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EXHIBIT H
_______________ SHARES
PETRA CAPITAL, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
DATED [___], 1998
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TABLE OF CONTENTS
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................2
Compliance with Registration Requirements.....................................................2
Offering Materials Furnished to Underwriters..................................................3
Distribution of Offering Material By the Company..............................................3
The Underwriting Agreement....................................................................3
Authorization of the Common Shares............................................................4
No Applicable Registration or Other Similar Rights............................................4
No Material Adverse Change....................................................................4
Independent Accountants.......................................................................4
Preparation of the Financial Statements.......................................................4
Incorporation and Good Standing of the Company and its Subsidiaries...........................5
Capitalization and Other Capital Stock Matters................................................5
Stock Exchange Listing........................................................................6
Non-Contravention of Existing Instruments; No Further Authorizations
or Approvals Required.....................................................................6
No Material Actions or Proceedings............................................................6
Intellectual Property Rights..................................................................7
All Necessary Permits, etc....................................................................7
Title to Properties...........................................................................7
Tax Law Compliance............................................................................7
1940 Act and Subchapter M Compliance..........................................................8
Insurance.....................................................................................8
No Price Stabilization or Manipulation........................................................8
Related Party Transactions....................................................................8
Company's Accounting System...................................................................8
Compliance with Environmental Laws............................................................9
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES................................................9
THE FIRM COMMON SHARES.............................................................................9
THE FIRST CLOSING DATE.............................................................................9
The Optional Common Shares; the Second Closing Date..........................................10
Public Offering of the Common Shares.........................................................10
Payment for the Common Shares................................................................10
DELIVERY OF THE COMMON SHARES.....................................................................11
DELIVERY OF PROSPECTUS TO THE UNDERWRITERS........................................................11
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY............................................................11
Representatives' Review of Proposed Amendments and Supplements...............................11
Securities Act Compliance....................................................................12
Amendments and Supplements to the Prospectus and Other Securities
Act Matters..............................................................................12
Copies of any Amendments and Supplements to the Prospectus...................................12
Blue Sky Compliance..........................................................................12
Use of Proceeds..............................................................................13
Transfer Agent...............................................................................13
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Earnings Statement...........................................................................13
Periodic Reporting Obligations...............................................................13
Agreement Not To Offer or Sell Additional Securities.........................................13
1940 Act Compliance..........................................................................13
Nasdaq National Market Listing...............................................................14
Future Reports to the Representative.........................................................14
SECTION 4. PAYMENT OF EXPENSES............................................................................14
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS..............................................14
Accountants' Comfort Letter..................................................................15
Compliance with Registration Requirements; No Stop Order; No
Objection from NASD......................................................................15
No Material Adverse Change or Ratings Agency Change.........................................15
Opinion of Counsel for the Company...........................................................16
Opinion of Counsel for the Underwriters......................................................16
Officers' Certificate........................................................................16
Bring-down Comfort Letter....................................................................16
Reorganization Consummated...................................................................16
Credit Facility Closed.......................................................................17
Policies and Procedures Adopted..............................................................17
Lock-Up Agreement from Certain Stockholders of the Company...................................17
Additional Documents.........................................................................17
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES........................................................17
SECTION 7. RESERVED.......................................................................................18
SECTION 8. INDEMNIFICATION................................................................................18
Indemnification of the Underwriters..........................................................18
Indemnification of the Company, its Directors and Officers...................................19
Notifications and Other Indemnification Procedures...........................................20
Settlements..................................................................................21
SECTION 9. CONTRIBUTION...................................................................................21
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS.............................................22
SECTION 11. TERMINATION OF THIS AGREEMENT..................................................................23
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY............................................23
SECTION 13. NOTICES........................................................................................24
SECTION 15. PARTIAL UNENFORCEABILITY.......................................................................25
SECTION 17. GENERAL PROVISIONS.............................................................................25
SCHEDULE A..................................................................................................1
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UNDERWRITING AGREEMENT
_______, 1998
NATIONSBANC XXXXXXXXXX SECURITIES LLC
BANCAMERICA XXXXXXXXX XXXXXXXX
WHEAT FIRST UNION
XXXXXXXX INC.
As Representatives of the several Underwriters
c/o NATIONSBANC XXXXXXXXXX SECURITIES LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
INTRODUCTORY. Petra Capital, Inc. a Delaware corporation (the
"Company), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of [___] shares (the "Firm Common
Shares") of its Common Stock, par value $[___] per share (the "Common Stock").
In addition, the Company has granted to the Underwriters an option to purchase
up to an additional [___] shares (the "Optional Common Shares") of Common Stock,
as provided in Section 2. The Firm Common Shares and, if and to the extent such
option is exercised, the Optional Common Shares are collectively called the
"Common Shares". NationsBanc Xxxxxxxxxx Securities LLC, BancAmerica Xxxxxxxxx
Xxxxxxxx, Wheat First Union and Xxxxxxxx Inc. have agreed to act as
representatives of the several Underwriters (in such capacity, the
"Representatives") in connection with the offering and sale of the Common
Shares.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form N-2 (File No.
333-[___]), which contains a form of prospectus to be used in connection with
the public offering and sale of the Common Shares. Such registration statement,
as amended, including the financial statements, exhibits and schedules thereto,
in the form in which it was declared effective by the Commission under the
Securities Act of 1933 and the rules and regulations promulgated thereunder
(collectively, the "Securities Act"), including any information deemed to be a
part thereof at the time of effectiveness pursuant to Rule 430A or Rule 434
under the Securities Act, is called the "Registration Statement". Any
registration statement filed by the Company pursuant to Rule 462(b) or Rule
497(h) under the Securities Act is called the "Rule 462(b) Registration
Statement", and from and after the date and time of filing of the Rule 462(b)
Registration Statement the term "Registration Statement" shall include the Rule
462(b) Registration Statement. Such prospectus, in the form first used by the
Underwriters to confirm sales of the Common Shares, is called the "Prospectus";
provided, however, if the Company has, with the consent of NationsBanc
Xxxxxxxxxx Securities LLC, elected to rely upon Rule 434 under the Securities
Act, the term "Prospectus" shall mean the Company's prospectus subject to
completion (each, a "preliminary prospectus") dated [___] (such preliminary
prospectus is called the "Rule 434 preliminary prospectus"), together with the
applicable term sheet (the "Term Sheet") prepared and filed by the Company with
the Commission under Rules 434 and 424(b) under the Securities Act and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. All references in
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this Agreement to the Registration Statement, the Rule 462(b) Registration
Statement, a preliminary prospectus, the Prospectus or the Term Sheet, or any
amendments or supplements to any of the foregoing, shall include any copy
thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval System ("XXXXX").
A Notification of Election to be Subject to Sections 55 through 65 of
the Investment Company Act of 1940, as amended (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 Common Shares has been prepared by the Company in conformity with
Section 12(g) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations thereunder, and has been filed
with the Commission under the Exchange Act.
On or before the First Closing Date (as defined herein), the Company,
Petra Capital, LLC and Petra Capital Management, LLC will complete a
reorganization pursuant to an Agreement and Plan of Reorganization, whereby
Petra Capital Management, LLC will be merged with and into Petra Capital
Management, LLC, subsequent to which, each member of Petra Capital, LLC will
contribute all the units owned in Petra Capital, LLC by each such member in
exchange for a like number of shares of Common Stock of the Company pursuant to
a Reorganization Agreement (the "Reorganization"). On or before the First
Closing Date, the Company also will secure a $100 million credit facility with
First Union National Bank as described in the Prospectus (the "Credit Facility")
The Plan of Reorganization, the Reorganization Agreement and the Credit Facility
are sometimes referred to herein individually as an "Operative Document" and
collectively as the "Operative Documents." Petra Capital, LLC and Petra Capital
Management, LLC are sometimes referred to herein collectively as the
"Predecessor Entities." Unless otherwise specified, all references herein to the
Company shall mean the Company and the Predecessor Entities.
The Company hereby confirms its agreements with the Underwriters as
follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company and Petra Capital, LLC hereby jointly and severally
represent, warrant and covenant to each Underwriter as follows:
(a) Compliance with Registration Requirements. The
Registration Statement and any Rule 462(b) Registration Statement have been
declared effective by the Commission under the Securities Act. To the knowledge
of the Company, the Company has complied to the Commission's satisfaction with
all requests of the Commission for additional or supplemental information. No
stop order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the best knowledge of the
Company, are contemplated or threatened by the Commission.
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Each preliminary prospectus and the Prospectus when filed
complied in all material respects with the Securities Act and, if filed by
electronic transmission pursuant to XXXXX (except as may be permitted by
Regulation S-T under the Securities Act), was identical to the copy thereof
delivered to the Underwriters for use in connection with the offer and sale of
the Common Shares. Each of the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendment thereto, at the time it
became effective and at all subsequent times, complied and will comply in all
material respects with the Securities Act and the 1940 Act and did not and will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Prospectus, as amended or supplemented, as of its date and
at all subsequent times, did not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The representations and warranties set forth in the two
immediately preceding sentences do not apply to statements in or omissions from
the Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment thereto, or the Prospectus, or any amendments or
supplements thereto, made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by the
Representatives expressly for use therein. There are no contracts or other
documents required to be described in the Prospectus or to be filed as exhibits
to the Registration Statement which have not been described or filed as
required. The Election and the Form 8-A registration statement at the time they
were filed complied in all material respects with the requirements of the
Securities Act, the 1940 Act, the Exchange Act and the rules and regulations of
the Commission under the Securities Act, the 1940 Act and the Exchange Act.
(b) Offering Materials Furnished to Underwriters. The Company
has delivered to the Representatives four complete manually signed copies of the
Registration Statement and of each consent and certificate of experts filed as a
part thereof, and conformed copies of the Registration Statement (without
exhibits) and preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representatives have
reasonably requested for each of the Underwriters.
(c) Distribution of Offering Material By the Company. The
Company has not distributed and will not distribute, prior to the later of the
Second Closing Date (as defined below) and the completion of the Underwriters'
distribution of the Common Shares, any offering material in connection with the
offering and sale of the Common Shares other than a preliminary prospectus, the
Prospectus or the Registration Statement.
(d) The Underwriting Agreement; the Operative Documents. Each
of this Agreement and the Operative Documents has been duly authorized, executed
and delivered by, and is a valid and binding agreement of, the Company,
enforceable in accordance with its terms, except as rights to indemnification
hereunder may be limited by applicable law and except as the enforcement hereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors or by
general equitable principles.
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(e) Authorization of the Common Shares. The Common Shares to
be purchased by the Underwriters from the Company have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(f) No Applicable Registration or Other Similar Rights. There
are no persons with registration or other similar rights to have any equity or
debt securities registered for sale under the Registration Statement or included
in the offering contemplated by this Agreement, except for such rights as have
been duly waived.
(g) No Material Adverse Change. Except as otherwise disclosed
in the Prospectus, subsequent to the respective dates as of which information is
given in the Prospectus: (i) there has been no material adverse change, or any
development that could reasonably be expected to result in a material adverse
change, in the condition, financial or otherwise, or in the earnings, business,
operations or prospects, whether or not arising from transactions in the
ordinary course of business, of the Company and its subsidiaries, considered as
one entity (any such change is called a "Material Adverse Change"); (ii) the
Company and its subsidiaries, considered as one entity, have not incurred any
material liability or obligation, indirect, direct or contingent, not in the
ordinary course of business nor entered into any material transaction or
agreement not in the ordinary course of business; and (iii) there has been no
dividend or distribution of any kind declared, paid or made by the Company or,
except for dividends paid to the Company or other subsidiaries, any of its
subsidiaries on any class of capital stock or repurchase or redemption by the
Company or any of its subsidiaries of any class of capital stock.
(h) Independent Accountants. Xxxxxx Xxxxxxxx LLP, who have
expressed their opinion with respect to the financial statements (which term as
used in this Agreement includes the related notes thereto) and supporting
schedules filed with the Commission as a part of the Registration Statement and
included in the Prospectus, are independent public or certified public
accountants as required by the Securities Act.
(i) Preparation of the Financial Statements. The financial
statements filed with the Commission as part of the Registration Statement and
included in the Prospectus present fairly the financial position of Petra
Capital, LLC and Petra Capital Management, LLC as of and at the dates indicated
and the results of their operations for the periods specified. The supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein. Such financial statements and supporting
schedules have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved, except
as may be expressly stated in the related notes thereto. The financial data set
forth in the Prospectus under the captions "Prospectus Summary -- Selected
Historial Financial Data of Petra Capital, LLC," "Prospectus Summary -- Selected
Historial Financial Data of Petra Capital Management, LLC," and "Prospectus
Summary -- Selected Pro Forma Combined Financial Data of Petra Capital, LLC and
Petra Capital Management, LLC," fairly present the information set forth therein
on a basis consistent with that of the financial statements of Petra Capital,
LLC and Petra Capital Management, LLC contained in the Registration Statement.
The pro forma combined financial statements of Petra Capital, LLC and Petra
Capital Management, LLC and the related notes thereto included in the Prospectus
and the Registration Statement
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present fairly the information contained therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly presented on the bases described
therein, and the assumptions used in the preparation thereof are reasonable and
the adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein. No other financial statements or
supporting schedules (other than the financial data schedule included in the
Registration Statement) are required to be included in the Registration
Statement.
(j) Incorporation and Good Standing of the Company and its
Subsidiaries. Each of the Company and its subsidiaries has been duly
incorporated or formed, as the case may be, and is validly existing as a
corporation or limited liability company, as the case may be, in good standing
under the laws of the jurisdiction of its incorporation or formation and has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and, in the case of the
Company, to enter into and perform its obligations under this Agreement and the
Operative Documents. Each of the Company and each subsidiary is duly qualified
as a foreign corporation or limited liability company, as the case may be, to
transact business and is in good standing in the State of Tennessee and each
other jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except for such
jurisdictions (other than the State of Tennessee) where the failure to so
qualify or to be in good standing would not, individually or in the aggregate,
result in a Material Adverse Change. All of the issued and outstanding capital
stock of each subsidiary has been duly authorized and validly issued, is fully
paid and nonassessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or claim. The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiaries listed in the Registration Statement.
(k) Capitalization and Other Capital Stock Matters. The
authorized, issued and outstanding capital stock of the Company is as set forth
in the Prospectus under the caption "Capitalization" (other than for subsequent
issuances, if any, pursuant to employee benefit plans described in the
Prospectus or upon exercise of outstanding options described in the Prospectus).
The Common Stock (including the Common Shares) conforms in all material respects
to the description thereof contained in the Prospectus. All of the issued and
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable and have been issued in compliance with federal
and state securities laws. None of the outstanding shares of Common Stock were
issued in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company. There are
no authorized or outstanding options, warrants, preemptive rights, rights of
first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those accurately described in the
Prospectus. The description of the Company's stock option, stock bonus and other
stock plans or arrangements, and the options or other rights granted thereunder,
set forth in the Prospectus accurately and fairly presents in all material
respects the information required to be shown with respect to such plans,
arrangements, options and rights.
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(l) Stock Exchange Listing. The Common Shares have been
approved for inclusion on the Nasdaq National Market, subject only to official
notice of issuance.
(m) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. Neither the Company nor any of its
subsidiaries nor any Predecessor Entity is in violation of its charter or
by-laws or other organizational documents or is in default (or, with the giving
of notice or lapse of time, would be in default) ("Default") under any
indenture, mortgage, loan or credit agreement, note, contract, franchise, lease
or other instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be bound (including, without limitation, the
revolving credit facility with SunAmerica Life Insurance Company, as lender), or
to which any of the property or assets of the Company or any of its subsidiaries
is subject (each, an "Existing Instrument"), except for such Defaults as would
not, individually or in the aggregate, result in a Material Adverse Change. The
Company's execution, delivery and performance of this Agreement and the
Operative Documents and consummation of the transactions contemplated hereby and
thereby and by the Prospectus (i) have been duly authorized by all necessary
corporate and limited liability company action and will not result in any
violation of the provisions of the charter or by-laws or organizational
documents of the Company or any subsidiary (ii) will not conflict with or
constitute a breach of, or Default or a Debt Repayment Triggering Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries, pursuant to, or require the consent of any other part to, any
Existing Instrument, except for such conflicts, breaches, Defaults, liens,
charges or encumbrances as would not, individually or in the aggregate, result
in a Material Adverse Change and (iii) will not result in any violation of any
law, administrative regulation or administrative or court decree applicable to
the Company or any subsidiary. No consent, approval, authorization or other
order of, or registration or filing with, any court or other governmental or
regulatory authority or agency, is required for the Company's execution,
delivery and performance of this Agreement and the Operative Documents and
consummation of the transactions contemplated hereby and thereby and by the
Prospectus, except such as have been obtained or made by the Company and are in
full force and effect under the Securities Act, the 1940 Act, the Exchange Act,
applicable state securities or blue sky laws and from the National Association
of Securities Dealers, Inc. (the "NASD"). As used herein, a "Debt Repayment
Triggering Event" means any event or condition which gives, or with the giving
of notice or lapse of time would give, the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any of its subsidiaries.
(n) No Material Actions or Proceedings. There are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened (i) against or affecting the Company or any of
its subsidiaries, (ii) which has as the subject thereof any officer or director
of, or property owned or leased by, the Company or any of its subsidiaries or
(iii) relating to environmental or discrimination matters, where in any such
case (A) there is a reasonable possibility that such action, suit or proceeding
might be determined adversely to the Company or such subsidiary and (B) any such
action, suit or proceeding, if so determined adversely, would reasonably be
expected to result in a Material Adverse Change or adversely affect the
consummation of the transactions contemplated by this Agreement or the Operative
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Documents. No material labor dispute with the employees of the Company or any of
its subsidiaries exists or, to the best of the Company's knowledge, is
threatened or imminent.
(o) Intellectual Property Rights. The Company and its
subsidiaries own or possess sufficient trademarks, trade names, patent rights,
copyrights, licenses, approvals, trade secrets and other similar rights
(collectively, "Intellectual Property Rights") reasonably necessary to conduct
their businesses as now conducted; and the expected expiration of any of such
Intellectual Property Rights would not result in a Material Adverse Change.
Neither the Company nor any of its subsidiaries has received any notice of
infringement or conflict with asserted Intellectual Property Rights of others,
which infringement or conflict, if the subject of an unfavorable decision, would
result in a Material Adverse Change.
(p) All Necessary Permits, etc. The Company and each
subsidiary possess such valid and current certificates, authorizations or
permits issued by the appropriate state, federal or foreign regulatory agencies
or bodies necessary to conduct their respective businesses as they are now
conducted or as they are proposed to be conducted, and neither the Company nor
any subsidiary has received any notice of proceedings relating to the revocation
or modification of, or non-compliance with, any such certificate, authorization
or permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could result in a Material Adverse Change.
(q) Title to Properties. The Company and each of its
subsidiaries has good and marketable title to all the properties and assets
reflected as owned in the financial statements referred to in Section 1 above
(or elsewhere in the Prospectus), in each case free and clear of any security
interests, mortgages, liens, encumbrances, equities, claims and other defects,
except such as do not materially and adversely affect the value of such property
and do not materially interfere with the use made or proposed to be made of such
property by the Company or such subsidiary. The real property, improvements,
equipment and personal property held under lease by the Company or any
subsidiary are held under valid and enforceable leases (except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting the rights and remedies of creditors or by general
equitable principles), with such exceptions as are not material and do not
materially interfere with the use currently made of such real property,
improvements, equipment or personal property by the Company or such subsidiary.
(r) Tax Law Compliance. The Company and its subsidiaries have
filed all necessary federal, state and foreign income and franchise tax returns
required to be filed and have paid all taxes required to be paid by any of them
and, if due and payable, any related or similar assessment, fine or penalty
levied against any of them. The Company has made adequate charges, accruals and
reserves in the applicable financial statements referred to in Section 1 above
in accordance with generally accepted accounting principles in respect of all
federal, state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company or any of its subsidiaries has not been
finally determined.
(s) 1940 Act and Subchapter M Compliance. The Election has
been prepared in conformity with Section 54(a) of the 1940 Act, has been filed
by the Company with the Commission under the 1940 Act, and is in full force and
effect. The Company has been advised
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of the rules and requirements under the 1940 Act. By virtue of the Election, the
Company is not, and after receipt of payment for the Common Shares will not be,
an "investment company" which is required to register under the 1940 Act. The
Company's current business operations and investments and its contemplated
business operations and investments as described in the Prospectus constitute
permissible activities and investments for a "business development company"
under the 1940 Act and will allow the Company to maintain its qualification as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). No person is serving as an officer or director
of the Company except in compliance with the 1940 Act and the rules and
regulations of the Commission thereunder.
(t) Insurance. Each of the Company and its subsidiaries are
insured by recognized, financially sound and reputable institutions with
policies in such amounts and with such deductibles and covering such risks as
are generally deemed adequate and customary for their businesses including, but
not limited to, policies covering real and personal property material to the
business of the Company. The Company has no reason to believe that it or any
subsidiary will not be able (i) to renew its existing insurance coverage as and
when such policies expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now
conducted and at a cost that would not result in a Material Adverse Change.
Neither of the Company nor any subsidiary has been denied any insurance coverage
which it has sought or for which it has applied.
(u) No Price Stabilization or Manipulation. The Company has
not taken and will not take, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Common Shares.
(v) Related Party Transactions. There are no business
relationships or related-party transactions involving the Company or any
subsidiary or any other person required to be described in the Prospectus (i)
which have not been described as required, or (ii) which are not in compliance
with applicable requirements of the 1940 Act and the rules and regulations
thereunder.
(w) Company's Accounting System. The Company maintains a
system of accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(x) Compliance with Environmental Laws. Except as otherwise
disclosed in the Prospectus (i) neither the Company nor any of its subsidiaries
is in violation of any federal, state, local or foreign law or regulation
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including without limitation, laws
and regulations relating to
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emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products (collectively, "Materials of Environmental Concern"), or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environment Concern
(collectively, "Environmental Laws"), which violation is reasonably likely to
result in a Material Adverse Change, nor has the Company or any of its
subsidiaries received any written communication, whether from a governmental
authority, citizens group, employee or otherwise, that alleges that the Company
or any of its subsidiaries is in violation of any Environmental Law, which
violation is reasonably likely to result in a Material Adverse Change; (ii)
there is no claim, action or cause of action filed with a court or governmental
authority, no investigation with respect to which the Company has received
written notice, and no written notice by any person or entity alleging potential
liability for investigatory costs, cleanup costs, governmental responses costs,
natural resources damages, property damages, personal injuries, attorneys' fees
or penalties arising out of, based on or resulting from the presence, or release
into the environment, of any Material of Environmental Concern at any location
owned, leased or operated by the Company or any of its subsidiaries, now or in
the past (collectively, "Environmental Claims"), pending or, to the best of the
Company's knowledge, threatened against the Company or any of its subsidiaries
which is reasonably likely to result in a Material Adverse Change; and (iii) to
the best of the Company's knowledge, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of any
Material of Environmental Concern, that reasonably could result in a violation
of any Environmental Law or form the basis of a potential Environmental Claim
against the Company or any of its subsidiaries which are reasonably likely to
result in a Material Adverse Change.
Any certificate signed by an officer of the Company and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to each Underwriter as
to the matters set forth therein.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.
The Firm Common Shares. The Company agrees to issue and sell to the
several Underwriters the Firm Common Shares upon the terms herein set forth. On
the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the
Underwriters agree, severally and not jointly, to purchase from the Company the
respective number of Firm Common Shares set forth opposite their names on
Schedule A. The purchase price per Firm Common Share to be paid by the several
Underwriters to the Company shall be $[___] per share.
The First Closing Date. Delivery of certificates for the Firm Common
Shares to be purchased by the Underwriters and payment therefor shall be made at
the offices of NationsBanc Xxxxxxxxxx Securities LLC, 000 Xxxxxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx (or such other place as may be agreed to by the Company
and the Representative) at 6:00 a.m. San Francisco time, on [___], or such other
time and date not later than 10:30 a.m. San Francisco time, on [date that is ten
business days following the original contemplated First Closing Date] as the
Representatives shall designate by notice to the Company (the time and date of
such closing are
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called the "First Closing Date"). The Company hereby acknowledges that
circumstances under which the Representatives may provide notice to postpone the
First Closing Date as originally scheduled include, but are in no way limited
to, any determination by the Company or the Representatives to recirculate to
the public copies of an amended or supplemented Prospectus or a delay as
contemplated by the provisions of Section 10.
The Optional Common Shares; the Second Closing Date. In addition, on
the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase, severally and
not jointly, up to an aggregate of [___] Optional Common Shares from the Company
at the purchase price per share to be paid by the Underwriters for the Firm
Common Shares. The option granted hereunder is for use by the Underwriters
solely in covering any over-allotments in connection with the sale and
distribution of the Firm Common Shares. The option granted hereunder may be
exercised at any time (but not more than once) upon notice by the
Representatives to the Company, which notice may be given at any time within 30
days from the date of this Agreement. Such notice shall set forth (i) the
aggregate number of Optional Common Shares as to which the Underwriters are
exercising the option, (ii) the names and denominations in which the
certificates for the Optional Common Shares are to be registered and (iii) the
time, date and place at which such certificates will be delivered (which time
and date may be simultaneous with, but not earlier than, the First Closing Date;
and in such case the term "First Closing Date" shall refer to the time and date
of delivery of certificates for the Firm Common Shares and the Optional Common
Shares). Such time and date of delivery, if subsequent to the First Closing
Date, is called the "Second Closing Date" and shall be determined by the
Representatives and shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. If any Optional Common
Shares are to be purchased, each Underwriter agrees, severally and not jointly,
to purchase the number of Optional Common Shares (subject to such adjustments to
eliminate fractional shares as the Representatives may determine) that bears the
same proportion to the total number of Optional Common Shares to be purchased as
the number of Firm Common Shares set forth on Schedule A opposite the name of
such Underwriter bears to the total number of Firm Common Shares.
Public Offering of the Common Shares. The Representatives hereby advise
the Company that the Underwriters intend to offer for sale to the public, as
described in the Prospectus, their respective portions of the Common Shares as
soon after this Agreement has been executed and the Registration Statement has
been declared effective as the Representatives, in their sole judgment, have
determined is advisable and practicable.
Payment for the Common Shares. Payment for the Common Shares shall be
made at the First Closing Date (and, if applicable, at the Second Closing Date)
by wire transfer of immediately available funds to the order of the Company.
It is understood that the Representatives have been authorized, for
their own accounts and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Common Shares and any Optional Common Shares the Underwriters have agreed
to purchase. NationsBanc Xxxxxxxxxx Securities LLC, individually and not as the
Representatives of the Underwriters, may (but shall not be obligated to) make
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payment for any Common Shares to be purchased by any Underwriter whose funds
shall not have been received by the Representatives by the First Closing Date or
the Second Closing Date, as the case may be, for the account of such
Underwriter, but any such payment shall not relieve such Underwriter from any of
its obligations under this Agreement.
Delivery of the Common Shares. The Company shall deliver, or cause to
be delivered, to the Representatives for the accounts of the several
Underwriters certificates for the Firm Common Shares at the First Closing Date,
against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The Company shall also
deliver, or cause to be delivered, to the Representatives for the accounts of
the several Underwriters, certificates for the Optional Common Shares the
Underwriters have agreed to purchase at the First Closing Date or the Second
Closing Date, as the case may be, against the irrevocable release of a wire
transfer of immediately available funds for the amount of the purchase price
therefor. The certificates for the Common Shares shall be in definitive form and
registered in such names and denominations as the Representatives shall have
requested at least two full business days prior to the First Closing Date (or
the Second Closing Date, as the case may be) and shall be made available for
inspection on the business day preceding the First Closing Date (or the Second
Closing Date, as the case may be) at a location in New York City as the
Representatives may designate. Time shall be of the essence, and delivery at the
time and place specified in this Agreement is a further condition to the
obligations of the Underwriters.
Delivery of Prospectus to the Underwriters. Not later than 12:00 p.m.
on the second business day following the date of release of the Common Shares by
the Underwriters for sale to the public, the Company shall delivery or cause to
be delivered copies of the Prospectus in such quantities and at such places as
the Representatives shall reasonably request.
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY.
The Company further covenants and agrees with each Underwriter as
follows:
(a) Representatives' Review of Proposed Amendments and
Supplements. During such period beginning on the date hereof and ending on the
later of the First Closing Date or such date, as in the opinion of counsel for
the Underwriters, the Prospectus is no longer required by law to be delivered in
connection with sales by an Underwriter or dealer (the "Prospectus Delivery
Period"), prior to amending or supplementing the Registration Statement
(including any registration statement filed under Rule 462(b) or Rule 497(h)
under the Securities Act) or the Prospectus, the Company shall furnish to the
Representatives for review a copy of each such proposed amendment or supplement,
and the Company shall not file any such proposed amendment or supplement to
which the Representatives reasonably object.
(b) Securities Act Compliance. After the date of this
Agreement, the Company shall promptly advise the Representatives in writing (i)
of the receipt of any comments of, or requests for additional or supplemental
information from, the Commission, (ii) of the time and date of any filing of any
post-effective amendment to the Registration Statement or any amendment or
supplement to any preliminary prospectus or the Prospectus, (iii) of the time
and date that any post-effective amendment to the Registration Statement becomes
effective and
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(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of any order preventing or suspending the use of any preliminary
prospectus or the Prospectus, or of any proceedings to remove, suspend or
terminate from listing or quotation the Common Stock from any securities
exchange upon which the it is listed for trading or included or designated for
quotation, or of the threatening or initiation of any proceedings for any of
such purposes. If the Commission shall enter any such stop order at any time,
the Company will use its best efforts to obtain the lifting of such order at the
earliest possible moment. Additionally, the Company agrees that it shall comply
with the provisions of Rules 424(b), 497(h), 430A and 434, as applicable, under
the Securities Act and will use its reasonable efforts to confirm that any
filings made by the Company under such Rule 424(b) or Rule 497(h) were received
in a timely manner by the Commission.
(c) Amendments and Supplements to the Prospectus and Other
Securities Act Matters. If, during the Prospectus Delivery Period, any event
shall occur or condition exist as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in the light
of the circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if in the opinion of the Representatives or counsel for the
Underwriters it is otherwise necessary to amend or supplement the Prospectus to
comply with law, the Company agrees to promptly prepare (subject to Section
3(A)(a) hereof), file with the Commission and furnish at its own expense to the
Underwriters and to dealers, amendments or supplements to the Prospectus so that
the statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will comply
with law.
(d) Copies of any Amendments and Supplements to the
Prospectus. The Company agrees to furnish the Representatives, without charge,
during the Prospectus Delivery Period, as many copies of the Prospectus and any
amendments and supplements thereto as the Representatives may reasonably
request.
(e) Blue Sky Compliance. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register the
Common Shares for sale under (or obtain exemptions from the application of) the
or state securities or blue sky laws or Canadian provincial securities laws of
those jurisdictions designated by the Representatives, shall comply with such
laws and shall continue such qualifications, registrations and exemptions in
effect so long as reasonably required for the distribution of the Common Shares.
The Company shall not be required to qualify as a foreign corporation or to take
any action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be subject to
taxation as a foreign corporation. The Company will advise the Representatives
promptly of the suspension of the qualification or registration of (or any such
exemption relating to) the Common Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain the
withdrawal thereof at the earliest possible moment.
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(f) Use of Proceeds. The Company shall apply the net proceeds
from the sale of the Common Shares sold by it in the manner described under the
caption "Use of Proceeds" in the Prospectus.
(g) Transfer Agent. The Company shall engage and maintain, at
its expense, a registrar and transfer agent for the Common Stock.
(h) Earnings Statement. As soon as practicable, the Company
will make generally available to its security holders and to the Representatives
an earnings statement (which need not be audited) covering the twelve-month
period ending September 30, 1999 that satisfies the provisions of Section 11(a)
of the Securities Act.
(j) Periodic Reporting Obligations. During the Prospectus
Delivery Period, the Company shall file, on a timely basis, with the Commission
and the Nasdaq National Market all reports and documents required to be filed
under the Exchange Act. Additionally, the Company shall file with the Commission
all reports as may be required under Rule 463 under the Securities Act.
(k) Agreement Not To Offer or Sell Additional Securities.
During the period of 180 days following the date of the Prospectus, the Company
will not, without the prior written consent of NationsBanc Xxxxxxxxxx Securities
LLC (which consent may be withheld at the sole discretion of NationsBanc
Xxxxxxxxxx Securities LLC), directly or indirectly, sell, offer, contract or
grant any option to sell, pledge, transfer or establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Exchange Act, or
otherwise dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any shares of
Common Stock, options or warrants to acquire shares of the Common Stock or
securities exchangeable or exercisable for or convertible into shares of Common
Stock (other than as contemplated by this Agreement with respect to the Common
Shares); provided, however, that the Company may issue shares of its Common
Stock or options to purchase its Common Stock, or Common Stock upon exercise of
options, pursuant to any stock option, stock bonus or other stock plan or
arrangement described in the Prospectus, but only if the holders of such shares,
options, or shares issued upon exercise of such options, agree in writing not to
sell, offer, dispose of or otherwise transfer any such shares or options during
such 180 day period without the prior written consent of NationsBanc Xxxxxxxxxx
Securities LLC (which consent may be withheld at the sole discretion of
NationsBanc Xxxxxxxxxx Securities LLC).
(l) Subchapter M Compliance. The Company shall elect to be
treated as a "regulated investment company" within the meaning of such term
under Subchapter M of the Code and shall conduct its business as described in
the Prospectus.
(m) Nasdaq National Market Listing . The Company shall use its
best efforts to effect and maintain the quotation of the Common Shares on the
Nasdaq National Market and to comply with applicable rules and regulations of
the NASD with respect to such Common Shares.
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(n) Future Reports to the Representative. During the period of
five years hereafter the Company will furnish to the Representatives, c/o
NationsBanc Xxxxxxxxxx Securities LLC at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
XX 00000 Attention: Xxxxx Xxxxxx: (i) as soon as practicable after the end of
each fiscal year, copies of the Annual Report of the Company containing the
balance sheet of the Company as of the close of such fiscal year and statements
of income, stockholders' equity and cash flows for the year then ended and the
opinion thereon of the Company's independent public or certified public
accountants; (ii) as soon as practicable after the filing thereof, copies of
each proxy statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q,
Current Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as available,
copies of any report or communication of the Company mailed generally to holders
of its capital stock.
SECTION 4. PAYMENT OF EXPENSES. The Company agrees to pay all costs,
fees and expenses incurred in connection with the performance of its obligations
hereunder and in connection with the transactions contemplated hereby, including
without limitation (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Common Shares to the Underwriters, (iv) all fees and expenses of
the Company's counsel, independent public or certified public accountants and
other advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration
Statement (including financial statements, exhibits, schedules, consents and
certificates of experts), each preliminary prospectus and the Prospectus, and
all amendments and supplements thereto, and this Agreement, (vi) all filing
fees, reasonable attorneys' fees and expenses incurred by the Company or the
Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Common Shares for offer and sale under the state securities or blue sky laws or
the provincial securities laws of Canada, and, if requested by the
Representatives, preparing and printing a "Blue Sky Survey" or memorandum, and
any supplements thereto, advising the Underwriters of such qualifications,
registrations and exemptions, (vii) the filing fees incident to, and the
reasonable fees and expenses of counsel for the Underwriters in connection with,
the NASD's review and approval of the Underwriters' participation in the
offering and distribution of the Common Shares, (viii) the fees and expenses
associated with including the Common Shares on the Nasdaq National Market, and
(ix) all other fees, costs and expenses referred to in the Registration
Statement. Except as provided in this Section 4, Section 6, Section 8 and
Section 9 hereof, the Underwriters shall pay their own expenses, including the
fees and disbursements of their counsel.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS.
The obligations of the several Underwriters to purchase and pay for the
Common Shares as provided herein on the First Closing Date and, with respect to
the Optional Common Shares, the Second Closing Date, shall be subject to the
accuracy of the representations and warranties on the part of the Company set
forth in Section 1 hereof as of the date hereof and as of the First Closing Date
as though then made and, with respect to the Optional Common Shares, as of the
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Second Closing Date as though then made, to the timely performance by the
Company of its covenants and other obligations hereunder, and to each of the
following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the
Representatives shall have received from Xxxxxx Xxxxxxxx LLC, independent public
or certified public accountants for the Company, a letter dated the date hereof
addressed to the Underwriters, in form and substance reasonably satisfactory to
the Representatives, containing statements and information of the type
ordinarily included in accountant's "comfort letters" to underwriters, delivered
according to Statement of Auditing Standards No. 72 (or any successor bulletin),
with respect to the audited and unaudited financial statements and certain
financial information contained in the Registration Statement and the Prospectus
(and the Representatives shall have received an additional four conformed copies
of such accountants' letter for each of the several Underwriters).
(b) Compliance with Registration Requirements; No Stop Order;
No Objection from NASD. For the period from and after effectiveness of this
Agreement and prior to the First Closing Date and, with respect to the Optional
Common Shares, the Second Closing Date:
(i) the Company shall have filed the Prospectus with
the Commission (including the information required by Rule 430A under the
Securities Act) in the manner and within the time period required by Rule 424(b)
or Rule 497(h) under the Securities Act; or the Company shall have filed a
post-effective amendment to the Registration Statement containing the
information required by such Rule 430A, and such post-effective amendment shall
have become effective; or, if the Company elected to rely upon Rule 434 under
the Securities Act and obtained the Representative's consent thereto, the
Company shall have filed a Term Sheet with the Commission in the manner and
within the time period required by such Rule 424(b) or Rule 497;
(ii) no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in effect and
no proceedings for such purpose shall have been instituted or threatened by the
Commission; and
(iii) the NASD shall have raised no objection to the
fairness and reasonableness of the underwriting terms and arrangements.
(c) No Material Adverse Change or Ratings Agency Change. For
the period from and after the date of this Agreement and prior to the First
Closing Date and, with respect to the Optional Common Shares, the Second Closing
Date:
(i) in the judgment of the Representatives there
shall not have occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any securities of
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the Company or any of its subsidiaries by any "nationally recognized statistical
rating organization" as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act.
(d) Opinion of Counsel for the Company. On each of the First
Closing Date and the Second Closing Date the Representatives shall have received
the favorable opinion of King & Spalding, counsel for the Company, dated as of
such Closing Date, the form of which is attached as Exhibit A (and the
Representatives shall have received an additional four conformed copies of such
counsel's legal opinion for each of the several Underwriters).
(e) Opinion of Counsel for the Underwriters. On each of the
First Closing Date and the Second Closing Date the Representatives shall have
received the favorable opinion of Xxxxxx, Xxxx & Xxxxxxxx LLC, counsel for the
Underwriters, dated as of such Closing Date, with respect to such matters as may
be reasonably requested (and the Representatives shall have received an
additional four conformed copies of such counsel's legal opinion for each of the
several Underwriters).
(f) Officers' Certificate. On each of the First Closing Date
and the Second Closing Date the Representatives shall have received a written
certificate executed by the Chairman of the Board, Chief Executive Officer or
President of the Company and the Chief Financial Officer or Chief Accounting
Officer of the Company, dated as of such Closing Date, to the effect set forth
in subsections (b)(ii) and (c)(ii) of this Section 5, and further to the effect
that:
(i) for the period from and after the date of this
Agreement and prior to such Closing Date, there has not occurred any Material
Adverse Change;
(ii) the representations, warranties and covenants of
the Company set forth in Section 1 of this Agreement are true and correct with
the same force and effect as though expressly made on and as of such Closing
Date; and
(iii) the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied at or
prior to such Closing Date.
(g) Bring-down Comfort Letter. On each of the First Closing
Date and the Second Closing Date the Representatives shall have received from
Xxxxxx Xxxxxxxx LLC, independent public or certified public accountants for the
Company, a letter dated such date, in form and substance satisfactory to the
Representatives, to the effect that they reaffirm the statements made in the
letter furnished by them pursuant to subsection (a) of this Section 5, except
that the specified date referred to therein for the carrying out of procedures
shall be no more than three business days prior to the First Closing Date or
Second Closing Date, as the case may be (and the Representatives shall have
received an additional four conformed copies of such accountants' letter for
each of the several Underwriters).
(h) Reorganization Consummated. The Reorganization shall have
been consummated.
(i) Credit Facility Closed. The Company shall have obtained
the Credit Facility and all agreements relating to the Credit Facility shall
have been duly authorized, executed
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and delivered and all transactions relating to obtaining the Credit Facility
shall have been consummated and all conditions precedent to the effectiveness of
the Credit Facility shall have been satisfied.
(j) Policies and Procedures Adopted. The Company shall have
adopted the policies and procedures described in the Prospectus, including loan
underwriting and monitoring policies and procedures, fair valuation policies and
procedures, hedging policies and procedures and procedures related to the
Company's continuing qualification as a "business development company" under the
1940 Act and a "regulated investment company" under Subchapter M of the Code.
(k) Lock-Up Agreement from Certain Stockholders of the
Company. On the date hereof, the Company shall have furnished to the
Representatives an agreement in the form of Exhibit B hereto from Xxxxxxx
Partners, L.P. , and such agreement shall be in full force and effect on each of
the First Closing Date and the Second Closing Date. On the date hereof, the
Company shall have furnished to the Representatives an agreement in the form of
Exhibit C hereto from each director, officer and each beneficial owner of Common
Shares (as defined and determined according to Rule 13d-3 under the Exchange
Act, except that a one hundred eighty day period shall be used rather than the
sixty day period set forth therein) other than Xxxxxxx Partners, L.P., and each
such agreement shall be in full force and effect on each of the First Closing
Date and the Second Closing Date.
(l) Additional Documents. On or before each of the First
Closing Date and the Second Closing Date, the Representatives and counsel for
the Underwriters shall have received such information, documents and opinions as
they may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Common Shares as contemplated herein, or in order to
evidence the accuracy of any of the representations and warranties, or the
satisfaction of any of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied
when and as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Optional Common Shares, at any time prior
to the Second Closing Date, which termination shall be without liability on the
part of any party to any other party, except that Section 4, Section 6, Section
8 and Section 9 shall at all times be effective and shall survive such
termination.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES.
If this Agreement is terminated by the Representatives pursuant to
Section 5 or Section 11, or if the sale to the Underwriters of the Common Shares
on the First Closing Date is not consummated because of any refusal, inability
or failure on the part of the Company to perform any agreement herein or to
comply with any provision hereof, the Company agrees to reimburse the
Representatives and the other Underwriters (or such Underwriters as have
terminated this Agreement with respect to themselves), severally, upon demand
for all out-of-pocket expenses that shall have been reasonably incurred by the
Representatives and the Underwriters in connection with the proposed purchase
and the offering and sale of the Common Shares,
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including but not limited to reasonable fees and disbursements of counsel,
printing expenses, travel expenses, postage, facsimile and telephone charges.
SECTION 7. RESERVED
SECTION 8. INDEMNIFICATION.
(a) Indemnification of the Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter, its officers and employees, and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act and the Exchange Act against any loss, claim, damage, liability
or expense, as incurred, to which such Underwriter or such controlling person
may become subject, under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based (i) upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof pursuant to Rule 430A or
Rule 434 under the Securities Act, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading; or (ii) upon any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; or (iii) in whole or in part upon any inaccuracy in the
representations and warranties of the Company contained herein; or (iv) in whole
or in part upon any failure of the Company to perform its obligations hereunder
or under law; or (v) any act or failure to act or any alleged act or failure to
act by any Underwriter in connection with, or relating in any manner to, the
Common Stock or the offering contemplated hereby, and which is included as part
of or referred to in any loss, claim, damage, liability or action arising out of
or based upon any matter covered by clause (i) or (ii) above, provided that the
Company shall not be liable under this clause (v) (and such Underwriters shall
reimburse the Company for any expenses reimbursed to the Underwriters by the
Company pursuant to clause (v)) to the extent that a court of competent
jurisdiction shall have determined by a final judgment that such loss, claim,
damage, liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Underwriter through its bad faith
or willful misconduct; and to reimburse each Underwriter and each such
controlling person for any and all expenses (including the reasonable fees and
disbursements of counsel chosen by NationsBanc Xxxxxxxxxx Securities LLC) as
such expenses are reasonably incurred by such Underwriter or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action as such
expenses are incurred; provided, however, that the foregoing indemnity agreement
shall not apply to any loss, claim, damage, liability or expense to the extent,
but only to the extent, arising out of or based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished to the Company by the
Representatives expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); and
provided, further, that with respect to any
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preliminary prospectus, the foregoing indemnity agreement shall not inure to the
benefit of any Underwriter from whom the person asserting any loss, claim,
damage, liability or expense purchased Common Shares, or any person controlling
such Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Common Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or expense; provided, further, the
Company shall not be obligated to indemnify any Underwriter for any losses or
expenses which are incurred by an Underwriter in an action, proceeding or
investigation initiated by such Underwriter (other than any such action,
proceeding or investigation against the Company for a breach or threatened
breach of this Agreement), unless the Company consents in writing to the
initiation of such action, proceeding or investigation. The indemnity agreement
set forth in this Section 8(a) shall be in addition to any liabilities that the
Company may otherwise have.
(b) Indemnification of the Company, its Directors and Officers.
Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act, against any loss, claim,
damage, liability or expense, as incurred, to which the Company, or any such
director, officer or controlling person may become subject, under the Securities
Act, the Exchange Act, or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in reliance
upon and in conformity with written information furnished to the Company by the
Representatives expressly for use therein; and to reimburse the Company, or any
such director, officer or controlling person for any legal and other expense
reasonably incurred by the Company, or any such director, officer or controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action as such
expenses are incurred; provided that in no event shall any Underwriter be liable
for any consequential, indirect, incidental or special damages of any nature,
except to the extent that the Company is required to pay to any third party any
consequential, indirect, incidental or special damages resulting from the bad
faith or willful misconduct of such Underwriter. The Company hereby acknowledges
that the only information that the Underwriters have furnished to the Company
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus (or any amendment or supplement
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thereto) are the statements set forth (A) as the last [two] paragraphs on the
inside front cover page of the Prospectus concerning stabilization [and passive
market making] by the Underwriters and (B) in the table in the first paragraph
and as the second paragraph under the caption "Underwriting" in the Prospectus;
and the Underwriters confirm that such statements are correct. The indemnity
agreement set forth in this Section 8(b) shall be in addition to any liabilities
that each Underwriter may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly
after receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for indemnification, contribution or
expense reimbursement or otherwise under this Section 8 to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties; provided, further that
the indemnifying party will not be required to pay the fees and disbursements of
more than one separate counsel for all indemnified parties in connection with
any one such action, proceeding or investigation or separate but substantially
similar actions, proceedings or investigations arising out of the same general
allegations (and one separate local counsel). Upon receipt of notice from the
indemnifying party to such indemnified party of such indemnifying party's
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 8 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with local counsel), approved by the indemnifying
party (Nationsbanc Xxxxxxxxxx Securities in the case of Section 8(b) and Section
9), representing the indemnified parties who are parties to such action) or (ii)
the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
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(d) Settlements. The indemnifying party under this Section 8 shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with the consent of the indemnifying party or if there
be a final judgment for the plaintiff entered with the consent of the
indemnifying party, the indemnifying party agrees to indemnify the indemnified
party against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by Section
8(c) hereof, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with Section 8(c) prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
SECTION 9. CONTRIBUTION.
If the indemnification provided for in Section 8 is for any reason
other than as a result of bad faith or wilful misconduct held to be unavailable
to or otherwise insufficient to hold harmless an indemnified party in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each indemnifying party shall contribute to the aggregate amount paid or payable
by such indemnified party, as incurred, as a result of any losses, claims,
damages, liabilities or expenses referred to therein (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company, on the
one hand, and the Underwriters, on the other hand, from the offering of the
Common Shares pursuant to this Agreement 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 the
Underwriters, on the other hand, in connection with the statements or omissions
or inaccuracies in the representations and warranties herein which 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 the Underwriters, on the other hand, in connection
with the offering of the Common Shares pursuant to this Agreement shall be
deemed to be in the same respective proportions as the total net proceeds from
the offering of the Common Shares pursuant to this Agreement (before deducting
expenses) received by the Company, and the total underwriting discount and
commissions received by the Underwriters, in each case as set forth on the front
cover page of the Prospectus (or, if Rule 434 under the Securities Act is used,
the corresponding location on the Term Sheet) bear to the aggregate initial
public offering price of the Common Shares as set forth on such cover. The
relative fault of the Company, on the one hand, and the Underwriters, on the
other hand, shall be determined by reference to, among other things, whether any
such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact or any such inaccurate or alleged
inaccurate representation or warranty relates to information supplied by
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the Company, on the one hand, or 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 a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter shall
be required to contribute any amount in excess of the underwriting commissions
received by such Underwriter in connection with the Common Shares underwritten
by it and distributed to the public. 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. The Underwriters' obligations to contribute
pursuant to this Section 9 are several, and not joint, in proportion to their
respective underwriting commitments as set forth opposite their names in
Schedule A. For purposes of this Section 9, each officer and employee of an
Underwriter and each person, if any, who controls an Underwriter within the
meaning of the Securities Act and the Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company with the meaning of the Securities Act and the Exchange
Act shall have the same rights to contribution as the Company.
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS.
If, on the First Closing Date or the Second Closing Date, as the case
may be, any one or more of the several Underwriters shall fail or refuse to
purchase Common Shares that it or they have agreed to purchase hereunder on such
date, and the aggregate number of Common Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase does not
exceed 10% of the aggregate number of the Common Shares to be purchased on such
date, the other Underwriters shall be obligated, severally, in the proportions
that the number of Firm Common Shares set forth opposite their respective names
on Schedule A bears to the aggregate number of Firm Common Shares set forth
opposite the names of all such non-defaulting Underwriters, or in such other
proportions as may be specified by the Representatives with the consent of the
non-defaulting Underwriters, to purchase the Common Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date. If,
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on the First Closing Date or the Second Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Common Shares
and the aggregate number of Common Shares with respect to which such default
occurs exceeds 10% of the aggregate number of Common Shares to be purchased on
such date, and arrangements satisfactory to the Representatives and the Company
for the purchase of such Common Shares are not made within 48 hours after such
default, this Agreement shall terminate without liability of any party to any
other party except that the provisions of Section 4, Section 8 and Section 9
shall at all times be effective and shall survive such termination. In any such
case either the Representatives or the Company shall have the right to postpone
the First Closing Date or the Second Closing Date, as the case may be, but in no
event for longer than seven days in order that the required changes, if any, to
the Registration Statement and the Prospectus or any other documents or
arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
10. Any action taken under this Section 10 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
SECTION 11. TERMINATION OF THIS AGREEMENT.
Prior to the First Closing Date this Agreement may be terminated by the
Representatives by notice given to the Company if at any time (i) trading or
quotation in any of the Company's securities shall have been suspended or
limited by the Commission or by the Nasdaq Stock Market, or trading in
securities generally on either the Nasdaq Stock Market or the New York Stock
Exchange shall have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock exchanges by the
Commission or the NASD; (ii) a general banking moratorium shall have been
declared by any of federal, New York, Delaware or California authorities; (iii)
there shall have occurred any outbreak or escalation of national or
international hostilities or any crisis or calamity, or any change in the United
States or international financial markets, or any substantial change or
development involving a prospective substantial change in United States' or
international political, financial or economic conditions, as in the judgment of
the Representatives is material and adverse and makes it impracticable to market
the Common Shares in the manner and on the terms described in the Prospectus or
to enforce contracts for the sale of securities; or (iv) in the judgment of the
Representatives there shall have occurred any Material Adverse Change. Any
termination pursuant to this Section 11 shall be without liability on the part
of (a) the Company to any Underwriter, except that the Company shall be
obligated to reimburse the expenses of the Representatives and the Underwriters
pursuant to Sections 4 and 6 hereof, (b) any Underwriter to the Company, or (c)
of any party hereto to any other party except that the provisions of Section 8
and Section 9 shall at all times be effective and shall survive such
termination.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties and
other statements of the Company, of its officers and of the several Underwriters
set forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on
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behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, as the case may be, and will
survive delivery of and payment for the Common Shares sold hereunder and any
termination of this Agreement.
SECTION 13. NOTICES.
All communications hereunder shall be in writing and shall be mailed,
hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representatives:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to the Company:
Petra Capital, Inc.
000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 14. SUCCESSORS. This Agreement will inure to the benefit of
and be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 10 hereof, and to the extent provided in Sections 8 and 9
hereof, to the benefit of the employees, officers and directors and controlling
persons referred to in Section 8 and Section 9, and in each case their
respective successors, and no other person will have any right or obligation
hereunder. Petra Capital, Inc. shall be deemed the "successor" to the
Predecessor Entities following consummation of the Reorganization. The term
"successors" shall not include any purchaser of the Common Shares as such from
any of the Underwriters merely by reason of such purchase.
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SECTION 15. PARTIAL UNENFORCEABILITY.
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
SECTION 16. GOVERNING LAW PROVISIONS. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
SECTION 17. GENERAL PROVISIONS.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition is meant to benefit. The Table of Contents and the Section
headings herein are for the convenience of the parties only and shall not affect
the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any preliminary
prospectus and the Prospectus (and any amendments and supplements thereto), as
required by the Securities Act and the Exchange Act.
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
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Very truly yours,
PETRA CAPITAL, INC.
By:
--------------------------------
Xxxxxx X. Xxxxxxx
President and Chief Executive Officer
PETRA CAPITAL LLC
By:
--------------------------------
Xxxxx X. Xxxxxxx
Co-Managing Partner
The foregoing Underwriting Agreement is hereby confirmed and accepted
by the Representatives in San Francisco, California as of the date first above
written.
NATIONSBANC XXXXXXXXXX SECURITIES LLC
BANCAMERICA XXXXXXXXX XXXXXXXX
WHEAT FIRST UNION
XXXXXXXX INC.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By: NATIONSBANC XXXXXXXXXX SECURITIES LLC
--------------------------------
By: Xxxxxxx X. Xxxxx
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SCHEDULE A
NUMBER OF FIRM
COMMON SHARES
UNDERWRITERS TO BE PURCHASED
NationsBanc Xxxxxxxxxx Securities LLC............... [___]
BancAmerica Xxxxxxxxx Xxxxxxxx...................... [___]
Wheat First Union................................... [___]
Xxxxxxxx Inc. ...................................... [___]
[___] .............................................. [___]
[___] .............................................. [___]
[___] .............................................. [___]
Total............................................... [___]
31
EXHIBIT A
The final opinion in draft form should be attached as Exhibit A at the time this
Agreement is executed.
Opinion of counsel for the Company to be delivered pursuant to Section
5(e) of the Underwriting Agreement.
All capitalized terms shall have the meaning ascribed to such terms in
the Underwriting Agreement.
References to the Prospectus in this Exhibit A include any supplements
thereto at the Closing Date.
(i.) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware (such counsel being entitled to rely in respect of this opinion on
certificates of appropriate officials of the State of Delaware as to the good
standing of the Company in such state).
(ii.) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Underwriting
Agreement and the Operative Documents.
(iii.) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in the State of
Tennessee and in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except for such other jurisdictions where the failure to so
qualify or to be in good standing would not, individually or in the aggregate,
result in a Material Adverse Change (such counsel being entitled to rely in
respect of this opinion on certificates of appropriate officials of such
jurisdictions and in respect of matters of fact upon certificates of officers of
the Company).
(iv.) Each significant subsidiary (as defined in Rule 405
under the Securities Act) has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and, to
the best knowledge of such counsel, is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except for such jurisdictions where the
failure to so qualify or to be in good standing would not, individually or in
the aggregate, result in a Material Adverse Change (such counsel being entitled
to rely in respect of this opinion on certificates of appropriate officials of
such jurisdictions and in respect of matters of fact upon certificates of
officers of the Company).
(v.) All of the issued and outstanding capital stock of
each such significant subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest,
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mortgage, pledge, lien, encumbrance or, to the best knowledge of such counsel,
any pending or threatened claim.
(vi.) The authorizedcapital of the Company consists of
50,000,000 shares of Common Stock and 20,000,000 shares of preferred stock, $.01
par value. All of the outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable and have been
issued in compliance with the registration and qualification requirements of
federal and state securities laws. The form of certificate used to evidence the
Common Stock is in due and proper form and complies with all applicable
requirements of the charter and by-laws of the Company and the General
Corporation Law of the State of Delaware. The description of the Company's stock
option, stock bonus and other stock plans or arrangements, and the options or
other rights granted and exercised thereunder, set forth in the Prospectus
accurately and fairly presents the information required to be shown with respect
to such plans, arrangements, options and rights.
(vii.) No stockholder of the Company or any other person has
any preemptive right, right of first refusal or other similar right to subscribe
for or purchase securities of the Company arising (i) by operation of the
charter or by-laws of the Company or the General Corporation Law of the State of
Delaware or (ii) to the best knowledge of such counsel, otherwise.
(viii.) Each of the Underwriting Agreement and the Operative
Documents has been duly authorized, executed and delivered by, and is a legal,
valid and binding obligation of, the Company and the Predecessor Entities, as
the case may be, enforceable in accordance with its terms, except as rights to
indemnification thereunder may be limited by applicable law and except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles.
(ix.) The Common Shares to be purchased by the Underwriters
from the Company have been duly authorized for issuance and sale pursuant to the
Underwriting Agreement and, when issued and delivered by the Company pursuant to
the Underwriting Agreement against payment of the consideration set forth
therein, will be validly issued, fully paid and nonassessable.
(x.) Each of the Registration Statement and the Rule
462(b) Registration Statement, if any, has been declared effective by the
Commission under the Securities Act. To the best knowledge of such counsel, no
stop order suspending the effectiveness of either of the Registration Statement
or the Rule 462(b) Registration Statement, if any, has been issued under the
Securities Act and no proceedings for such purpose have been instituted or are
pending or are contemplated or threatened by the Commission. Any required filing
of the Prospectus and any supplement thereto pursuant to Rule 424(b) or Rule
497(h) under the Securities Act has been made in the manner and within the time
period required by such Rule 424(b) or Rule 497(h).
(xi.) The Registration Statement, including any Rule 462(b)
Registration Statement, the Prospectus, and each amendment or supplement to the
Registration Statement and
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33
the Prospectus, as of their respective effective or issue dates (other than the
financial statements and supporting schedules and other financial data included
therein or in exhibits to or excluded from the Registration Statement, as to
which no opinion need be rendered) comply as to form in all material respects
with the applicable requirements of the Securities Act.
(xii.) The Common Shares have been approved for listing on
the Nasdaq National Market.
(xiii.) The statements (i) in the Prospectus under the
captions "Risk Factors--Loss of RIC Tax Status," "Description of Capital Stock",
"Regulation," "Tax Status" and "Shares Eligible for Future Sale and (ii) in Item
29 of the Registration Statement, insofar as such statements constitute matters
of law, summaries of legal matters, the Company's charter or by-law provisions,
documents or legal proceedings, or legal conclusions, has been reviewed by such
counsel and fairly present and summarize, in all material respects, the matters
referred to therein.
(xiv.) To the best knowledge of such counsel, there are no
legal or governmental actions, suits or proceedings pending or threatened which
are required to be disclosed in the Registration Statement, other than those
disclosed therein.
(xv.) To the best knowledge of such counsel, there are no
Existing Instruments required to be filed as exhibits to the Registration
Statement thereto other than those filed as exhibits to the Registration
Statement; and the descriptions thereof in the Registration Statement are
correct in all material respects.
(xvi.) No consent, approval, authorization or other order
of, or registration or filing with, any court or other governmental authority or
agency, is required to be obtained by the Company or either of the Predecessor
Entities for the Company's or Petra Capital LLC's execution, delivery and
performance of the Underwriting Agreement or for the Company's and the
Predecessor Entities' execution, delivery and performance of the Operative
Agreements, except as required under the Securities Act, applicable state
securities or blue sky laws and from the NASD.
(xvii.) The execution and delivery of the Underwriting
Agreement and the Operative Documents by the Company and the performance by the
Company of its obligations thereunder (other than performance by the Company of
its obligations under the indemnification section of the Underwriting Agreement,
as to which no opinion need be rendered), and the execution and delivery of the
Operative Documents by each of the Predecessor Entities and the performance by
each of the Predecessor Entities of their respective obligations under the
Operative Documents (i) have been duly authorized by all necessary corporate
action on the part of the Company and the Predecessor Entities, as the case may
be; (ii) will not result in any violation of the provisions of the charter or
by-laws of the Company or any subsidiary or the organizational documents of the
Predecessor Entities, as the case may be; (iii) will not constitute a breach of,
or Default or a Debt Repayment Triggering Event under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries or any Predecessor Entity pursuant to,
(A) the Credit Facility, or (B) to the knowledge of such counsel, any other
material Existing Instrument; or (iv) to the knowledge of such counsel, will not
result in any violation of any law, administrative regulation or
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34
administrative or court decree applicable to the Company or any subsidiary or to
any Predecessor Entity.
(xviii.) The Company meets all requirements to qualify as a
"business development company" as that term is defined in the 1940 Act and has
in effect a valid election as a "business development company" as provided for
in Sections 54 through 65 of the 1940 Act. By virtue of its election as a
"business development company," the Company is not an investment company
required to be registered under the 1940 Act.
(xix.) To the best knowledge of such counsel, there are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by the Underwriting Agreement, except for such rights
as have been duly waived.
(xx.) To the best knowledge of such counsel, neither the
Company nor any subsidiary nor any Predecessor Entity is in violation of its
charter or by-laws or other organizational document or any law, administrative
regulation or administrative or court decree applicable to the Company or any
subsidiary or any Predecessor Entity or is in Default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
material Existing Instrument, except in each such case for such violations or
Defaults as would not, individually or in the aggregate, result in a Material
Adverse Change.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants for
the Company and with representatives of the Underwriters at which the contents
of the Registration Statement and the Prospectus, and any supplements or
amendments thereto, and related matters were discussed. Although such counsel
has not independently verified, is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (other than as
specified above), and any supplements or amendments thereto, on the basis of the
foregoing, no facts have come to their attention which would lead them to
believe that either the Registration Statement or any amendments thereto, at the
time the Registration Statement or such amendments became effective, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus, as of its date or at the First Closing Date
or the Second Closing Date, as the case may be, contained an untrue statement of
a material fact or omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express no
belief as to the financial statements or schedules or other financial or
statistical data contained in the Registration Statement or the Prospectus or
any amendments or supplements thereto).
In rendering such opinion, (A) such counsel need not express opinions
on the laws of any jurisdiction other than the General Corporation Law of the
State of Delaware, New York, Georgia or the federal law of the United States and
(B) as to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials.
A-4
35
EXHIBIT B
______, 1998
NationsBanc Xxxxxxxxxx Securities LLC
BancAmerica Xxxxxxxxx Xxxxxxxx
Wheat First Union
Xxxxxxxx Inc.
As Representatives of the Several Underwriters
c/o NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: Petra Capital, Inc. (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("Common Stock") or securities convertible into or
exchangeable or exercisable for Common Stock. The Company proposes to carry out
a public offering of Common Stock (the "Offering") for which you will act as the
representatives of the underwriters. The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company by,
among other things, raising additional capital for its operations. The
undersigned acknowledges that you and the other underwriters are relying on the
representations and agreements of the undersigned contained in this letter in
carrying out the Offering and in entering into underwriting arrangements with
the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of NationsBanc
Xxxxxxxxxx Securities LLC (which consent may be withheld in its sole
discretion), directly or indirectly, sell, offer, contract or grant any option
to sell (including without limitation any short sale), pledge, transfer,
establish an open "put equivalent position" within the meaning of Rule 16a-1(h)
under the Securities Exchange Act of 1934, or otherwise dispose of any shares of
Common Stock, options or warrants to acquire shares of Common Stock, or
securities exchangeable or exercisable for or convertible into shares of Common
Stock currently or hereafter owned either of record or beneficially (as defined
in Rule 13d-3 under Securities Exchange Act of 1934, as amended) by the
undersigned, or publicly announce the undersigned's intention to do any of the
foregoing, for a period commencing on the date hereof and continuing through the
close of trading on the date that is two (2) years after the date of the
Prospectus; provided, however, that nothing contained herein shall be deemed to
prohibit a pledge by the undersigned of all or any portion of the Common Stock
to a financial institution as security for any financing made available to the
undersigned or any of its affiliates by such financial institution. The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent and registrar against the transfer of shares
of Common Stock or securities convertible into or exchangeable or exercisable
for Common Stock held by the undersigned except in compliance with the foregoing
restrictions.
36
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of any Common Stock
owned either of record or beneficially by the undersigned, including any rights
to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
Xxxxxxx Partners, L.P.
By:
-------------------------------------------
General Partner
By:
-------------------------------------
Signature
-----------------------------------------
Printed Name of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
B-2
37
EXHIBIT c
______, 1998
NationsBanc Xxxxxxxxxx Securities LLC
BancAmerica Xxxxxxxxx Xxxxxxxx
Wheat First Union
Xxxxxxxx Inc.
As Representatives of the Several Underwriters
c/o NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: Petra Capital, Inc. (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("Common Stock") or securities convertible into or
exchangeable or exercisable for Common Stock. The Company proposes to carry out
a public offering of Common Stock (the "Offering") for which you will act as the
representatives of the underwriters. The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company by,
among other things, raising additional capital for its operations. The
undersigned acknowledges that you and the other underwriters are relying on the
representations and agreements of the undersigned contained in this letter in
carrying out the Offering and in entering into underwriting arrangements with
the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of NationsBanc
Xxxxxxxxxx Securities LLC (which consent may be withheld in its sole
discretion), directly or indirectly, sell, offer, contract or grant any option
to sell (including without limitation any short sale), pledge, transfer,
establish an open "put equivalent position" within the meaning of Rule 16a-1(h)
under the Securities Exchange Act of 1934, or otherwise dispose of any shares of
Common Stock, options or warrants to acquire shares of Common Stock, or
securities exchangeable or exercisable for or convertible into shares of Common
Stock currently or hereafter owned either of record or beneficially (as defined
in Rule 13d-3 under Securities Exchange Act of 1934, as amended) by the
undersigned, or publicly announce the undersigned's intention to do any of the
foregoing, for a period commencing on the date hereof and continuing through the
close of trading on the date 180 days after the date of the Prospectus;
provided, however, that nothing contained herein shall be deemed to prohibit a
pledge by the undersigned of all or any portion of the Common Stock to a
financial institution as security for any financing made available to the
undersigned or any of its affiliates by such financial institution. The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent and registrar against the transfer of shares
of Common Stock or securities convertible into or exchangeable or exercisable
for Common Stock held by the undersigned except in compliance with the foregoing
restrictions.
38
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of any Common Stock
owned either of record or beneficially by the undersigned, including any rights
to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
-----------------------------------------------
Printed Name of Holder
By:
--------------------------------------------
Signature
-----------------------------------------------
Printed Name of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf
of an entity)
C-2
