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EXHIBIT h.1
400,000 SHARES
ALLIED CAPITAL LENDING CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
December 20, 1996
XXXXXX BROTHERS INC.
Three World Financial Center
Xxx Xxxx, XX 00000
Dear Sirs:
Allied Capital Corporation, a Maryland corporation ("Allied Capital"),
proposes to sell to Xxxxxx Brothers Inc. (the "Underwriter") 400,000 shares
(the "Shares") of common stock, $0.0001 par value (the "Common Stock"), of
Allied Capital Lending Corporation, a Maryland corporation (the "Company").
This is to confirm the agreement concerning the purchase of the Shares from
Allied Capital by the Underwriter.
1. Representations and Warranties. (a) The Company represents and
warrants to, and agrees with, the Underwriter that:
(i) A registration statement on Form N-2 (File No. 333-15709)
with respect to the Shares (A) has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Investment Company Act of 1940, as amended (the
"1940 Act"), and the rules and regulations of the Securities and Exchange
Commission (the "Commission") under the Securities Act and the 1940 Act, (B)
has been filed with the Commission under the Securities Act and (C) has become
effective under the Securities Act. If any post-effective amendment to such
registration statement has been filed with the Commission prior to the
execution and delivery of this Agreement, the most recent such amendment has
been declared effective by the Commission. Copies
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of such registration statement as amended to date have been delivered by the
Company to you. A Notification of Election to be Subject to Sections 55
through 65 of the 1940 Act on Form N-54A (the "Election") has been prepared in
conformity with Section 54(a) of the 1940 Act and has been filed by the Company
with the Commission under the 1940 Act, and the Election remains in effect. A
registration statement on Form 8-A with respect to the Shares has been prepared
by the Company in conformity with Section 12(g) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the rules and regulations under
the Exchange Act, and has been filed with the Commission under the Exchange Act.
For purposes of this Agreement: "Rules and Regulations" means the rules and
regulations of the Commission under the Securities Act, 1940 Act, Exchange Act
and the Investment Advisers Act of 1940, as amended (the "Advisers Act");
"Effective Time" means the date and the time as of which such registration
statement, or the most recent post-effective amendment thereto, if any, was
declared effective by the Commission; "Effective Date" means the date of the
Effective Time; "Preliminary Prospectus" means each prospectus and related
statement of additional information included in such registration statement, or
amendments thereto, before it became effective under the Securities Act and any
prospectus filed with the Commission by the Company pursuant to Rule 497(a) of
the Rules and Regulations; "Registration Statement" means such registration
statement, as amended at the Effective Time, including all information deemed
to be a part thereof as of the Effective Time pursuant to paragraph (b) of Rule
430A of the Rules and Regulations; and "Prospectus" means the form of
prospectus and statement of additional information relating to the Shares, as
first filed pursuant to Rule 497 of the Rules and Regulations ("Rule 497") and
any amendment or supplement thereto. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus.
(ii) The Registration Statement, the Election and the Form
8-A registration statement contain, and any post-effective amendment to the
Registration Statement filed with the Commission after the Effective Time and
the Prospectus will contain, all statements which are required by the
Securities Act, the 1940 Act, and the Exchange Act and the Rules and
Regulations; at the time of filing thereof, any Preliminary Prospectus did not,
and on the Effective Date, the Registration Statement did not, and
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any post-effective amendment to the Registration Statement filed with the
Commission after the Effective Time and the Prospectus 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; provided that the Company makes no representation or warranty as to
information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by you, specifically for inclusion therein, but, for
this purpose, tax-related information in the Registration Statement and the
Prospectus shall not be deemed to have been furnished by you. There is no
contract or document required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement which
is not described or filed as required.
(iii) Neither the Company nor any partnership that it
controls, nor any of the Company's subsidiaries (hereinafter, the Company, such
partnerships and subsidiaries are collectively referred to as the "Company"
unless inappropriate in the context) is in violation of its articles of
incorporation, bylaws or other governing documents or is in default under any
agreement, indenture or instrument.
(iv) This Agreement, the Investment Advisory Agreement (the
"Advisory Agreement") between the Company and Allied Capital Advisers, Inc.
("Allied Advisers"), the Custody Agreement between the Company and Xxxxx Bank
N.A. (the "Xxxxx Custody Agreement"), and the Custody Agreement between the
Company and the U.S. Small Business Administration (the "SBA Custody Agreement"
and the Xxxxx Custody Agreement and the SBA Custody Agreement being sometimes
referred to herein together as the "Custody Agreements") have each been duly
authorized, executed and delivered by the Company; and this Agreement, the
Advisory Agreement, the Xxxxx Custody Agreement and the SBA Custody Agreement
each constitutes the valid and binding obligation of the Company and is
enforceable against the Company in accordance with its terms (A) subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles, and (B) except for rights to indemnity under this Agreement
and the Advisory Agreement, to the extent
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that such rights may be limited by federal or state securities laws or the
public policy underlying such laws. No consent, approval, authorization or
order of any court or governmental agency or body or financial institution is
required for the execution, delivery and performance of this Agreement, the
Advisory Agreement, the Xxxxx Custody Agreement or the SBA Custody Agreement by
the Company or the consummation by the Company of the transactions contemplated
hereby or thereby, except such as have been obtained and such as may be
required under the Securities Act, the 1940 Act, the Exchange Act, the rules of
the National Association of Securities Dealers, Inc. (the "NASD") or applicable
state securities laws in connection with the purchase and distribution of the
Shares by the Underwriter. The execution, delivery and performance of this
Agreement, the Advisory Agreement, the Xxxxx Custody Agreement and the SBA
Custody Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby will not conflict with, result in
the creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company pursuant to the terms of, result in a breach
or violation by the Company of any of the terms or provisions of, or constitute
a default by the Company under, any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which the Company is a
party or by which it is bound or by which it or its property is subject that is
material to the Company, the articles of incorporation, bylaws or other
governing documents of the Company, any statute, rule, administrative
regulation, or any judgment, decree, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
property.
(v) Except as described in or contemplated by the
Registration Statement and the Prospectus, (A) there has not been any material
adverse change in, or adverse development which materially affects, the
condition (financial or other), results of operation, business or prospects of
the Company from the date as of which information is given in the Prospectus,
(B) there have been no transactions entered into by the Company that are
material to the Company other than those in the ordinary course of business and
(C) there has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
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(vi) Xxxxxxxx, Xxxxxx and Xxxxx, whose report appears in the
Prospectus, are independent certified public accountants as required by the
Securities Act and the Rules and Regulations. The financial statements and
schedules (including the related notes and supporting schedules) included in
the Registration Statement, any Preliminary Prospectus or the Prospectus
present fairly the financial condition, results of operations and changes in
financial condition of the Company at the dates and for the periods indicated
and have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated.
(vii) All of the outstanding shares of Common Stock,
including the Shares, have been duly authorized, validly issued, and
fully paid and are nonassessable, with no personal liability attaching to the
ownership thereof. None of the Shares when delivered will be subject to any
lien, claim, encumbrance, preemptive rights or any other claim of any third
party and the Shares will conform to the description thereof contained in the
Registration Statement and the Prospectus. Neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated
by this Agreement gives rise to any rights, other than those which have been
waived or satisfied, for or relating to the registration of any shares of
Common Stock or other securities of the Company.
(viii) The Company has been duly organized and is validly
existing and in good standing under the laws of the State of Maryland, is duly
qualified to do business and is in good standing as a foreign corporation (and,
with respect to any partnership controlled by the Company, as a foreign
partnership) in each jurisdiction in which the failure to be so qualified would
have a material adverse effect on the Company and has all power and authority
necessary to own or hold its properties and to conduct its business as
described in the Prospectus and to issue and sell the Shares as contemplated by
this Agreement.
(ix) Except as described in the Registration Statement and
the Prospectus, there is no litigation or governmental proceeding to which the
Company is a party or to which any property of the Company is subject or which
is pending or, to the knowledge of the Company, threatened against the Company
which might result in any material adverse change in the condition
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(financial or other), results of operations, business or prospects of the
Company or which is required to be disclosed in the Registration Statement and
Prospectus.
(x) The Company is not in violation of any law, ordinance,
governmental rule or regulation or court decree to which it may be subject
which violation could reasonably be expected to have a material adverse effect
on the condition (financial or other), results of operation, business or
prospects of the Company.
(xi) The Company has not taken and shall not take, directly
or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Stock to
facilitate the sale or resale of the Shares.
(xii) Any advertising and sales literature used by the
Company in connection with the public offering and sale of the Shares complies
with the Securities Act and the Rules and Regulations and does 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.
(xiii) There are no contracts or other documents that are
required to be filed as exhibits to the Registration Statement by the
Securities Act or by the Rules and Regulations that have not been so filed.
(xiv) The Company has filed, or will by the Closing Date
have filed, all tax returns and reports required to be filed by it by the
Closing Date, or have requested extensions with respect thereto, and such
returns are, or by the Closing Date will be, materially correct and complete.
The Company, to the best of its knowledge, has paid all taxes (which term
includes interest charges and penalties relating to taxes) which it is required
to pay by the Closing Date and adequate provision has been made in the
Company's financial statements for taxes that will be due from the Company but
for which payment is not due from the Company by the Closing Date.
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(b) Allied Advisers represents, warrants to and agrees with
the Underwriter that:
(i) Allied Advisers has been duly organized and is validly
existing and in good standing as a corporation under the laws of Maryland, with
full power and authority to own or lease its properties and conduct its
business as described in the Prospectus and is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
such qualification is required (except where the failure so to qualify would
not have a material adverse effect on the ability of Allied Advisers to conduct
its business with respect to the Company as described in the Prospectus), and
has all power and authority necessary to perform its management services with
respect to the Company as described in the Prospectus.
(ii) Allied Advisers is duly registered and in good standing
with the Commission under the Advisers Act as an investment adviser. Allied
Advisers is not prohibited by the Advisers Act, or the rules and regulations
under such Act, from acting for the Company under the Advisory Agreement as
contemplated by the Prospectus.
(iii) The description of Allied Advisers in the Prospectus
does 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 in light of the circumstances under which they were
made.
(iv) This Agreement and the Advisory Agreement have each been
duly authorized, executed and delivered by Allied Advisers and each constitutes
the valid and binding obligation of Allied Advisers and is enforceable against
Allied Advisers in accordance with its terms. No consent, approval,
authorization or order of any court or governmental agency or body or financial
institution is required for the execution, delivery and performance of this
Agreement or the Advisory Agreement by Allied Advisers or the consummation by
Allied Advisers of the transactions contemplated hereby or thereby, except such
as have been obtained and such as may be required under the Exchange Act, the
1940 Act and the Advisers Act. The execution, delivery and performance of this
Agreement and the Advisory Agreement by
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Allied Advisers and the consummation by Allied Advisers of the transactions
contemplated hereby and thereby will not conflict with, result in the creation
or imposition of any lien, charge, claim or encumbrance upon any property or
asset of Allied Advisers pursuant to the terms of, result in a breach or
violation by Allied Advisers of any of the terms or provisions of, or
constitute a default by Allied Advisers under, any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which Allied
Advisers is a party or to which it is bound or to which it or its property is
subject that is material to Allied Advisers, the corporate charter, bylaws or
other governing documents of Allied Advisers, any statute, rule, administrative
regulation, or any judgment, decree, order, rule or regulation of any court or
governmental agency or body having jurisdiction over Allied Advisers or any of
its property.
(v) Except as described in the Registration Statement and the
Prospectus, there is no litigation or governmental proceeding to which Allied
Advisers is a party or to which any property of Allied Advisers is subject or
which is pending or, to the knowledge of Allied Advisers, threatened against
Allied Advisers which might result in any material adverse change in the
condition (financial or other), results of operations, business or prospects of
Allied Advisers or which is required to be disclosed in the Registration
Statement and the Prospectus.
(vi) Except as described in or contemplated by the
Registration Statement or the Prospectus, (A) there has not been any material
adverse change in, or adverse development which materially affects, the
condition (financial or other), results of operation, business or prospects, of
Allied Advisers as of the date of the Prospectus from the information contained
in Allied Advisers's Form 10-K filed with the Commission on March 29, 1996, and
(B) there have been no transactions entered into by Allied Advisers that are
material to Allied Advisers other than those in the ordinary course of business
or that have been described in such Form 10-K or a Form 8-K filed subsequent to
March 29, 1996.
(vii) Any advertising and sales literature prepared by Allied
Advisers or submitted for review and approved by Allied Advisers and used by
the Company in connection with the public offering and sale of the Shares
complies with the Securities Act
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and the Rules and Regulations and does 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.
(c) Allied Capital makes the same representations and
warranties as the Company set forth under Section 1(a)(ii) above, but only
with respect to the material in the Prospectus under the heading "Allied
Capital Corporation," and Section 1(a)(xi) above. Allied Capital also makes
the same representations and warranties as the Company in Section l(a)(iv)
above with the phrase "Allied Capital" substituted in each case for the phrase
"the Company," but only with respect to this Agreement, and further represents,
warrants to and agrees with the Underwriter that:
(i) All of the outstanding shares of Common Stock owned
by Allied Capital have been duly authorized, validly issued, and fully
paid and are nonassessable, with no personal liability attaching to the
ownership thereof. None of the shares of Common Stock to be sold by Allied
Capital are, or when delivered will be, subject to any lien, claim,
encumbrance, preemptive rights or any other claim of any third party with
respect to such shares. Allied Capital has, and immediately prior to the
Closing Date will have, good and valid title to the Shares free and clear of
all liens, encumbrances, equities, or claims; upon delivery of such Shares and
payment therefor pursuant hereto, good and valid title to the Shares will pass
to the Underwriter. Neither the filing of the Registration Statement nor the
offering or sale of such shares as contemplated by this Agreement gives rise to
any rights, other than those which have been waived or satisfied, for or
relating to the registration of any shares of Common Stock or other securities
of the Company.
2. Purchase of the Shares by the Underwriter. Subject to the terms
and conditions and upon the basis of the representations and warranties herein
set forth, Allied Capital agrees to sell to the Underwriter, and the
Underwriter agrees to purchase 400,000 shares at a price of $___ per Share.
The Underwriter agrees to offer the Shares to the public as set forth in the
Prospectus.
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3. Delivery of and Payment for Shares. Delivery of certificates for
the Shares shall be made at the offices of Xxxxxx Brothers Inc. (or such other
places as may be mutually agreed upon), at 10:00 A.M., Eastern Standard time,
on the third full Business Day following the date of this Agreement or on such
later date as shall be determined by you and Allied Capital (the "Closing
Date").
Delivery of certificates for the Shares shall be made by or on behalf
of Allied Capital to you, for the account of the Underwriter, against payment
of the purchase price therefor by certified or official bank checks payable in
New York Clearing House funds to the order of and in the respective amounts
owing to Allied Capital or, if the day following the Closing Date is not a
Business Day, by Federal Funds (immediately available funds). The certificates
for the Shares shall be registered in such names and denominations as you shall
have requested at least two full Business Days prior to the Closing Date, and
shall be made available for checking and packaging in New York, New York or
such other location as may be designated by you at least one full Business Day
prior to the Closing Date. Time shall be of the essence, and delivery of
certificates for the Shares at the time and place specified in this Agreement
is a further condition to the obligations of the Underwriter.
4. Covenants. The Company covenants and agrees with the
Underwriter that:
(a) The Company shall comply with the provisions of and make
all requisite filings with the Commission pursuant to Rules 497 and 430A of the
Rules and Regulations and shall notify you promptly (in writing, if requested)
of all such filings. The Company shall notify you promptly of any request by
the Commission for any amendment of or supplement to the Registration Statement
or the Prospectus or for additional information; the Company shall prepare and
file with the Commission, promptly upon your request, any amendments or
supplements to the Registration Statement or the Prospectus which, in your
opinion, may be necessary or advisable in connection with the distribution of
the Shares; and the Company shall not file any amendment or supplement to the
Registration Statement or the Prospectus, which filing is not consented to by
you after reasonable notice thereof, such consent not to be unreasonably
withheld or delayed.
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The Company shall advise you promptly of the issuance by the Commission or any
State or other regulatory body of any stop order or other order suspending the
effectiveness of the Registration Statement, suspending or preventing the use
of any Preliminary Prospectus or the Prospectus or suspending the qualification
of the Shares for offering or sale in any jurisdiction, or of the institution
of any proceedings for any such purpose; and the Company shall use its best
efforts to prevent the issuance of any stop order or other such order and,
should a stop order or other such order be issued, to obtain as soon as
possible the lifting thereof.
(b) The Company shall furnish to the Underwriter and counsel
for the Underwriter a signed copy of the Registration Statement as originally
filed and each amendment thereto filed with the Commission, including all
consents and exhibits filed therewith, and shall furnish to the Underwriter
such number of conformed copies of the Registration Statement, as originally
filed and each amendment thereto (excluding exhibits other than this
Agreement), the Prospectus and all amendments and supplements to any of such
documents, in each case as soon as available and in such quantities as the
Underwriter may from time to time reasonably request.
(c) Within the time during which the Prospectus relating to
the Shares is required to be delivered under the Securities Act, the Company
shall comply with all requirements imposed upon it by the Securities Act, as
now and hereafter amended, and by the Rules and Regulations, as from time to
time in force, so far as is necessary to permit the continuance of sales of or
dealings in the Shares as contemplated by the provisions hereof and by the
Prospectus. 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 the Registration
Statement or supplement the Prospectus to comply with the Securities Act, the
Company shall promptly notify you and shall amend the Registration Statement or
supplement the Prospectus (at the expense of the Company) so as to correct such
statement or omission or to effect such compliance.
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(d) The Company shall take or cause to be taken all necessary
action and furnish to whomever you may direct such information as may be
required in qualifying the Shares for sale under the laws of such jurisdictions
as you shall designate, and to continue such qualifications in effect for as
long as may be necessary for the distribution of the Shares; except that in no
event shall the Company be obligated in connection therewith to qualify as a
foreign corporation or to execute a general consent to service of process.
(e) The Company shall make generally available to its
security holders (and shall deliver to the Underwriter), pursuant to Rule
158(a) or (b) under the Securities Act, as soon as practicable but in any event
not later than 45 days after the end of its fiscal quarter in which the first
anniversary date of the Effective Date occurs, an earnings statement satisfying
the requirements of Section 11(a) of the Securities Act and covering a period
of at least 12 consecutive months beginning after the Effective Date.
(f) The Company and Allied Capital shall not, during the 120
days following the Effective Date, except with your prior written consent,
offer for sale, sell or otherwise dispose of any shares of Common Stock, or
sell or grant options, rights or warrants with respect to any shares of Common
Stock (other than the grant of options pursuant to option plans existing on the
date hereof), otherwise than in accordance with this Agreement or as
contemplated in the Prospectus. The Company shall not take, directly or
indirectly, any action designed to cause or result in, or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of the shares of Common Stock to facilitate the sale or resale of the
Shares.
(g) The Company shall take such steps as shall be necessary
to ensure that the Company shall continue to qualify as a "business development
company" within the meaning of such term under the 1940 Act, and the rules and
regulations thereunder.
(h) Whether or not this Agreement becomes effective or is
terminated or the sale of the Shares to the Underwriter is consummated, Allied
Capital shall pay or cause to be paid (i) all expenses (including stock
transfer taxes) incurred in connection with the delivery to the Underwriter of
the Shares, (ii) all fees
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and expenses (including, without limitation, fees and expenses of the Company's
accountants and counsel, but excluding fees and expenses of counsel for the
Underwriter) in connection with the preparation, printing, filing, delivery and
shipping of the Registration Statement (including the financial statements
therein and all amendments and exhibits thereto), each Preliminary Prospectus,
the Prospectus and any amendments or supplements to the foregoing, and any
advertising or sales literature (other than the sales materials prepared by the
Underwriter for internal use only), and the printing, delivery and shipping of
this Agreement and Blue Sky Memoranda, (iii) all filing fees and fees and
disbursements of counsel to the Underwriter incurred in connection with the
qualification of the Shares under state securities laws as provided in section
4(d) hereof, (iv) the filing fee of the NASD, (v) the costs of quotation of the
Shares in the Nasdaq National Market, (vi) the cost of printing certificates
representing the Shares, (vii) the cost and charges of any transfer agent or
registrar, and (viii) all other costs and expenses incident to the performance
of its obligations hereunder for which provision is not otherwise made in this
Section. It is understood, however, that, except as provided in this Section
and Sections 6 and 8 hereof, the Underwriter shall pay all of its own costs and
expenses, including the fees of its counsel, stock transfer taxes due upon
resale of any of the Shares by it and any advertising expenses incurred in
connection with any offers it may make. If the sale of the Shares provided for
herein is not consummated pursuant to Section 8 hereof by reason of acts of
Allied Capital which prevent this Agreement from becoming effective, or by
reason of any failure, refusal or inability on the part of Allied Capital to
perform any agreement on its part to be performed or because any other
condition of the Underwriter's obligations hereunder is not fulfilled or if the
Underwriter shall decline to purchase the Shares for any reason permitted under
this Agreement, Allied Capital shall reimburse the Underwriter for all
reasonable out-of-pocket disbursements (including fees and disbursements of
counsel) incurred by the Underwriter in connection with any investigation or
preparation made by it in respect of the marketing of the Shares or in
contemplation of the performance by it of its obligations hereunder.
(i) The Company shall continue to take such action as shall
be necessary to cause the Shares to continue to be quoted
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in the Nasdaq National Market and to comply with the rules and regulations of
the NASD with respect to such Shares.
(j) During a period of five years from the Effective Date,
the Company shall furnish to the Underwriter copies of all reports or other
communications furnished to shareholders and copies of any reports or financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed.
5. Conditions of Underwriter's Obligations. The obligations of the
Underwriter hereunder are subject to the accuracy, as of the date hereof and
the Closing Date (as if made on such Closing Date), of the representations and
warranties of the Company, Allied Capital, and Allied Advisers contained
herein, to the performance by the Company, Allied Capital, and Allied Advisers
of their obligations hereunder and to the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
in a timely fashion in accordance with Section 4(a) hereof, all post-effective
amendments to the Registration Statement shall have become effective, all
filings required by Rule 497 of the Rules and Regulations have been made and no
such filings have been made without the consent of the Underwriter, such
consent not to be reasonably withheld or delayed; no stop order suspending the
effectiveness of the Registration Statement or any amendment or supplement
thereto shall have been issued; no proceedings for the issuance of any such
order shall have been initiated or threatened; and any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been disclosed to you and
complied with to your satisfaction.
(b) The Underwriter shall not have been advised by the
Company or shall have discovered and disclosed to the Company that the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, contains an untrue statement of fact which, in your opinion or in the
opinion of counsel for the Underwriter, is material, or omits to state a fact
which, in your written opinion or in the opinion of counsel for the
Underwriter, is material and is required to be stated therein or is necessary
to make any statement therein not misleading.
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(c) On the Closing Date, there shall have been furnished
to you the opinion (addressed to the Underwriter) of Xxxxxxxxxx, Xxxxxx &
Xxxxxxx, L.L.P., counsel for the Company, dated as of the Closing Date and in
form and substance satisfactory to counsel for the Underwriter, to the effect
that:
(i) The Company has been duly organized and is
validly existing as a corporation (or in the
case of a partnership controlled by the
Company, as a partnership) in good standing
under the laws of the State of Maryland, with
full power and authority to own or hold its
properties and conduct its business as
described in the Prospectus.
(ii) To the best of such counsel's knowledge, the
Company is not in violation of its articles
of incorporation, bylaws or other governing
documents, or in material default under any
agreement, indenture or instrument known to
such counsel.
(iii) All of the outstanding shares of Common
Stock, including the Shares, have been duly
authorized, validly issued, and fully paid and
are nonassessable, with no personal liability
attaching to the ownership thereof; there are
no preemptive or other rights to subscribe
for or to purchase, nor (except as disclosed
in the Registration Statement and the
Prospectus) any restriction upon the voting
or transfer of, any shares of Common Stock
pursuant to the Company's articles of
incorporation, bylaws, other governing
documents (in the case of a partnership
controlled by the Company) or any agreement
or other instrument known to such counsel to
which the Company is a party or by which it
may be bound; and, to the best of such
counsel's knowledge, neither the filing of
the Registration Statement nor the offering
or sale of the Shares as contemplated by this
Agreement gives rise to any rights, other
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than those which have been waived or
satisfied, for or relating to the
registration of any shares of Common Stock or
other securities of the Company. The
authorized, issued and outstanding
capitalization of the Company as of March 31,
1996 is as set forth in the Prospectus, and
the Common Stock conforms to the description
thereof contained in the Prospectus.
(iv) This Agreement, the Advisory Agreement, and
the Custody Agreements have each been duly
authorized, executed and delivered by the
Company; and this Agreement (assuming its due
execution and delivery by you), the Advisory
Agreement and the Custody Agreements each
constitutes the valid and binding obligation
of the Company and is enforceable against the
Company in accordance with its terms (A)
subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of
general applicability relating to or
affecting creditors' rights and to general
equity principles, and (B) except for rights
to indemnity under this Agreement and the
Advisory Agreement, to the extent that such
rights may be limited by federal or state
securities laws or the public policy
underlying such laws. No consent, approval,
authorization or order of any court,
governmental agency or body is required by
applicable law or regulation or, to the best
of such counsel's knowledge, is otherwise
required, and to the best of such counsel's
knowledge, no consent, approval or
authorization of any financial institution is
required, for the execution, delivery and
performance of this Agreement, the Advisory
Agreement or the Custody Agreements by the
Company or the consummation by the Company of
the transactions contemplated hereby or
thereby, except such as have been obtained
and such as may be required under applicable
- 16 -
17
state securities laws in connection with the
purchase and distribution of the Shares by
the Underwriter. The execution, delivery and
performance of this Agreement, the Advisory
Agreement and the Custody Agreements by the
Company and the consummation by the Company
of the transactions contemplated hereby and
thereby will not conflict with, result in the
creation or imposition of any lien, charge,
claim or encumbrance upon any property or
asset of the Company pursuant to the terms
of, result in a breach or violation by the
Company of any of the terms or provisions of,
or constitute a default by the Company under,
any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or
instrument filed by the Company with the
Commission or known to such counsel to which
the Company is a party or to which it is
bound or to which it or its property is
subject, the articles of incorporation,
bylaws or other governing documents of the
Company, any statute, rule, administrative
regulation, or, insofar as such counsel
knows, any judgment, decree, order, rule or
regulation of any court or governmental
agency or body having jurisdiction over the
Company or any of its property.
(v) The Registration Statement and the Prospectus
(except that no opinion need be expressed as
to the financial statements or other
financial or performance data contained
therein, including, without limitation, the
form or content of the "Fees and Expenses"
table in the Prospectus) comply as to form in
all material respects with the requirements
of the Securities Act and the Rules and
Regulations. The Registration Statement and
all post-effective amendments thereto have
become effective under the Securities Act
and, to the best of such counsel's knowledge,
no stop order suspending the effectiveness of
- 17 -
18
the Registration Statement has been issued
and no proceedings for that purpose have been
instituted or are pending before or
contemplated by the Commission and all
filings required by Rule 497 of the Rules and
Regulations have been made.
(vi) All summaries in the Prospectus of statutes,
regulations, legal or governmental
proceedings, contracts and other documents
accurately present the information required
to be shown in order to make the statements
made therein not misleading; and such counsel
does not know of any contracts or documents
required to be summarized or described
therein or to be filed as exhibits thereto
which are not so summarized, described or
filed, nor does such counsel know of any
pending or threatened litigation or any
governmental proceeding, statute or
regulation which would affect the subject
matter of this Agreement or is required to be
described in the Prospectus which is not so
described.
(vii) The information in the Prospectus under the
caption "Tax Status," has been reviewed by
such counsel, is correct in all material
respects and does not omit to state any
material matter of law relating to the
taxation of the Company and its shareholders
(in their capacity as such), and if the
Company is operated in accordance with the
statements made in the Prospectus, the
Company will qualify as a regulated
investment company, under Subchapter M of the
Internal Revenue Code of 1986, as amended.
(viii) The Company is a small business lending
company approved by the Small Business
Administration.
- 18 -
19
(ix) The Company meets all requirements to qualify
as a "business development company" as that
term is defined in the 1940 Act.
(x) The Shares are duly authorized for quotation
in the Nasdaq National Market and a
registration statement has been filed
pursuant to Section 12 of the Exchange Act
for such Shares and has been declared
effective.
Such opinion shall also contain a statement that nothing came to the
attention of such counsel which leads such counsel to believe that (i) the
Registration Statement, as of its Effective Date, or any amendment thereto, at
the time it became effective, contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or (ii) the
Prospectus or any supplement or amendment thereto on such Closing Date or at
the time such Prospectus or supplement or amendment thereto was issued contains
or contained any untrue statement of a material fact or omits or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(d) On the Closing Date, there shall have been furnished to
you the opinion (addressed to the Underwriter) of Xxxxxxxxxx, Xxxxxx & Xxxxxxx,
L.L.P., counsel for Allied Advisers, dated as of the Closing Date and in form
and substance satisfactory to counsel for the Underwriter, to the effect that:
(i) Allied Advisers has been duly incorporated
and is validly existing as a corporation in
good standing under the laws of the State of
Maryland, with full power and authority to
own, lease and operate its properties and
conduct its business, and is duly qualified
to do business and is in good standing in the
District of Columbia.
- 19 -
20
(ii) This Agreement and the Advisory Agreement
have been duly authorized, executed and
delivered by Allied Advisers and each
complies with all applicable provisions of
the Advisers Act; this Agreement (assuming
its due execution and delivery by you), and
the Advisory Agreement each constitutes the
valid and binding obligation of Allied
Advisers and is enforceable against Allied
Advisers in accordance with its terms (A)
subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of
general applicability relating to or
affecting creditors' rights and to general
equity principles, and (B) except for rights
to indemnity under this Agreement and the
Advisory Agreement, to the extent that such
rights may be limited by federal or state
securities laws or the public policy
underlying such laws; to the best of such
counsel's knowledge, the execution, delivery
and performance of this Agreement and the
Advisory Agreement by Allied Advisers will
not conflict with, or result in the creation
or imposition of any lien, charge or
encumbrance upon any property or asset of
Allied Advisers pursuant to the terms of,
result in a breach or violation by Allied
Advisers of any of the terms or provisions
of, or constitute a default by Allied
Advisers under, any agreement, indenture or
instrument filed by the Company or Allied
Advisers with the Commission or known to such
counsel, to which Allied Advisers is a party
or to which it is bound or to which it or its
property is subject, or result in a violation
of the corporate charter, bylaws or other
governing documents of Allied Advisers or any
statute, rule, administrative regulation, or,
insofar as such counsel knows, any judgment,
decree, order, rule or regulation of any
court or governmental agency or body having
jurisdiction over Allied Advisers or any of
- 20 -
21
its property; and no consent, approval,
authorization or order of, or filing or
registration with, any court, governmental
agency or body is required by applicable law
or regulation, or to the best of such
counsel's knowledge, is otherwise required,
and to the best of such counsel's knowledge,
no consent, or approval or authorization of
any financial institution is required, for
the execution, delivery and performance of
this Agreement or the Advisory Agreement by
Allied Advisers, except such as has been
obtained and such as may be required under
applicable state securities laws.
(iii) Allied Advisers is duly registered with the
Commission under the Advisers Act as an
investment adviser and is not prohibited by
the Advisers Act, or the rules and
regulations under such act, from acting for
the Company under the Advisory Agreement as
contemplated by the Prospectus.
(iv) Such counsel does not know of any litigation
or any proceeding pending or threatened
against Allied Advisers that could affect the
subject matter of this Agreement or the
Advisory Agreement or the registration or
good standing of Allied Advisers with the
Commission, which is required to be disclosed
in the Prospectus which is not disclosed and
correctly summarized therein.
(v) To the best of such counsel's knowledge,
Allied Advisers is not in violation of its
corporate charter or bylaws, or in material
default under any agreement, indenture or
instrument.
Such opinion shall also contain a statement that nothing came to
the attention of such counsel which leads such counsel to believe that the
description of Allied Advisers in the
- 21 -
22
Registration Statement and the Prospectus contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(e) On the Closing Date, there shall have been furnished
to you the opinion (addressed to the Underwriter) of Xxxxxxxxxx, Xxxxxx &
Xxxxxxx, L.L.P., counsel for Allied Capital, dated as of the Closing Date and
in form and substance satisfactory to counsel for the Underwriter, to the
effect that:
(i) All of the outstanding shares of Common Stock
of the Company owned by Allied Capital to be
sold to the Underwriter have been duly
authorized, validly issued, and fully paid and
are nonassessable, with no personal liability
attaching to the ownership thereof; the
Shares are not, and when they are delivered
will not be, subject to any lien, claim,
encumbrance or preemptive or other rights to
subscribe for or to purchase, nor (except as
disclosed in the Registration Statement and
the Prospectus) any restriction upon the
voting or transfer of, such shares pursuant
to the Company's articles of incorporation,
bylaws, other governing documents or any
agreement or other instrument known to such
counsel to which the Company or Allied
Capital is a party or by which either may be
bound; and, to the best of such counsel's
knowledge, the filing of the Registration
Statement does not give rise to any rights,
other than those which have been waived or
satisfied, for or relating to the
registration of any shares of Common Stock or
other securities of the Company.
(ii) This Agreement has been duly authorized,
executed and delivered by Allied Capital; and
this Agreement (assuming its due execution
and delivery by you) constitutes the valid
and binding obligation of Allied Capital and
is enforceable against Allied Capital in
- 22 -
23
accordance with its terms (A) subject, as to
enforcement, to bankruptcy, insolvency,
reorganization and other laws of general
applicability relating to or affecting
creditors' rights and to general equity
principles, and (B) except, with respect to
this Agreement, as to rights to indemnity, to
the extent that such rights may be limited by
federal or state securities laws or the
public policy underlying such laws. No
consent, approval, authorization or order of
any court, governmental agency or body is
required by applicable law or regulation or,
to the best of such counsel's knowledge, is
otherwise required, and to the best of such
counsel's knowledge, no consent, approval or
authorization of any financial institution is
required, for the execution, delivery and
performance of this Agreement by Allied
Capital or the consummation by Allied Capital
of the transactions contemplated hereby
except, with respect to this Agreement, such
as have been obtained and such as may be
required under applicable state securities
laws in connection with the purchase and
distribution of the Shares by the
Underwriter. The execution, delivery and
performance of this Agreement and the
consummation by Allied Capital of the
transactions contemplated hereby will not
conflict with, result in the creation or
imposition of any lien, charge, claim or
encumbrance upon any property or asset of
Allied Capital pursuant to the terms of,
result in a breach or violation by Allied
Capital of any of the terms or provisions of,
or constitute a default by Allied Capital
under, any indenture, mortgage, deed of
trust, loan agreement, lease or other
agreement or instrument filed by Allied
Capital with the Commission or known to such
counsel to which Allied Capital is a party or
to which it is bound or to which it or its
- 23 -
24
property is subject, the articles of
incorporation, bylaws or other governing
documents of Allied Capital, any statute,
rule, administrative regulation, or, insofar
as such counsel knows, any judgment, decree,
order, rule or regulation of any court or
governmental agency or body having
jurisdiction over Allied Capital or any of
its property.
(iii) The Registration Statement and the Prospectus
(except that no opinion need be expressed as
to the financial statements or other
financial or performance data contained
therein, including, without limitation, the
form and content of the "Fee and Expenses"
table in the Prospectus) comply as to form in
all material respects with the requirements
of the Securities Act and the Rules and
Regulations. The Registration Statement and
all post-effective amendments thereto have
become effective under the Securities Act
and, to the best of such counsel's knowledge,
no stop order suspending the effectiveness of
the Registration Statement has been issued
and no proceedings for that purpose have been
instituted or are pending before or
contemplated by the Commission and all
filings required by Rule 497 of the Rules and
Regulations have been made.
(iv) To the best of such counsel's knowledge,
Allied Capital is not in violation of its
articles of incorporation or bylaws, or in
material default under any agreement,
indenture or instrument.
(v) Upon payment for and delivery of the Shares
in accordance with the terms hereof, the
Underwriter will acquire all of the rights of
Allied Capital in the Shares and will also
acquire the interest of Allied Capital in the
- 24 -
25
Shares free of any adverse claim (within the
meaning of the Uniform Commercial Code).
Such opinion shall also contain a statement that nothing came to the
attention of such counsel which leads such counsel to believe that (i) the
Registration Statement, as of its Effective Date, or any amendment thereto, at
the time it became effective, contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or (ii) the
Prospectus or any supplement or amendment thereto on such Closing Date or at
the time such Prospectus or supplement or amendment thereto was issued contains
or contained any untrue statement of a material fact or omits or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(f) There shall have been furnished to you a certificate,
dated the Closing Date and addressed to you, signed by the Chairman of the
Board or the President and by the Chief Financial Officer of the Company to the
effect that: (i) the representations and warranties of the Company contained in
this Agreement are true and correct, as if made at and as of the Closing Date,
and the Company has complied with all the agreements and satisfied all the
conditions on its part to be complied with or satisfied at or prior to the
Closing Date; (ii) to the knowledge of such officers based upon due inquiry of
appropriate personnel of the Commission, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no proceeding
for that purpose has been initiated or threatened; (iii) the signers of said
certificate have carefully examined the Registration Statement and the
Prospectus, and any amendments or supplements thereto, and such documents (a)
contain all statements and information required to be included therein, and (b)
do not include 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 (iv) since the Effective Date there has occurred no
event required to be set forth in an amendment or supplement to the
Registration Statement or the Prospectus which has not been so set forth.
- 25 -
26
(g) There shall have been furnished to you a certificate,
dated the Closing Date and addressed to you, signed by the Chairman of the
Board or the President of Allied Advisers to the effect that: (i) the
representations and warranties of Allied Advisers contained in this Agreement
are true and correct, as if made at and as of the Closing Date, and Allied
Advisers has complied with all the agreements and satisfied all the conditions
on its part to be complied with or satisfied at or prior to the Closing Date;
(ii) the signer of said certificate has carefully examined the Registration
Statement and the Prospectus, and any amendments or supplements thereto, and
such documents (a) contain all statements and information required to be
included therein concerning Allied Advisers, and (b) do not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein concerning Allied Advisers or necessary to make such statements
not misleading; and (iii) since the Effective Date there has occurred no event
concerning Allied Advisers required to be set forth in an amendment or
supplement to the Registration Statement or the Prospectus which has not been
so set forth.
(h) There shall have been furnished to you a certificate,
dated the Closing Date and addressed to you, signed by the Chairman of the
Board or the President and by the Chief Financial Officer of Allied Capital to
the effect that: (i) the representations and warranties of Allied Capital
contained in this Agreement are true and correct, as if made at and as of the
Closing Date, and Allied Capital has complied with all the agreements and
satisfied all the conditions on its part to be complied with or satisfied at or
prior to the Closing Date; (ii) the signers of said certificate have carefully
examined the Registration Statement and the Prospectus, and any amendments or
supplements thereto, and such documents (a) contain all statements and
information required to be included therein concerning Allied Capital, and (b)
do not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein concerning Allied Capital or
necessary to make such statements not misleading; and (iii) since the Effective
Date there has occurred no event concerning Allied Capital required to be set
forth in an amendment or supplement to the Registration Statement or the
Prospectus which has not been so set forth.
- 26 -
27
(i) Since the Effective Date, the Company shall not have
become a party to or the subject of any litigation which is materially adverse
to the Company, nor shall there have been a material adverse change in the
general affairs, operations, business, prospects, key personnel,
capitalization, financial condition or net worth of the Company, whether or not
arising in the ordinary course of business, which loss, litigation or change,
in your judgment, shall render it impractical or inadvisable to proceed with
the payment for and delivery of the Shares.
(j) On the Closing Date, you shall have received a letter of
Xxxxxxxx, Xxxxxx and Xxxxx, dated the Closing Date and addressed to you,
confirming that they are independent certified public accountants within the
meaning of the Securities Act and the Rules and Regulations and stating, as of
the date of such letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five days
prior to the date of such letter), the conclusions and findings of such firm
with respect to the financial information and other matters covered by its
letter delivered to you concurrently with the execution of this Agreement and
confirming the conclusions and findings set forth in such prior letter.
(k) You shall have been furnished such additional documents
and certificates as you or counsel for the Underwriter may reasonably request.
(l) The Shares to be purchased on the Closing Date by the
Underwriter shall have been approved for quotation in the Nasdaq National
Market, and Shares of the same class of the Company's common stock are so
quoted.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and to counsel for the Underwriter. The Company shall furnish
to you conformed copies of such opinions, certificates, letters and other
documents in such number as you shall reasonably request. If any of the
conditions specified in this Section 5 shall not have been fulfilled when and
as required by this Agreement, the Agreement
- 27 -
28
and all obligations of the Underwriter hereunder may be cancelled by you at, or
at any time prior to, the Closing Date. Any such cancellation shall be without
liability of the Underwriter to the Company, Allied Capital, or Allied
Advisers. Notice of such cancellation shall be given to the Company in
writing, or by telegraph or telephone and confirmed in writing.
6. Indemnification and Contribution. (a) The Company shall indemnify
and hold harmless the Underwriter against any loss, claim, damage or liability
(or any action in respect thereof), joint or several, to which the Underwriter
may become subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage or liability (or action in respect thereof) arises out of
or is based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or the Registration Statement as amended or
supplemented or in any Blue Sky application or other document executed by the
Company specifically for that purpose or based upon written information
furnished by the Company filed in any state or other jurisdiction in order to
qualify any or all of the Shares under the securities laws thereof (any such
application, document or information being hereinafter referred to as a "Blue
Sky Application"), (ii) the omission or alleged omission to state in the
Registration Statement, any Preliminary Prospectus, the Prospectus or the
Registration Statement as amended or supplemented or in any Blue Sky
Application a material fact required to be stated therein or necessary to make
the statements therein not misleading; or (iii) a breach of a representation
warranty, or covenant made by the Company herein; and shall reimburse the
Underwriter promptly after receipt of invoices from the Underwriter for any
legal or other expenses as may reasonably be incurred by the Underwriter in
connection with investigating, preparing to defend or defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action, notwithstanding the possibility that payments for
such expenses might later be held to be improper, in which case such payments
shall be promptly refunded; provided, however, that the Company shall not be
liable under this paragraph 6(a) in any such case to the extent, but only to
the extent, that any such loss, claim, damage, liability or action arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with
- 28 -
29
written information, other than tax-related information, furnished to the
Company by or on behalf of the Underwriter specifically for use in the
preparation of the Registration Statement, any Preliminary Prospectus, the
Prospectus or the Registration Statement as amended or supplemented, or any
Blue Sky Application.
(b) Allied Advisers shall indemnify and hold harmless the
Underwriter against any loss, claim, damage or liability (or any action in
respect thereof), joint or several, to which the Underwriter may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage or liability (or action in respect thereof) arises out of or is based
upon (i) any untrue statement or alleged untrue statement of a material fact
with respect to itself contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or the Registration Statement as amended or
supplemented or in any document executed by Allied Advisers specifically for
that purpose or based upon written information furnished by Allied Advisers,
(ii) the omission or alleged omission to state in the Registration Statement,
any Preliminary Prospectus, the Prospectus or the Registration Statement as
amended or supplemented a material fact with respect to itself required to be
stated therein or necessary to make the statements therein not misleading, or
(iii) any breach by Allied Advisers of any representation, warranty or covenant
made herein by it; and shall reimburse the Underwriter promptly after receipt
of invoices from the Underwriter for any legal or other expenses as may
reasonably be incurred by the Underwriter in connection with investigating,
preparing to defend or defending against or appearing as a third-party witness
in connection with any such loss, claim, damage, liability or action,
notwithstanding the possibility that payments for such expenses might later be
held to be improper, in which case such payments shall be promptly refunded;
provided, however, that Allied Advisers shall not be liable under this
paragraph 6(b) in any such case to the extent, but only to the extent, that any
such loss, claim, damage, liability or action arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
Allied Advisers by or on behalf of the Underwriter specifically for use in the
preparation of the Registration Statement, any Preliminary Prospectus, the
Prospectus or the Registration Statement as
- 29 -
30
amended or supplemented, and provided further that Allied Advisers shall be
liable to such indemnified party in any such case only to the extent that the
Company or Allied Capital fails to indemnify and hold harmless such indemnified
party pursuant to paragraph 6(a).
(c) Allied Capital shall indemnify and hold harmless the
Underwriter against any loss, claim, damage or liability (or any action in
respect thereof), joint or several, to which the Underwriter may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage or liability (or action in respect thereof) arises out of or is based
upon (i) any untrue statement or alleged untrue statement of a material fact
with respect to itself contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or the Registration Statement as amended or
supplemented or in any Blue Sky application or other document executed by
Allied Capital specifically for that purpose or based upon written information
furnished by Allied Capital filed in any state or other jurisdiction in order
to qualify any or all of the Shares under the securities laws thereof (any such
application, document or information being hereinafter referred to as a "Blue
Sky Application"), (ii) the omission or alleged omission to state in the
Registration Statement, any Preliminary Prospectus, the Prospectus or the
Registration Statement as amended or supplemented or in any Blue Sky
Application a material fact with respect to itself required to be stated
therein or necessary to make the statements therein not misleading, (iii) or
any breach of any representation, warranty, or covenant made by Allied Capital
herein; and shall reimburse the Underwriter promptly after receipt of invoices
from the Underwriter for any legal or other expenses as may reasonably be
incurred by the Underwriter in connection with investigating, preparing to
defend or defending against or appearing as a third-party witness in connection
with any such loss, claim, damage, liability or action, notwithstanding the
possibility that payments for such expenses might later be held to be improper,
in which cases such payments shall be promptly refunded; provided, however,
that Allied Capital shall not be liable under this paragraph 6(a) in any such
case to the extent, but only to the extent, that any such loss, claim, damage,
liability or action arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in
- 30 -
31
conformity with written information furnished to Allied Capital by or on behalf
of the Underwriter specifically for use in the preparation of the Registration
Statement, any Preliminary Prospectus, the Prospectus or the Registration
Statement as amended or supplemented, or any Blue Sky Application.
(d) The Underwriter shall indemnify and hold harmless the
Company and Allied Advisers against any loss, claim, damage or liability (or
any action in respect thereof) to which the Company may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage or
liability (or action in respect thereof) arises out of or is based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus or the
Registration Statement as amended or supplemented, or in any Blue Sky
Application, or (ii) the omission or alleged omission to state in the
Registration Statement, any Preliminary Prospectus, the Prospectus or the
Registration Statement as amended or supplemented, or in any Blue Sky
Application a material fact required to be stated therein or necessary to make
the statements therein not misleading and shall reimburse the Company or Allied
Advisers promptly after receipt of invoices from the Company or Allied Advisers
for any legal or other expenses reasonably incurred by the Company or Allied
Advisers in connection with investigating, preparing to defend or defending
against or appearing as a third-party witness in connection with any such loss,
claim, damage, liability or action notwithstanding the possibility that
payments for such expenses might later be held to be improper, in which case
such payments shall be promptly refunded; provided, however, that such
indemnification or reimbursement shall be available in each such case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company or Allied Advisers
by or on behalf of the Underwriter specifically for use in the preparation
thereof.
(e) Promptly after receipt by any indemnified party under
subsections (a), (b), (c), or (d) above of notice of any claim or the
commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such subsection,
notify the indemnifying
- 31 -
32
party in writing of the claim or the commencement of that action; provided,
however, that the failure so to notify the indemnifying party shall not relieve
it from any liability which it may have under this Section 6 except to the
extent that it has been prejudiced in any material respect by such failure or
from any liability which it may have to an indemnified party otherwise than
under this Section 6. If any such claim or action shall be brought against any
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party,
to assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under such
subsection for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; except that the Underwriter shall have the right to
employ counsel to represent it if it is subject to liability arising out of any
claim in respect of which indemnity may be sought by the Underwriter against
the Company or Allied Advisers under such subsection if, in your reasonable
judgement, it is advisable for you to be represented by separate counsel, and
in that event the fees and expenses of such separate counsel shall be paid by
the Company or Allied Advisers.
(f) If the indemnification provided for in this Section 6 is
unavailable in whole or in part to hold harmless an indemnified party under
subsections (a), (b), (c), or (d) above, then each indemnifying party shall, in
lieu of indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsections (a), (b), (c), or (d) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, Allied Capital, and Allied Advisers on the one hand and the
Underwriter on the other from the offering of the Shares, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company,
Allied Capital, and Allied
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33
Advisers on the one hand and the Underwriter on the other in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company,
Allied Capital, and Allied Advisers on the one hand and the Underwriter on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Shares (before deducting expenses) received by Allied
Capital bear to the total underwriting discounts and commissions received by
the Underwriter, in each case as set forth in the supplement dated December 20,
1996, to the Prospectus. Relative fault 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, Allied Capital, or Allied
Advisers or the Underwriter and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such untrue statement or
omission. The Company, Allied Capital, and Allied Advisers and the Underwriter
agree that it would not be just and equitable if contributions pursuant to this
subsection (f) were to be determined by pro rata allocation or by any other
method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this subsection (f). The
amount paid by an indemnified party as a result of the losses or claims,
damages or liabilities (or actions in respect thereof) referred to in the first
sentence of this subsection (f) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigation, preparing to defend or defending against any action or claim
which is the subject of this subsection (f). Notwithstanding the provisions of
this subsection (f), the Underwriter shall not be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which the 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 Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. Each party entitled to contribution agrees that, upon the
service of a
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34
summons or other initial legal process upon it in any action instituted against
it for which contribution may be sought, it shall promptly give written notice
of such service to the party or parties from whom contribution may be sought.
However, the omission so to notify such party or parties of any such service
shall not relieve such party or parties from any obligation it or they may have
hereunder or otherwise (except as specifically provided in this subsection
(f)).
(g) The obligations of the Company, Allied Capital, and
Allied Advisers under this Section 6 shall be in addition to any liability
which the Company, Allied Capital, and Allied Advisers may otherwise have, and
shall extend, upon the same terms and conditions, to each person, if any, who
controls the Underwriter within the meaning of the Securities Act; and the
obligations of the Underwriter under this Section 6 shall be in addition to any
liability that the Underwriter may otherwise have, and shall extend, upon the
same terms and conditions, to each director of the Company, Allied Capital, and
Allied Advisers (including any person who, with his or her consent, is named in
the Registration Statement as about to become a director of the Company), to
each Officer of the Company who has signed the Registration Statement, to each
of the officers of Allied Capital and Allied Advisers and to each person, if
any, who controls the Company, Allied Capital, or Allied Advisers within the
meaning of the Securities Act.
7. Effective Date and Termination. (a) This Agreement shall
become effective at 11:00 A.M., Eastern Standard time, on the first full
Business Day following the date hereof or at such earlier time after the
Registration Statement becomes effective as you shall first release the Shares
for sale to the public. You shall notify the Company immediately after you
have taken any action which causes this Agreement to become effective. Until
this Agreement is effective, it may be terminated by the Company by giving
notice as hereinafter provided to you, or by you by giving notice as
hereinafter provided to the Company, except that the provisions of Section 4(h)
and Section 6 shall at all times be effective. For purposes of this Agreement,
the release of the Shares for sale to the public shall be deemed to have been
made when you release, by telegram or otherwise, firm offers of the Shares or
release for publication a newspaper advertisement relating to the Shares,
whichever occurs first.
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35
(b) Until the Closing Date, this Agreement may be terminated
by you by giving notice as hereinafter provided to the Company if (i) the
Company shall have failed, refused or been unable, at or prior to the Closing
Date, to perform any agreement on its part to be performed hereunder, (ii) any
other condition of the Underwriter's obligation hereunder is not fulfilled,
(iii) trading in securities generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market shall have been suspended
or minimum prices shall have been established on either of such exchanges or
such system by the Commission or such exchange or other regulatory body or
governmental authority having jurisdiction, (iv) a banking moratorium is
declared by either Federal or New York State authorities, (v) the United States
becomes engaged in hostilities or there is an escalation of hostilities
involving the United States or there is a declaration of a national emergency
or war by the United States, or (vi) there shall have taken place such a
material adverse change in general economic, political or financial conditions,
or the effect of international conditions on the financial markets in the
United States shall be such, as to make it inadvisable or impracticable, in the
judgment of a majority in interest of the Underwriter, to proceed with the
delivery of the Shares. Any termination of this Agreement pursuant to this
Section 8 shall be without liability on the part of the Company or the
Underwriter, except as otherwise provided in Sections 4(h) and 6 hereof.
Any notice referred to above may be given at the address
specified in Section 9 hereof in writing or by facsimile, telegraph or
telephone, and if by facsimile, telegraph or telephone, shall be immediately
confirmed in writing.
8. Survival of Certain Provisions. The agreements contained in
Section 6 hereof and the representations, warranties and agreements of the
Company, Allied Capital, and Allied Advisers contained in Sections 1 and 4
hereof shall survive the delivery of the Shares to the Underwriter hereunder
and shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigations made by or on behalf of
any indemnified party.
9. Notices. Except as otherwise provided in the Agreement, (a)
whenever notice is required by the provisions of this Agreement to be given to
the Company, Allied Capital, or Allied
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36
Advisers, such notice shall be in writing or by facsimile addressed to the
Company c/o Allied Advisers, Allied Capital c/o Allied Advisers, or to Allied
Advisers itself, at 0000 X Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx Xxxxxxxxx, facsimile: (000) 000-0000; and (b) whenever notice
is required by the provisions of this Agreement to be given to the Underwriter,
such notice shall be in writing or by facsimile addressed to Xxxxxx Brothers
Inc., Three World Financial Center, New York, New York 10285 Attention:
Syndicate Department, facsimile: (000) 000-0000.
10. Information Furnished by Underwriter. The Underwriter confirms
that the statements set forth in the first and fifth paragraphs of the
supplement dated December 20, 1996, to the Prospectus, insofar as it relates to
the distribution of the Shares by the Underwriter, constitute the written
information furnished by or on behalf of the Underwriter referred to in
paragraph (a)(ii) of Section 1 hereof and in paragraphs (a), (b) and (c) of
Section 6 hereof.
11. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriter, the Company, Allied Capital, and Allied Advisers,
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (a) the
representations, warranties, indemnities and agreements of the Company, Allied
Capital, and Allied Advisers contained in this Agreement shall also be deemed
to be for the benefit of the person or persons, if any, who controls the
Underwriter within the meaning of Section 15 of the Securities Act and (b) the
indemnity agreement of the Underwriter contained in Section 6 hereof shall be
deemed to be for the benefit of directors of the Company (including any
individuals identified in the Registration Statement as Directors of the
Company but not yet elected as such on the date hereof), officers of the
Company who signed the Registration Statement, any person controlling the
Company, Allied Capital, or Allied Advisers and the Directors of Allied Capital
and Allied Advisers. Nothing in this Agreement shall be construed to give any
person, other than the persons referred to in this paragraph, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
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37
12. Definition of "Business Day". For purposes of this Agreement,
"Business Day" means any day on which both the New York Stock Exchange, Inc.
and banks in New York are open for business.
13. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
14. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
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38
Please confirm, by signing and returning to us two counterparts of
this Agreement, that the foregoing correctly sets forth the Agreement among the
Company, Allied Capital, Allied Advisers, and the Underwriter.
Very truly yours,
ALLIED CAPITAL LENDING CORPORATION
By:
----------------------------------
Xxxxxxxxx X. Xxxxxx
President
ALLIED CAPITAL CORPORATION
By:
----------------------------------
Xxxxx Xxxxxxxxx
Chairman of the Board and Chief
Executive Officer
ALLIED CAPITAL ADVISERS, INC.
By:
----------------------------------
Xxxx Xxxxxxx
President
Confirmed and accepted as of
the date first above mentioned
XXXXXX BROTHERS INC.
By:
-------------------------------------
Name:
Title:
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