein or failure to perform its obligations hereunder, all as
set forth in this Section 8, subject to the limitations set
forth in this Section 8, it will reimburse each of the
Underwriters on a quarterly basis for all reasonable legal or
other out-of-pocket expenses incurred in connection with
investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and
enforceability of the Company's obligation to reimburse each of
the Underwriters for such expenses and the possibility that such
payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the
Underwriters to which such payment was made shall promptly
return it to the person(s) from whom it was received, together
with interest compounded daily determined on the basis of the
base lending rate announced from time to time by Chase Manhattan
Bank, N.A. (the "Prime Rate"). Any such interim reimbursement
payments that are not made to an Underwriter within 30 days of a
request for reimbursement shall bear interest at the Prime Rate
from the date of such request.
If any action or claim shall be brought against any Underwriter
or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or
such controlling person shall promptly notify in writing the
party(s) against whom indemnification is being sought (the
"indemnifying party" or "indemnifying parties"), and such
indemnifying party(s) shall assume the defense thereof,
including the employment of counsel reasonably acceptable to
such Underwriter or such controlling person and payment of all
fees and expenses incurred by such counsel. Such Underwriter or
any such controlling person shall have the right to employ
separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall
be at the expense of such Underwriter or such controlling person
unless (i) the indemnifying party(s) has (have) agreed in
writing to pay such fees and expenses, (ii) the indemnifying
party(s) has (have) failed to assume the defense and employ
counsel reasonably acceptable to such Underwriter or such
controlling person or (iii) the named parties to any such action
(including any impleaded parties) include both such Underwriter
or such controlling person and the indemnifying party(s), and
such Underwriter or such controlling person shall have been
advised by its counsel that one or more legal defenses may be
available to such Underwriter which may not be available to the
Company, or that representation of such indemnified party and
any indemnifying party(s) by the same counsel would be
inappropriate under applicable standards of professional conduct
(whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between
them (in which case the indemnifying party(s) shall not have the
right to assume the defense of such action on behalf of such
Underwriter or such controlling person (notwithstanding its
(their) obligation to bear the fees and expenses of such
counsel)). It is understood, however, that the indemnifying
parties shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related
actions, suits or proceedings in the same jurisdiction arising
out of the same general allegations or circumstances, be liable
for the reasonable fees and expenses of only one separate firm
of attorneys (in addition to any local counsel) at any time for
such Underwriter and controlling persons not having actual or
potential differing interests. The indemnifying party(s) shall
not be liable for any settlement of any such action effected
without its (their) written consent, but if settled with such
written consent, or if there be a final judgment for the
plaintiff in any such action, the indemnifying party(s) agrees
12
to indemnify and hold harmless such Underwriter and any such
controlling person from and against any loss, claim, damage,
liability or expense by reason of such settlement or judgment,
but in the case of a judgment only to the extent stated in the
immediately preceding paragraph.
Each of the Underwriters, severally and not jointly, agrees to
indemnify and hold harmless the Company, its directors, its
officers who sign the Registration Statement, and any person who
controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the Exchange Act, to the same extent
as the foregoing indemnity from the Company to each of the
Underwriters, but only with respect to information furnished in
writing by or on behalf of each of the Underwriters through the
Representative expressly for use in the Registration Statement,
the Prospectus or any Prepricing Prospectus, or any amendment or
supplement thereto. If any action or claim shall be brought or
asserted against the Company, any of its directors, any such
officers, or any such controlling person based on the
Registration Statement, the Prospectus or any Prepricing
Prospectus, or any amendment or supplement thereto, and in
respect of which indemnity may be sought against any of the
Underwriters pursuant to this paragraph, such Underwriter shall
have the rights and duties given to the Company by the preceding
paragraph (except that if the Company shall have assumed the
defense thereof such Underwriter shall not be required to do so,
but may employ separate counsel therein and participate in the
defense thereof, but the fees and expenses of such counsel shall
be at such Underwriter's expense), and the Company, its
directors, any such officers, and any such controlling persons
shall have the rights and duties given to such Underwriter by
the immediately preceding paragraph.
If the indemnification provided for in this Section 8 is
unavailable or insufficient for any reason whatsoever to an
indemnified party under the first or fourth paragraph of this
Section 8 in respect of any losses, claims, damages, liabilities
or expenses referred to therein, then an indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and each of the
Underwriters on the other hand from the offering and sale of the
Shares or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the
Company on the one hand and each of the Underwriters on the
other hand in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company
on the one hand and each of the Underwriters on the other hand,
shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and
commissions received by each of the Underwriters, in each case
as set forth in the table on the cover page of the Prospectus;
provided that, in the event that an Underwriter shall have
purchased any Additional Shares hereunder, any determination of
the relative benefits received by the Company or an Underwriter
from the offering of the Shares shall include the net proceeds
(before deducting expenses) received by the Company, and the
underwriting discounts and commissions received by such
Underwriter, from the sale of such Additional Shares, in each
case computed on the basis of the respective amounts set forth
in the notes to the table on the cover page of the Prospectus.
The relative fault of the Company on the one hand and each of
the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information
supplied by the Company on the one hand or by each of the
Underwriters on the other hand and the parties" relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The amount paid or payable by an indemnified party as a result
of the losses, claims, damages, liabilities and expenses
referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of
this Section 8, an Underwriter shall not be required to
contribute any amount in excess of the amount by which the total
price of the Shares underwritten by it and distributed to the
public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
13
Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification,
reimbursement or interim payment or contribution under this
Section 8 shall be subject to the requirements of Release No.
11330 and Section 17(i) of the 1940 Act and, subject thereto,
shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are
incurred. The indemnity, contribution and reimbursement
agreements contained in this Section 8 and the representations
and warranties of the Company, respectively, set forth in this
Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any
Underwriter or any person controlling such Underwriter, the
Company, its directors or officers or any person controlling the
Company, (ii) acceptance of any Shares and payment therefor
hereunder and (iii) any termination of this Agreement. A
successor to such Underwriter or any person controlling such
Underwriter, or to the Company, its directors or officers, or
any person controlling the Company, shall be entitled to the
benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 8.
It is agreed that any controversy arising out of the operation
of the interim reimbursement arrangements set forth in the
second and fifth paragraphs of this Section 8, including the
amounts of any requested reimbursement payments and the method
of determining such amounts, shall be settled by arbitration
conducted pursuant to the Code of Arbitration Procedure of the
NASD. Any such arbitration must be commenced by service of a
written demand for arbitration or written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the
event the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice,
then the party responding to said demand or notice is authorized
to do so. Such an arbitration would be limited to the operation
of the interim reimbursement provisions contained in the second
and fifth paragraphs of this Section 8, and would not resolve
the ultimate propriety or enforceability of the obligation to
reimburse expenses which is created by the provisions of the
second and fifth paragraphs of this Section 8.
9. Conditions of Underwriters" Obligations. The several
obligations of the Underwriters to purchase the Firm Shares
hereunder are subject to the following conditions:
(a) All filings required by Rules 497 and 462 under the 1933
Act shall have been timely made, no order pursuant to Section
8(e) of the 1940 Act shall have been issued and no proceeding
for that purpose shall have been instituted or, to the knowledge
of the Company, threatened by the Commission and any request of
the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall
have been complied with to the Representative's satisfaction.
(b) The Representative shall be reasonably satisfied that since
the respective dates as of which information is given in the
Registration Statement and Prospectus, (i) there shall not have
been any change in the capital stock of the Company or any
material change in the indebtedness (other than in the ordinary
course of business) of the Company, (ii) except as set forth or
contemplated by the Registration Statement or the Prospectus, no
material oral or written agreement or other transaction shall
have been entered into by the Company which is not in the
ordinary course of business and which could reasonably be
expected to result in a material reduction in the future
earnings of the Company, (iii) no casualty loss or damage
(whether or not insured) to the property of the Company shall
have been sustained which has or could reasonably be expected to
have a Material Adverse Effect, (iv) no legal or governmental
action, suit or proceeding affecting the Company or any of its
properties which is material to the Company and its subsidiaries
taken as a whole or which affects or could reasonable be
expected to affect the transactions contemplated by this
Agreement shall have been instituted or threatened, and (v)
there shall not have been any change in the condition (financial
or otherwise), business, management, results or operations or
prospects of the Company or its subsidiaries having a Material
Adverse Effect which makes it impractical or inadvisable in the
Representative's judgment to proceed with the public offering or
purchase the Shares as contemplated hereby.
(c) The Representative shall have received on the Closing Date
(and the Additional Closing Date, if any) an opinion of Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, as counsel for the Company,
dated the Closing Date, satisfactory to you and your counsel, in
substantially the form attached hereto as Exhibit A.
14
(d) The Representative shall have received on the Closing Date
an opinion of Xxxxxxxxx Traurig, P.A., as counsel for the
Underwriters, dated the Closing Date with respect to the
issuance and sale of the Firm Shares, the Registration Statement
and other related matters as the Representative may reasonably
request, and the Company and its counsel shall have furnished to
such counsel such documents as they may reasonably request for
the purpose of enabling them to pass upon such matters.
(e) The Representative shall have received letters addressed to
the Underwriters and dated the date hereof and the Closing Date
from the firm of PricewaterhouseCoopers LLP, independent
certified public accountants, substantially in the forms
heretofore approved by the Representative.
(f) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings
for that purpose shall be pending or, to the knowledge of the
Company, shall be threatened or contemplated by the Commission
at or prior to the Closing Date; (ii) no order suspending the
effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky
laws of any jurisdiction shall be in effect and no proceeding
for such purpose shall be pending or, to the knowledge of the
Company, threatened or contemplated by the Commission or the
authorities of any jurisdiction; (iii) any request for
additional information on the part of the staff of the
Commission or any such authorities shall have been complied with
to the satisfaction of the staff of the Commission or such
authorities; (iv) after the date hereof no amendment or
supplement to the Registration Statement or the Prospectus shall
have been filed unless a copy thereof was first submitted to the
Representative and the Representative did not object thereto in
good faith; and (v) all of the representations and warranties of
the Company contained in this Agreement shall be true and
correct in all respects on and as of the date hereof and on and
as of the Closing Date as if made on and as of the Closing Date,
and the Representative shall have received a certificate, dated
the Closing Date and signed by the chief executive officer and
the chief financial officer of the Company (or such other
officers as are acceptable to the Representative) to the effect
set forth in this Section 9(f) and in Sections 9(b) and 9(g)
hereof.
(g) The Company shall not have failed in any material respect
at or prior to the Closing Date to have performed or complied
with any of its agreements herein contained and required to be
performed or complied with by it hereunder at or prior to the
Closing Date.
(h) The Company shall have furnished or caused to have been
furnished to the Representative such further certificates and
documents as the Representative shall have reasonably requested.
(i) At or prior to the date of this Agreement, the
Representative shall have received telephonic notice from the
Corporate Financing Department of the NASD confirming that such
Department has determined to raise no objections with respect to
the fairness or reasonableness of the underwriting terms and
arrangements of the offering contemplated hereby.
(j) At or prior to the Closing Date, the Representative shall
have received Lock-Up Agreements from each of Xxxxxxx X.
Xxxxxx, Xxx X. Xxxxxxxxxx and Xxxxxxx X. Xxxxxxx.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they
are reasonably satisfactory in form and substance to the
Representative and its counsel.
The several obligations of the Underwriters to purchase
Additional Shares hereunder are subject to the satisfaction on
and as of the Additional Closing Date of the conditions set
forth in this Section 9, except that, if the Additional Closing
Date is other than the Closing Date, the certificates, opinions
and letters referred to in this Section 9 shall be dated as of
the Additional Closing Date and the opinions called for by
paragraph (c) shall be revised to reflect the sale of Additional
Shares.
If any of the conditions hereinabove provided for in this
Section 9 shall not have been satisfied when and as required by
this Agreement, this Agreement may be terminated by the
Representative by notifying the Company of such termination in
15
writing or by telegram at or prior to such Closing Date, but the
Representative shall be entitled to waive any of such
conditions.
10. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Shares agreed to
be purchased by such Underwriter or Underwriters hereunder and
such failure to purchase shall constitute a default in the
performance of its or their obligations under this Agreement,
the remaining Underwriters shall be obligated severally to take
up and pay for (in the respective proportions which the amount
of Shares set forth opposite their names in Schedule I hereto
bears to the aggregate amount of Shares set forth opposite the
names of all the remaining Underwriters) the Shares which the
defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the
aggregate amount of Shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate amount of Shares set forth in Schedule I hereto,
the remaining Underwriters shall have the right to purchase all,
but shall not be under any obligation to purchase any, of the
Shares, and if such nondefaulting Underwriters do not purchase
all the Shares, this Agreement will terminate without liability
to any nondefaulting Underwriter or the Company. In the event
of a default by any Underwriter as set forth in this Section 10,
the Closing Date shall be postponed for such period, not
exceeding five Business Days, as the Representative shall
determine in order that the required changes in the Registration
Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its
liability, if any, to the Company and any nondefaulting
Underwriter for damages occasioned by its default hereunder.
11. Effective Date of Agreement. This Agreement shall become
effective upon the execution and delivery hereof by the parties
hereto; provided, however, that the provisions of Section 8
shall at all times be effective.
12. Termination of Agreement. This Agreement shall be subject
to termination in the Representative's absolute discretion,
without liability on the part of the Underwriters to the Company
by notice to the Company, if prior to the Closing Date or the
Additional Closing Date (if different from the Closing Date and
then only as to the Additional Shares, as the case may be, (i)
trading in the Company's common stock shall have been suspended
by the Commission or the Nasdaq/NMS, (ii) trading in securities
generally on the New York Stock Exchange, American Stock
Exchange or Nasdaq/NMS shall have been suspended or materially
limited, or minimum or maximum prices shall have been generally
established on such exchange, or additional material
governmental restrictions, not in force on the date of this
Agreement, shall have been imposed upon trading in securities
generally by any such exchange or by order of the Commission or
any court or other governmental authority, (iii) a general
moratorium on commercial banking activities shall have been
declared by either federal or New York State authorities or (iv)
there shall have occurred any outbreak or escalation of
hostilities or other international or domestic calamity, crisis
or change in political, financial or economic conditions or
other material event the effect of which on the financial
markets of the United States is such as to make it, in the
Representative's good faith judgment, impracticable or
inadvisable to market the Shares or to enforce contracts for the
sale of the Shares. Notice of such cancellation shall be
promptly given to the Company and its counsel by telegraph,
telecopy or telephone and shall be subsequently confirmed by
letter.
13. Information Furnished by the Underwriters. The Company
acknowledges that (i) the penultimate paragraph on the cover
page of the Prospectus, and (ii) the information under the
caption "Underwriting" in any Prepricing Prospectus and in the
Prospectus, constitute the only information furnished by or on
your behalf as such information is referred to in Sections 6(a),
6(b) and 9 hereof.
14. Miscellaneous. Except as otherwise provided in Sections 5
and 12 hereof, notice given pursuant to any of the provisions of
this Agreement shall be in writing and shall be delivered (i) if
to the Company, to the office of the Company at 000 Xxxx 00
Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxxx X. Xxxxxx, Chairman and Chief Executive Officer (with
copy to Xxxxxxx X. Xxxxx, Esq., Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP, Four Times Square, New York, New York 10036), or (ii)
if to you, to ThinkEquity Partners LLC, 00 Xxxx 00xx Xxxxxx,
Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxxxx,
Managing Director (with copy to Xxxxxxxxx Xxxxxxx, P.A., 0000
Xxxxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000, Attention: Xxx X.
Xxxxxx, Esq.).
This Agreement has been and is made solely for the benefit of
each of the Underwriters, the Company, its directors and
officers, and the other controlling persons referred to in
Section 9 hereof, to the extent provided herein, and no other
16
person shall acquire or have any right under or by virtue of
this Agreement. Neither of the terms "successor" and
"successors and assigns" as used in this Agreement shall include
a purchaser from you of any of the Shares in his status as such
purchaser.
15. Applicable Law; Counterparts. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York without reference to choice of law principles
thereunder.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
This Agreement shall be effective when, but only when, at least
one counterpart hereof shall have been executed on behalf of
each party hereto.
The Company and each of the Underwriters each hereby irrevocably
waive any right they may have to a trial by jury in respect to
any claim based upon or arising out of this Agreement or the
transactions contemplated hereby.
17
Please confirm that the foregoing correctly sets forth the
agreement between the Company and each of the Underwriters.
Very truly yours,
XXXXXX & XXXXXX GROUP, INC.
By:/s/ Xxx Xxxxxxxxxx
--------------------------
Xxx Xxxxxxxxxx, President
Chief Financial Officer and
Chief Operating Officer
CONFIRMED as of the date
first above mentioned for
itself and as Representative
of the other Underwriters
named in Schedule I hereto.
ThinkEquity Partners LLC
By:/s/Xxxxx X. Xxxxxx, Xx.
-------------------------------
Name: Xxxxx X. Xxxxxx, Xx.
Title:Principal
18
SCHEDULE I
Name of Underwriter Number of Firm Shares
------------------- ---------------------
ThinkEquity Partners LLC 1,500,000
Punk, Xxxxxx & Company 1,500,000
TOTAL 3,000,000
