_________ Shares
XXXXXX & XXXXXX GROUP, INC.
Common Stock
[Form Of UNDERWRITING AGREEMENT]
New York, New York
_______, 2005
ThinkEquity Partners LLC
00 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
as Representative of the Several Underwriters
Ladies and Gentlemen:
Xxxxxx & Xxxxxx Group, Inc., a New York corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
an aggregate of _________ shares of common stock, $0.01 par value per share (the
"Firm Shares"), of the Company to the several underwriters named in Schedule I
hereto (the "Underwriters"), for whom ThinkEquity Partners LLC is acting as
representative (the "Representative"). The Company also proposes to sell upon
the terms and conditions contained in Section 2 hereof, up to _______ additional
common shares (the "Additional Shares," which together with the Firm Shares are
hereinafter collectively referred to as the "Shares").
The Company wishes to confirm as follows its agreement with you in
connection with the purchases of the Shares from the Company.
1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933 (the "1933 Act"),
the Investment Company Act of 1940 (the "1940 Act"), and the rules and
regulations of the Commission promulgated under the 1933 Act (the "1933 Act
Rules and Regulations") and the 1940 Act (the "1940 Act Rules and Regulations"
and, together with the 1933 Act Rules and Regulations, the "Rules and
Regulations"), a registration statement on Form N-2 (File No. 333-112862), under
the 1933 Act including a prospectus, relating to seven million shares of the
Company's common stock and an election to be treated as a business development
company under the 1940 Act. References herein to the term "Registration
Statement" as of any given date shall mean such registration statement, as
amended or supplemented to such date, including a registration statement filed
pursuant to Rule 462(b) under the 1933 Act registering additional shares of
common stock (the "462 Registration Statement"), and including all documents
incorporated by reference therein as of such date pursuant to General
Instruction F of Form N-2 ("Incorporated Documents"). References herein to the
term "Prospectus" as of any given date shall mean the prospectus in the form
included in the Registration Statement, as supplemented by a prospectus
supplement relating to the Shares proposed to be issued and sold hereunder filed
pursuant to Rule 497(a) or 497(c) of the 1933 Act Rules and Regulations ("Rule
497"), and as further amended or supplemented as of such date, including all
Incorporated Documents. Any Prospectus used prior to the execution hereof shall
be referred to as a "Prepricing Prospectus." References herein to the term
"Effective Date" shall be deemed to refer to the later of the time and date of
effectiveness of (i) Post-Effective Amendment No. 3 to the Registration
Statement and (ii) the date of the filing of the 462 Registration Statement.
References herein to the terms "amend", "amendment" or "supplement" with respect
to the Registration Statement or any Prospectus shall be deemed to refer to and
include the filing of any document under the Securities Exchange Act of 1934
(the "1934 Act") deemed to be incorporated therein by reference. The Company
will next file with the Commission a Prospectus in accordance with Rule 497. As
filed, the Prospectus shall contain all required information, and, except to the
extent the Representative shall agree in writing to a modification, shall be in
all substantive respects in the form furnished to the Representative prior to
the execution hereof or, to the extent not completed at such time, shall contain
only such specific additional
information and other changes as the Company has
advised the Representative, prior to the such time, will be included or made
therein.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell the
Firm Shares to the respective Underwriters and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and conditions set forth herein, each of the
Underwriters, severally and not jointly, agrees to purchase from the Company at
a purchase price of $_____ per Share (the "purchase price per Share"), the
number of Firm Shares set forth opposite such Underwriter's name in Schedule I
hereto.
The Company hereby also agrees to sell to the Underwriters, and upon the
basis of the representations, warranties and agreements of the Company herein
contained and subject to all the terms and conditions set forth herein, the
Underwriters shall have the right for 30 days from the date of the Prospectus to
purchase from the Company up to _______ Additional Shares at the purchase price
per Share for the Firm Shares. The number of shares of the Additional Shares to
be purchased by each Underwriter shall be the same percentage of the total
number of shares of the Additional Shares to be purchased by the several
Underwriters as such Underwriter is purchasing of the Firm Shares, subject to
such adjustments as the Representative in its absolute discretion shall make to
eliminate any fractional shares. The Additional Shares may be purchased solely
for the purpose of covering over-allotments, if any, made in connection with the
offering of the Firm Shares.
3. Terms of Public Offering. The Company has been advised by the
Underwriters that they propose to make a public offering of the Shares as soon
after this Agreement has been executed and delivered as in their judgment is
advisable, and initially to offer the Shares upon the terms set forth in the
Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of the Firm Shares and payment therefor shall be made at the
offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Four Times Square, New
York, New York, at 10:00 a.m., New York, New York time, on ______, 2005 (the
"Closing Date"). The place of closing for the Firm Shares and the Closing Date
may be varied by agreement between the Representative and the Company.
Delivery to the Underwriters of and payment for any Additional Shares to be
purchased by the Underwriters shall be made at the offices of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, Four Times Square, New York, New York, at 10:00 a.m.,
New York, New York time, on such date or dates (the "Additional Closing Date")
(which may be the same as the Closing Date but shall in no event be earlier than
the Closing Date nor earlier than three nor later than ten business days after
the giving of the notice hereinafter referred to) as shall be specified in a
written notice from the Representative to the Company of the Underwriters'
determination to purchase a number, specified in such notice, of Additional
Shares. You may give such notice to the Company at any time within 30 days after
the date of the Prospectus. The place of closing for the Additional Shares and
the Additional Closing Date may be varied by agreement between the
Representative and the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as the Representative shall request prior to 1:00 p.m., New York, New York time
(or such other time as the parties agree), not later than the second full
business day preceding the Closing Date or the Additional Closing Date, as the
case may be. Such certificates shall be made available to the Representative in
New York, New York for inspection and packaging not later than 9:30 a.m., New
York, New York time, on the business day immediately preceding the Closing Date
or the Additional Closing Date, as the case may be. The certificates evidencing
the Firm Shares and any Additional Shares to be purchased hereunder shall be
delivered to the Representative on the Closing Date or the Additional Closing
Date, as the case may be, against payment of the purchase price therefor by wire
transfer immediately available funds to the account specified in writing, not
later than the close of business two days next preceding the Closing Date or the
Additional Closing Date, as the case may be. Payment for the Firm Shares sold by
the Company hereunder shall be delivered by the Representative to the Company.
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5. Covenants and Agreements of the Company. The Company covenants and
agrees with each of the Underwriters as follows:
(a) If, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to
be declared effective under the 1933 Act before the offering of the Shares
may commence, the Company will use its best efforts to cause such
post-effective amendment to become effective under the 1933 Act as soon as
possible. The Company will file a Prospectus pursuant to Rule 497, as
promptly as practicable, but no later than the fifth business day following
the date hereof. The Company will advise the Representative promptly and,
if requested by the Representative, will confirm such advice in writing:
(i) when such post-effective amendment has become effective or (ii) when
the Prospectus has been timely filed pursuant to Rule 497.
(b) The Company will advise you promptly and, if requested by the
Representative, will confirm such advice in writing: (i) of any request
made by the Commission for amendment of or a supplement to the Registration
Statement, including a Rule 462(b) Registration Statement, the Prospectus
or any Prepricing Prospectus (or any amendment or supplement to any of the
foregoing) or for additional information, (ii) of the issuance by the
Commission, any state securities commission, any national securities
exchange, any arbitrator, any court or any other governmental, regulatory,
self-regulatory or administrative agency or any official of any order
suspending the effectiveness of the Registration Statement, prohibiting or
suspending the use of the Prospectus, any Prepricing Prospectus or any
Sales Material (as hereinafter defined), of any notice pursuant to Section
8(e) of the 1940 Act, of the suspension of qualification of the Shares for
offering or sale in any jurisdiction, or the initiation or contemplated
initiation of any proceeding for any such purposes, (iii) of receipt by (A)
the Company, any affiliate of the Company or attorney of the Company of any
other material communication from the Commission, or (B) the Company, any
affiliate of the Company or attorney of the Company of any other material
communication from the Commission, any state securities commission, any
national securities exchange, any arbitrator, any court or any other
governmental, regulatory, self-regulatory or administrative agency or any
official relating, in the case of either clause (A) or (B), to the Company
(if such communication relating to the Company is received by such person
within three years after the date of this Agreement), the Registration
Statement, the Form N-8A, the Prospectus, any Prepricing Prospectus, any
Sales Material (or any amendment or supplement to any of the foregoing) or
this Agreement, and (iv) within the period of time referred to in paragraph
(f) below, of any material, adverse change in the condition (financial or
other), business, business prospects, properties, net assets or results of
operations of the Company (other than as a result of changes in market
conditions generally) or of the happening of any event known to the Company
which makes any statement of a material fact made in the Registration
Statement, the Prospectus, any Prepricing Prospectus or any Sales Material
(or any amendment or supplement to any of the foregoing) untrue or which
requires the making of any additions to or changes in the Registration
Statement, the Prospectus, any Prepricing Prospectus or any Sales Material
(or any amendment or supplement to any of the foregoing) in order to state
a material fact required by the 1933 Act, the 1940 Act or the Rules and
Regulations to be stated therein or necessary in order to make the
statements therein (in the case of a prospectus or any Sales Material, in
light of the circumstances under which they were made) not misleading or of
the necessity to amend or supplement the Registration Statement, the
Prospectus, any Prepricing Prospectus or any Sales Material (or any
amendment or supplement to any of the foregoing) to comply with the 1933
Act, the 1940 Act, the Rules and Regulations or any other law or order of
any court or regulatory body. If at any time the Commission shall issue any
order suspending the effectiveness of the Registration Statement,
prohibiting or suspending the use of the Prospectus or any Sales Material
(or any amendment or supplement to any of the foregoing) or suspending the
qualification of the Shares for offering or sale in any jurisdiction, the
Company will use its best efforts to obtain the withdrawal of such order at
the earliest possible time. If at any time any national securities
exchange, any state securities commission, any arbitrator, any court or any
other governmental, regulatory, self-regulatory or administrative agency or
any official shall issue any order suspending the effectiveness of the
Registration Statement, prohibiting or suspending the use of the Prospectus
or any Sales Material (or any amendment or supplement to any of the
foregoing) or suspending the qualification of the Shares for offering or
sale in any jurisdiction, the Company will use its reasonable best efforts
to obtain the withdrawal of such order at the earliest possible time.
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(c) Within five years from the date hereof, the Company will not (i)
file any amendment (except any post-effective amendment required by Rule
8b-16 of the 1940 Act which is filed with the Commission after the later of
(x) one year from the date of this Agreement or (y) the date on which the
distribution of the Shares is completed) to the Registration Statement or
make any amendment or supplement to the Prospectus, any Prepricing
Prospectus or any Sales Material (or any amendment or supplement to any of
the foregoing) unless (i) the Representative shall have been previously
advised thereof and been given a reasonable opportunity to review such
filing, amendment or supplement or (ii) so long as, in the opinion of
counsel for the Underwriters, a Prospectus is required to be delivered in
connection with sales of Shares by an Underwriter or dealer, file any
information, documents or reports pursuant to the 1933 Act, the 1940 Act or
the 1934 Act, without delivering a copy of such information, documents or
reports to the Representative, prior to or concurrently with such filing.
(d) Prior to the execution and delivery of this Agreement, the Company
has delivered to the Representative, without charge, in such quantities as
it has reasonably requested, copies of each form of any Prepricing
Prospectus. The Company consents to the use, in accordance with the
provisions of the 1933 Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by each of the Underwriters
and by dealers, prior to the date of the Prospectus, of each Prepricing
Prospectus so furnished by the Company.
(e) As soon after the execution and delivery of this Agreement as
reasonably possible and thereafter from time to time, for such period as in
the opinion of counsel for the Underwriters a prospectus is required by the
1933 Act to be delivered in connection with sales of Shares by each of the
Underwriters, the Company will promptly deliver to each of the Underwriters
and each dealer, without charge, as many copies of the Prospectus (and of
any amendment or supplement thereto) as the Representative may reasonably
request. The Company consents to the use of the Prospectus (and of any
amendments or supplements thereto) in accordance with the provisions of the
1933 Act and with the securities or Blue Sky laws of the jurisdictions in
which the Shares are offered by the Underwriters and by all dealers to whom
Shares may be sold, both in connection with the offering or sale of the
Shares and for such period of time thereafter as the Prospectus is required
by law to be delivered in connection with sales of Shares by the
Underwriters or any dealer. If during such period of time any event shall
occur that in the judgment of the Company or in the opinion of counsel for
the Underwriters is required to be set forth in the Registration Statement
or the Prospectus (as then amended or supplemented) or should be set forth
therein in order to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not
misleading in any material respect or if it is necessary to supplement or
amend the Registration Statement or the Prospectus to comply with the 1933
Act, the 1940 Act, the Rules and Regulations or any other applicable law,
rule or regulation, the Company will forthwith notify the Representative of
such event, prepare and, subject to the provisions of paragraph 1 above,
promptly file with the Commission and use its best efforts to cause to
become effective as promptly as possible an appropriate amendment or
supplement thereto and will furnish as promptly as reasonably possible to
each of the Underwriters and dealers, without charge, such number of copies
thereof as they may reasonably request; provided, however, that if such
amendment or supplement is required solely as a result of a material
misstatement in or material omission from the information furnished in
writing by or on behalf of each of the Underwriters to the Company
expressly for use in the Registration Statement or the Prospectus (such
information, as described in Section 13 of this Agreement, being referred
to herein as the "Underwriter Information"), then the Company shall deliver
such amendment or supplement at cost to the Underwriters.
(f) The Company will cooperate with the Representative and with
counsel for the Underwriters in connection with any registration or
qualification of the Shares for offering and sale by each of the
Underwriters and by dealers as may be required under the applicable
securities or Blue Sky laws of such jurisdictions as the Representative may
designate and will file such consents to service of process or other
documents necessary or appropriate in order to effect such registration or
qualification for so long as required to complete the distribution of the
Shares; provided, however, that the foregoing shall not apply to the extent
that the Shares are "covered securities" that are exempt from state
regulation of securities offerings pursuant to Section 18 of the 1933 Act.
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(g) As soon as practicable, but in no event later than the last day of
the 15th full calendar month following the end of the calendar quarter in
which the effective date of the Registration Statement falls, the Company
will make generally available to its security holders an earnings
statement, which need not be audited, which earnings statement shall
satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 of the
1933 Act Rules and Regulations.
(h) During the period of three years hereafter, the Company will
furnish or will have furnished to the Representative and, upon your
request, to each of the other Underwriters, as soon as available: (i) a
copy of each report of the Company mailed to shareholders or filed with the
Commission or furnished to the NASD or any national securities exchange or
(ii) from time to time such other information concerning the Company as the
Representative may reasonably request.
(i) If this Agreement shall terminate or be terminated after execution
pursuant to any provisions hereof or if this Agreement shall be terminated
by the Underwriters because of any inability, failure or refusal on the
part of the Company to comply with any material terms in this Agreement or
because any of the conditions in Section 9 of this Agreement required to be
complied with or fulfilled by it are not satisfied, then the Company agrees
to reimburse each of the Underwriters for all out-of-pocket expenses
(including reasonable fees and expenses of counsel for the Underwriters)
incurred by the Underwriters in connection herewith.
(j) The Company will direct the investment of the net proceeds of the
offering of the Shares in accordance in all material respects with the
statements under the caption "Use of Proceeds" set forth in the Prospectus.
(k) The Company will file the requisite copies of the Prospectus with
the Commission in a timely fashion pursuant to Rule 497 and will advise you
of the time and manner of such filing.
(l) The Company will use its best efforts to have the Shares approved,
subject to notice of issuance, for trading on the NASD National Market
concurrently with the effectiveness of the Registration Statement and to
comply with the rules or regulations of the NASD in relation thereto.
(m) Except to the Underwriters as provided in this Agreement or
pursuant to any dividend reinvestment plan of the Company described in the
Prospectus, the Company will not directly or indirectly offer, sell,
contract to sell or otherwise dispose of, any common stock of the Company
or any securities convertible into or exercisable or exchangeable for
common stock of the Company or grant any rights, options or warrants to
purchase common stock of the Company, for a period of 90 days after the
date of the Prospectus, without the prior written consent of the
Representative; provided, that following the sale by each Underwriter of
its allotment of Shares and the termination of stabilizing activities, if
any, the Company may, without the prior written consent of any of the
Underwriters, sell shares of its common stock that are registered under the
Registration Statement but are not being sold pursuant to this Agreement.
In the event that either (i) during the last 17 days of the lock-up period,
the Company releases earnings results or announce material news or a
material event relating to the Company or (ii) prior to the expiration of
the lock-up period, the Company announces that it will release earnings
results during the 15-day period beginning on the last day of the initial
lock-up period, the expiration of the lock-up period will be extended until
the expiration of the 18-day period beginning on the issuance of the
earnings release of the announcement of the material news or material
event.
(n) Except as stated in this Agreement and in the Prospectus, the
Company will not take, directly or indirectly, any action designed to or
that might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Shares in violation of federal securities
laws.
(o) For a period of one year following the Closing Date, the Company
will direct the investment of the proceeds of the offering of the Shares so
as to comply with the requirements of Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), to qualify as a regulated investment
company under the Code.
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(p) The Company will comply with all applicable securities and other
applicable laws, rules and regulations, including, without limitation, the
Xxxxxxxx-Xxxxx Act of 2002, and will use its best efforts to cause the
Company's directors and officers, in their capacities as such, to comply
with such laws, rules and regulations, including, without limitation, the
provisions of the Xxxxxxxx-Xxxxx Act of 2002.
(q) The Company will comply with all provisions of any undertakings
contained in the Registration Statement.
6. Representations and Warranties of the Company. The Company hereby
represents and warrants to each of the Underwriters on the date hereof, and
shall be deemed to represent and warrant to each of the Underwriters on the
Closing Date and the Additional Closing Date, that:
(a) Each Prepricing Prospectus filed pursuant to Rule 497 of the 1933
Act Rules and Regulations, complied when so filed in all material respects
with the provisions of the 1933 Act, the 1940 Act and the Rules and
Regulations (except that this representation and warranty does not apply to
statements in or omissions from the Prepricing Prospectus (and any
amendment or supplement thereto) made in reliance upon and in conformity
with the Underwriter Information) and the Commission has not issued any
order preventing or suspending the use of the Prepricing Prospectus.
(b) The Registration Statement has been declared effective by the
Commission and no stop order suspending such effectiveness has been issued
under the 1933 Act or the 1940 Act and no proceedings for that purpose have
been instituted or are pending or, to the knowledge of the Company,
threatened by the Commission. None of the shares of the Company's common
stock registered with the Commission pursuant to such registration
statement have been previously issued. The Registration Statement, in the
form in which it became or becomes effective and also in such form as it
may be when any post-effective amendment thereto shall become effective,
the Prospectus and any amendment or supplement thereto when filed with the
Commission under Rule 497 and at the Closing Date or any Additional Closing
Date and the Form N-8A when originally filed with the Commission and any
amendment or supplement thereto when filed with the Commission complied or
will comply in all material respects with the provisions of the 1933 Act,
the 1940 Act and the Rules and Regulations and each of the Registration
Statement, and the Prospectus (or any supplement or amendment to any of
them) did not or will not at any such times contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not
misleading; except that this representation and warranty does not apply to
statements in or omissions from the Registration Statement and the
Prospectus (and any amendment or supplement to either of them) made in
reliance upon and in conformity with the Underwriter Information.
(c) All the outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable
and are free of any preemptive or similar rights; the Shares have been duly
authorized and, when issued and delivered to the Underwriters against
payment therefor in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable and free of any preemptive or similar
rights; except as set forth in the Prospectus, the Company is not a party
to or bound by any outstanding options, warrants, or similar rights to
subscribe for, or contractual obligations to issue, sell, transfer or
acquire, any of its capital stock or any securities convertible into or
exchangeable for any of such capital stock; and the capital stock of the
Company conforms in all respects to the description thereof in the
Registration Statement or the Prospectus (or any amendment or supplement to
either of them). Except for the Shares and the shares of common stock
issued in accordance with Section 14(a) of the 1940 Act, no other shares of
capital stock are issued or outstanding and the capitalization of the
Company conforms to the description thereof in the Registration Statement
and the Prospectus (or any amendment or supplement to either of them) as of
the date set forth therein.
(d) The Company has been duly formed and is validly existing in good
standing as a corporation under the laws of the State of New York, with
full corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration Statement and
the Prospectus (and any amendment or supplement to either of them) and is
duly registered and qualified to
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conduct business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business requires
such registration or qualification, except where the failure so to register
or to qualify does not or would not have a material, adverse effect on the
condition (financial or other), business, business prospects, properties,
net assets or results of operations of the Company (a "Material Adverse
Effect").
(e) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company, or to which the
Company or any of its properties is subject (i) that are required to be
described in the Registration Statement or the Prospectus (and any
amendment or supplement to either of them) but are not described therein or
(ii) which might individually or in the aggregate prevent the transactions
contemplated by this Agreement, and there are no agreements, contracts,
indentures, leases or other instruments that are required to be described
in the Registration Statement or the Prospectus (or any amendment or
supplement to either of them) or to be filed as an exhibit to the
Registration Statement that are not described therein or filed as an
exhibit thereto. The contracts so filed as exhibits are accurate and
complete in all respects. All such contracts to which the Company is a
party have been duly authorized, executed and delivered by the Company,
constitute valid and binding agreements of the Company and are enforceable
against the Company in accordance with the terms thereof, except as
enforceability thereof may be limited by (A) the application of bankruptcy,
reorganization, insolvency and other laws affecting creditors' rights
generally, (B) equitable principles being applied at the discretion of a
court before which any proceeding may be brought and (C) limitations of
public policy and a court's discretion with respect to the enforceability
of any indemnification rights. The Company has not received notice or been
made aware that any other party is in breach of or default under any such
contracts.
(f) The Company is not (i) in violation of its Certificate of
Incorporation, bylaws or other organizational documents, (ii) in violation
of any law, ordinance, administrative or governmental rule or regulation
applicable to the Company or of any decree of the Commission, any state
securities commission, any national securities exchange, any arbitrator,
any court or any other governmental, regulatory, self-regulatory or
administrative agency or any other agency or any body or official having
jurisdiction over the Company or (iii) in breach or default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
material agreement, indenture, lease or other instrument to which the
Company is a party or by which it or any of its properties may be bound,
except, in the case of (ii) and (iii) above, for violations, breaches or
defaults that do not or would not have, either individually or in the
aggregate, a Material Adverse Effect on the Company; and there does not
exist any state of facts which constitute an event of default on the part
of the Company as defined in such documents or which, with notice or lapse
of time or both, would constitute such an event of default (except for any
such event of default that would not have a Material Adverse Effect).
(g) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or any of the Stock Transfer
Agency Agreement or Corporate Safekeeping Account Agreement by the Company,
nor the consummation by the Company of the transactions contemplated hereby
or thereby (i) requires any consent, approval, authorization or order of or
registration or filing with the Commission, any state securities
commission, any national securities exchange, any arbitrator, any court,
regulatory body, administrative agency or other governmental body, agency
or official having jurisdiction over the Company (except (A) such as have
been obtained or made prior to the date of this Agreement, (B) for
compliance with the securities or Blue Sky laws of various jurisdictions
which have been or will be effected in accordance with this Agreement and
(C) for compliance with the filing requirements of the NASD Division of
Corporate Finance) or conflicts or will conflict with or constitutes or
will constitute a breach of the Certificate of Incorporation, bylaws, or
other organizational documents of the Company or (ii) (A) conflicts or will
conflict with or constitutes or will constitute a breach of or a default
under any agreement, indenture, lease or other instrument to which the
Company is a party or by which it or any of its properties may be bound or
(B) violates or will violate any statute, law, regulation or filing or
judgment, injunction, order or decree applicable to the Company or any of
its properties or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant
to the terms of any agreement or instrument to which it is a party or by
which it may be bound or to which any of the property or assets of the
Company is subject except, in the case of (ii) above, for conflicts,
breaches, defaults, violations or encumbrances that do not or would not
have, either individually or in the aggregate,
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a Material Adverse Effect. As of the date hereof, the Company is not
subject to any order of any court or of any arbitrator, governmental
authority or administrative agency that has or would have, either
individually or in the aggregate, a Material Adverse Effect.
(h) Since the date as of which information is given in the
Registration Statement and the Prospectus (and any amendment or supplement
to either of them), except as otherwise stated therein (i) there has been
no change that has or would have a Material Adverse Effect; (ii) there have
been no material transactions entered into by the Company other than those
in the ordinary course of its business or described in the Prospectus (and
any amendment or supplement thereto); and (iii) there has been no dividend
or distribution of any kind declared, paid or made by the Company on any
class of its common stock.
(i) PricewaterhouseCoopers LLP, who has audited the Statement of
Assets and Liabilities as of December 31, 2004 and 2003 included in, and
whose report appears in, the Registration Statement and the Prospectus (and
any amendment or supplement to either of them), are independent public
accountants with respect to the Company as required by the 1933 Act, the
1940 Act and the Rules and Regulations and is a registered public
accounting firm within the meaning of the Xxxxxxxx-Xxxxx Act of 2002. To
the best of the Company's knowledge and belief, Xxxxxx Xxxxxxxx LLP, who
previously expressed their opinions on certain of the audited financial
statements included in the Registration Statements and the Prospectus (but
have not consented to inclusion of such opinions in the registration
statements), at all times at which they served as public accountants, were
independent public accountants with respect to the Company within the
meaning of the Securities Act and the applicable Rules and Regulations.
(j) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement
or the Prospectus (or any amendment or supplement to either of them)
present fairly the financial position of the Company on the basis stated in
the Registration Statement at the respective dates or for the respective
periods to which they apply; such statements and related schedules and
notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved except as
disclosed therein; and the other financial and statistical information and
data included in the Registration Statement or the Prospectus (or any
amendment or supplement thereto) are accurately derived from such financial
statements and the books and records of the Company. No other financial
statements or schedules are required to be included in the Registration
Statement.
(k) The Company, subject to the filing of the Prospectus under Rule
497, has taken all action required to be taken by it under the 1933 Act,
the 1940 Act and the Rules and Regulations to make the public offering and
consummate the sale of the Shares as contemplated by this Agreement.
(l) The execution and delivery of and the performance by the Company
of its obligations under this Agreement and the Company Agreements have
been duly and validly authorized by the Company and this Agreement and each
of the Company Agreements have been duly executed and delivered by the
Company and (assuming due and valid authorization, execution and delivery
by the other parties hereto and thereto) this Agreement and each Company
Agreement constitutes the valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except as rights to indemnity and contribution hereunder may be limited by
federal or state securities laws and subject to the qualification that the
enforceability of the Company's obligations hereunder and thereunder may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights
generally and by general equitable principles (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(m) Except as disclosed in or contemplated by the Registration
Statement or the Prospectus (or any amendment or supplement to either of
them), subsequent to the respective dates as of which such information is
given in the Registration Statement and the Prospectus (and any amendment
or supplement to either of them), the Company has not incurred any debt,
liability or obligation, indirect, direct or contingent, and there has not
been any change in the capital stock or capitalization of the Company.
8
(n) The Company has not distributed without the Representative's
consent any offering material in connection with the offering and sale of
the Shares other than the Registration Statement, the Prepricing
Prospectus, the Prospectus and the Sales Material (or any other material,
if any, permitted by the 1933 Act, the 1940 Act or the Rules and
Regulations).
(o) (i) The Company has such licenses, permits, and authorizations of
governmental or regulatory authorities ("permits") as are necessary to own
its property and to conduct its business in the manner described in the
Prospectus (and any amendment or supplement thereto); (ii) the Company has
fulfilled and performed all its obligations with respect to such permits
and no event has occurred which allows or, after notice or lapse of time,
would allow, revocation or termination thereof or results in any other
impairment of the rights of the Company under any such permit, subject in
each case to such qualification as may be set forth in the Prospectus (and
any amendment or supplement thereto); and (iii) except as described in the
Prospectus (and any amendment or supplement thereto), none of such permits
contains any restriction that is materially burdensome to the Company;
except where the failure to obtain or perform its obligations with respect
to such permits, or the restrictions set forth in such permits, as set
forth in clauses (i), (ii) and (iii), either individually or in the
aggregate, does or would not have a Material Adverse Effect.
(p) The Company has maintained and continues to maintain a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with the Board of
Directors' general or specific authorization and with the investment
policies and restrictions of the Company and the applicable requirements of
the 1940 Act, the 1940 Act Rules and Regulations and the Code; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles, to
calculate net asset value and fee accruals, to maintain accountability for
assets and to maintain compliance with the books and records requirements
under the 1940 Act and the 1940 Act Rules and Regulations; (iii) access to
assets is permitted only in accordance with the Board of Directors' general
or specific authorization; and (iv) the recorded account for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. Based on the evaluation of
the Company's controls and procedures described above, the Company is not
aware of (1) any significant deficiency in the design or operation of its
internal control over financial reporting which could adversely affect the
Company's ability to record, process, summarize and report financial data
other than any significant deficiencies disclosed in the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 2005 or any
material weakness in its internal control over financial reporting, other
than the material weakness identified by the Company and disclosed in the
Annual Report on Form 10-K for the year ended December 31, 2004, or the
Quarterly Report on Form 10-Q for the period ended June 30, 2005, or (2)
any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal control
over financial reporting.
(q) The conduct by the Company of its business (as described in the
Prospectus) does not require it to be the owner, possessor, licensee of, or
otherwise require it to have the right to use, any patents, patent
licenses, trademarks, service marks or trade names (collectively,
"Intellectual Property") which it does not own, possess, license or
otherwise have the right to use, except where the failure to own, possess,
license or otherwise have the right to use such Intellectual Property,
individually or in the aggregate, does or would not have a Material Adverse
Effect.
(r) Except as stated in this Agreement and in the Prospectus (and any
amendment or supplement thereto), the Company has not taken and will not
take, directly or indirectly, any action designed to or which could cause
or result in or which will constitute stabilization or manipulation of the
price of the Shares in violation of federal securities laws and, to the
Company's knowledge, no such action has been, or will be, taken by any
affiliates of the Company.
(s) The Company has duly elected to be a business development company
under the 1940 Act and the Rules and Regulations; no order of suspension or
revocation of such election under the 1940 Act and the Rules and
Regulations has been issued or proceedings therefor initiated or, to the
knowledge of the Company, threatened by the Commission. The Company is, and
at all times through the completion of the transactions contemplated
hereby, will be, in compliance in all material respects with the 1933 Act
and
9
the 1940 Act. No person is serving as an officer, director, trustee or
investment adviser of the Company except in accordance with the provisions
of the 1940 Act and the 1940 Act Rules and Regulations. The Company has not
received any notice from the Commission pursuant to Section 8(e) of the
1940 Act with respect to the 1940 Act Notification or the Registration
Statement (or any amendment or supplement to either of them).
(t) All advertising, sales literature, "prospecting letters,"
"prospectus wrappers," envelopes, prospectuses omitted from the
Registration Statement pursuant to the 1933 Act Rules and Regulations or
other promotional material prepared or authorized in writing by the Company
for use or distribution to the public for use in connection with the
offering and sale of the Shares (collectively, "Sales Material") complied
and comply in all respects with the applicable requirements of the 1933
Act, the 1933 Act Rules and Regulations and the rules and interpretations
of the NASD and no Sales Material contained or contains an untrue statement
of a material fact or omitted or omits to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading (except that
this representation and warranty does not apply to statements in or
omissions from the Sales Material made in reliance upon and in conformity
with the Underwriter Information).
(u) No holder of any security of the Company has any right to require
registration of any Shares, capital stock or any other security of the
Company because of the filing of the registration statement or consummation
of the transactions contemplated by this Agreement.
(v) The Company intends to direct the investment of the proceeds of
the offering of the Shares in such a manner as to comply with the
requirements of Subchapter M of the Code.
(w) None of the promotional material for use by brokers in connection
with the marketing of the Shares (including any "broker kits," "road show
slides," "road show scripts," "broker post-cards" and "broker reference
cards" authorized in writing by or prepared by the Company for use in
connection with the offering and sale of the Shares (collectively, "Broker
Material") when read together with the Prospectus, contained or contains an
untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (except that this representation and warranty does not apply to
statements in or omissions from the Broker Material made in reliance upon
and in conformity with the Underwriter Information), and no Broker Material
was or has been made available by the Company by means of an Internet web
site or similar electronic means.
(x) The Commission has not issued any order preventing or suspending
the use of any Prepricing Prospectus or the Prospectus.
(y) Except as disclosed in the Registration Statement or the
Prospectus (or any amendment or supplement to either of them), to the
Company's knowledge, after due inquiry, no director of the Company is an
"interested person" (as defined in the 0000 Xxx) of the Company or an
"affiliated person" (as defined in the 0000 Xxx) of an Underwriter.
(z) The Shares have been approved for trading on the NASD National
Market.
(aa) The officers and directors of the Company are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary, in the judgment of the Company,
for directors' and officers' liability insurance of a public company of the
size and nature of business of the Company, including in connection with
public offerings of securities; and the Company has no reason to believe
that it will not be able to renew its existing directors' and officers'
liability insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to cover its
officers and directors.
10
(bb) The registration and issuance of the Company's transferable
rights pursuant to the Company's registration statement on Form N-2 (File
No. 333-87032) was made in compliance with the 1933 Act, the 1940 Act, the
Rules and Regulations and all other applicable state and federal laws or
regulations, except to the extent any noncompliance would not have a
Material Adverse Effect.
(cc) To the Company's knowledge, all federal, state, local and foreign
tax returns required to be filed by or on behalf of the Company (and its
predecessors) with respect to the six full fiscal years ended prior to the
date of this Agreement have been filed (or are the subject of valid
extension) with the appropriate federal, state, local and foreign
authorities and all such tax returns, as filed, are accurate in all
material respects. To the Company's knowledge, all federal, state, local
and foreign taxes (including estimated tax payments) required to be shown
on all such tax returns or claimed to be due from or with respect to the
business of the Company (and its predecessors) with respect to such six
full fiscal years have been paid or reflected as a liability on the
financial statements of the Company for appropriate periods, except for
those taxes or claims therefor which are being contested by the Company in
good faith and for which appropriate reserves are reflected in the
Company's financial statements. All deficiencies asserted as a result of
any federal, state, local or foreign tax audits have been paid or finally
settled and no issue has been raised in any such audit which, by
application of the same or similar principles, reasonably could be expected
to result in a proposed deficiency for any other period not so audited.
There are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any federal, state, local or foreign tax
return for any period. On the Closing Date, and Additional Closing Date, if
any, all stock transfer and other taxes which are required to be paid in
connection with the sale of the shares to be sold by the Company to each of
the Underwriters will have been fully paid by the Company and all laws
imposing such taxes will have been complied with.
(dd) Except as set forth in the Prospectus, there are no transactions
with "affiliates" (as defined in Rule 405 promulgated under the 0000 Xxx)
or any officer, director or security holder of the Company (whether or not
an affiliate) which are required by the 1933 Act, the 1940 and the Rules
and Regulations thereunder to be disclosed in the Registration Statement.
(ee) The Company has procured lock-up agreements from each of Xxxxxxx
X. Xxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxx, Xxxxxx X.
Xxxxx, Xxxxxx Xxxxxxx Xxxxxx and Xxxxxxxx Xxxx.
(ff) To the Company's knowledge, no officer, director or 10%
shareholder of the Company has a direct or indirect affiliation or
association with any member of the NASD, except as discussed in the
questionnaires delivered by the Company to each of the Underwriters or
disclosed in the Prospectus.
(gg) The statistical and market-related data included in the
Prospectus is based on or derived from sources which the Company believes
to be reliable and accurate in all material respects.
7. Expenses. Whether or not the transactions contemplated hereby are
consummated or this Agreement becomes effective or is terminated, the Company
will pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the 1933 Act and the 1940 Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof and of any Prepricing
Prospectus to each of the Underwriters and dealers; (ii) the printing and
delivery (including, without limitation, postage, air freight charges and
charges for counting and packaging) of such copies of the Registration
Statement, the Prospectus, each Prepricing Prospectus, the Blue Sky memoranda,
the Power of Attorney, the Master Agreement among Underwriters, this Agreement
and all amendments or supplements to any of them as may be reasonably requested
for use in connection with the offering and sale of the Shares; (iii) all
expenses in connection with the qualification of the Shares for offering and
sale under state securities laws or Blue Sky laws, including the reasonable
attorneys' fees and out-of-pocket expenses of the counsel for the Underwriters
in connection therewith; (iv) the filing fees incident to securing any required
review by the NASD of the fairness of the terms of the sale of the Shares and
the reasonable fees and disbursements of the Underwriters' counsel relating
thereto; (v) the cost of preparing stock certificates; (vi) the costs and
charges of any transfer agent or registrar; (vii) the cost of the tax stamps, if
any, in connection with the issuance and delivery of the
11
Shares to each of the Underwriters; (viii) all other fees, costs and expenses
referred to in Item 26 of the Registration Statement, (ix) the transportation,
lodging, graphics and other expenses incidental to the Company's preparation for
and participation in the "roadshow" for the offering contemplated hereby, and
(x) all other costs and expenses incident to the performance of the obligations
of the Company hereunder which are not otherwise specifically provided for in
this Section 7. Notwithstanding the foregoing, in the event that the proposed
offering is terminated for the reasons set forth in Section 11 hereof, the
Company agrees to reimburse each of the Underwriters as provided in this Section
7.
8. Indemnification and Contribution. Subject to the limitations in this
paragraph below and to the other limitations set forth in this Section 8, the
Company agrees to indemnify and hold harmless each Underwriter and each
Underwriter's directors, officers, employees and agents, and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the 1933
Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages, liabilities and expenses, including, without limitation,
reasonable costs of investigation and attorneys' fees and expenses
(collectively, "Damages") arising out of or based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in any Prepricing
Prospectus or in the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prepricing Prospectus or the Prospectus
in light of the circumstances under which they were made), not misleading,
except to the extent that any such Damages arise out of or are based upon an
untrue statement or omission or alleged untrue statement or omission which has
been made therein or omitted therefrom in reliance upon and in conformity with
the information furnished in writing to the Company by the Representative or on
behalf of any Underwriter through the Representative expressly for use in
connection therewith, or (ii) any inaccuracy in or breach of the representations
and warranties of the Company contained herein or any failure of the Company to
perform its respective obligations hereunder or under law; provided, however,
that with respect to any untrue statement or omission made in any Prepricing
Prospectus, the indemnity agreement contained in this paragraph shall not inure
to the benefit of any Underwriter (or to the benefit of any person controlling
such Underwriter or to any officer, director, employee or agent of such
Underwriter) from whom the person asserting any such losses, claims, damages or
liabilities purchased the Shares concerned if both (y) a copy of the Prospectus
was not sent or given to such person at or prior to the written confirmation of
the sale of such Shares to such person as required by the 1933 Act, and (z) the
untrue statement or omission in the Prepricing Prospectus was corrected in the
Prospectus. This indemnification shall be in addition to any liability that the
Company may otherwise have.
In addition to its other obligations under this Section 8, the Company
agrees that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any inaccuracy in the representations and warranties
of the Company herein or failure to perform its obligations hereunder, all as
set forth in this Section 8, subject to the limitations set forth in this
Section 8, it will reimburse each of the Underwriters on a quarterly basis for
all reasonable legal or other out-of-pocket expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse each
of the Underwriters for such expenses and the possibility that such payments
might later be held to have been improper by a court of competent jurisdiction.
To the extent that any such interim reimbursement payment is so held to have
been improper, the Underwriters to which such payment was made shall promptly
return it to the person(s) from whom it was received, together with interest
compounded daily determined on the basis of the base lending rate announced from
time to time by Chase Manhattan Bank, N.A. (the "Prime Rate"). Any such interim
reimbursement payments that are not made to an Underwriter within 30 days of a
request for reimbursement shall bear interest at the Prime Rate from the date of
such request.
If any action or claim shall be brought against any Underwriter or any
person controlling any Underwriter in respect of which indemnity may be sought
against the Company, such Underwriter or such controlling person shall promptly
notify in writing the party(s) against whom indemnification is being sought (the
"indemnifying party" or "indemnifying parties"), and such indemnifying party(s)
shall assume the defense thereof, including the employment of counsel reasonably
acceptable to such Underwriter or such controlling person and payment of all
fees and expenses incurred by such counsel. Such Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling person
unless (i) the indemnifying party(s) has (have) agreed in writing to pay such
fees and expenses, (ii) the indemnifying party(s) has (have) failed to assume
12
the defense and employ counsel reasonably acceptable to such Underwriter or such
controlling person or (iii) the named parties to any such action (including any
impleaded parties) include both such Underwriter or such controlling person and
the indemnifying party(s), and such Underwriter or such controlling person shall
have been advised by its counsel that one or more legal defenses may be
available to such Underwriter which may not be available to the Company, or that
representation of such indemnified party and any indemnifying party(s) by the
same counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the indemnifying party(s) shall not have the right to assume the defense of
such action on behalf of such Underwriter or such controlling person
(notwithstanding its (their) obligation to bear the fees and expenses of such
counsel)). It is understood, however, that the indemnifying parties shall, in
connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for such Underwriter
and controlling persons not having actual or potential differing interests. The
indemnifying party(s) shall not be liable for any settlement of any such action
effected without its (their) written consent, but if settled with such written
consent, or if there be a final judgment for the plaintiff in any such action,
the indemnifying party(s) agrees to indemnify and hold harmless such Underwriter
and any such controlling person from and against any loss, claim, damage,
liability or expense by reason of such settlement or judgment, but in the case
of a judgment only to the extent stated in the immediately preceding paragraph.
Each of the Underwriters, severally and not jointly, agrees to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the 1933 Act or Section 20 of the Exchange Act, to the
same extent as the foregoing indemnity from the Company to each of the
Underwriters, but only with respect to information furnished in writing by or on
behalf of each of the Underwriters through the Representative expressly for use
in the Registration Statement, the Prospectus or any Prepricing Prospectus, or
any amendment or supplement thereto. If any action or claim shall be brought or
asserted against the Company, any of its directors, any such officers, or any
such controlling person based on the Registration Statement, the Prospectus or
any Prepricing Prospectus, or any amendment or supplement thereto, and in
respect of which indemnity may be sought against any of the Underwriters
pursuant to this paragraph, such Underwriter shall have the rights and duties
given to the Company by the preceding paragraph (except that if the Company
shall have assumed the defense thereof such Underwriter shall not be required to
do so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such
Underwriter's expense), and the Company, its directors, any such officers, and
any such controlling persons shall have the rights and duties given to such
Underwriter by the immediately preceding paragraph.
If the indemnification provided for in this Section 8 is unavailable or
insufficient for any reason whatsoever to an indemnified party under the first
or fourth paragraph of this Section 8 in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then an indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and each of the
Underwriters on the other hand from the offering and sale of the Shares or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and each of the Underwriters on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and each of the Underwriters on the other hand, shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by each of the Underwriters, in each case as
set forth in the table on the cover page of the Prospectus; provided that, in
the event that an Underwriter shall have purchased any Additional Shares
hereunder, any determination of the relative benefits received by the Company or
an Underwriter from the offering of the Shares shall include the net proceeds
(before deducting expenses) received by the Company, and the underwriting
discounts and commissions received by such Underwriter, from the sale of such
Additional Shares, in each case computed on the basis of the respective amounts
set forth in the notes to the table on the cover page of the Prospectus. The
relative fault of the Company on the one hand and each of the Underwriters on
the other hand shall
13
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or by each of the Underwriters on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, an Underwriter shall not be
required to contribute any amount in excess of the amount by which the total
price of the Shares underwritten by it and distributed to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification, reimbursement or interim
payment or contribution under this Section 8 shall be subject to the
requirements of Release No. 11330 and Section 17(i) of the 1940 Act and, subject
thereto, shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity, contribution and reimbursement agreements contained in this Section 8
and the representations and warranties of the Company, respectively, set forth
in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling such Underwriter, the Company, its directors or officers
or any person controlling the Company, (ii) acceptance of any Shares and payment
therefor hereunder and (iii) any termination of this Agreement. A successor to
such Underwriter or any person controlling such Underwriter, or to the Company,
its directors or officers, or any person controlling the Company, shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 8.
It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in the second and fifth paragraphs
of this Section 8, including the amounts of any requested reimbursement payments
and the method of determining such amounts, shall be settled by arbitration
conducted pursuant to the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for arbitration or
written notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make such
designation of an arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Such an arbitration
would be limited to the operation of the interim reimbursement provisions
contained in the second and fifth paragraphs of this Section 8, and would not
resolve the ultimate propriety or enforceability of the obligation to reimburse
expenses which is created by the provisions of the second and fifth paragraphs
of this Section 8.
9. Conditions of Underwriters' Obligations. The several obligations of the
Underwriters to purchase the Firm Shares hereunder are subject to the following
conditions:
(a) All filings required by Rules 497 and 462 under the 1933 Act shall
have been timely made, no order pursuant to Section 8(e) of the 1940 Act
shall have been issued and no proceeding for that purpose shall have been
instituted or, to the knowledge of the Company, threatened by the
Commission and any request of the Commission for additional information (to
be included in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the Representative's satisfaction.
(b) The Representative shall be reasonably satisfied that since the
respective dates as of which information is given in the Registration
Statement and Prospectus (i) there shall not have been any change in the
capital stock of the Company or any material change in the indebtedness
(other than in the ordinary course of business) of the Company, (ii) except
as set forth or contemplated by the Registration Statement or the
Prospectus, no material oral or written agreement or other transaction
shall have been entered into by the Company which is not in the ordinary
course of business and which could reasonably be expected to result in a
material reduction in the future earnings of the Company, (iii) no casualty
loss or damage (whether or not insured) to the property of the Company
shall have been sustained which has or
14
could reasonably be expected to have a Material Adverse Effect, (iv) no
legal or governmental action, suit or proceeding affecting the Company or
any of its properties which is material to the Company and its subsidiaries
taken as a whole or which affects or could reasonable be expected to affect
the transactions contemplated by this Agreement shall have been instituted
or threatened, and (v) there shall not have been any change in the
condition (financial or otherwise), business, management, results of
operations or prospects of the Company or its subsidiaries having a
Material Adverse Effect which makes it impractical or inadvisable in the
Representative's judgment to proceed with the public offering or purchase
the Shares as contemplated hereby.
(c) The Representative shall have received on the Closing Date (and
the Additional Closing Date, if any) an opinion of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, as counsel for the Company, dated the Closing Date,
satisfactory to you and your counsel, in substantially the form attached
hereto as Exhibit A.
(d) The Representative shall have received on the Closing Date an
opinion of Xxxxxxxxx Traurig, P.A., as counsel for the Underwriters, dated
the Closing Date with respect to the issuance and sale of the Firm Shares,
the Registration Statement and other related matters as the Representative
may reasonably request, and the Company and its counsel shall have
furnished to such counsel such documents as they may reasonably request for
the purpose of enabling them to pass upon such matters.
(e) The Representative shall have received letters addressed to the
Underwriters and dated the date hereof and the Closing Date from the firm
of PricewaterhouseCoopers LLP, independent registered public accountants,
substantially in the forms heretofore approved by the Representative and of
a type satisfactory to PriceWaterhouseCoopers LLP.
(f) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
be pending or, to the knowledge of the Company, shall be threatened or
contemplated by the Commission at or prior to the Closing Date; (ii) no
order suspending the effectiveness of the Registration Statement or the
qualification or registration of the Shares under the securities or Blue
Sky laws of any jurisdiction shall be in effect and no proceedings for such
purpose shall be pending or, to the knowledge of the Company, threatened or
contemplated by the Commission or the authorities of any jurisdiction;
(iii) any request for additional information on the part of the staff of
the Commission or any such authorities shall have been complied with to the
satisfaction of the staff of the Commission or such authorities; (iv) after
the date hereof no amendment or supplement to the Registration Statement or
the Prospectus shall have been filed unless a copy thereof was first
submitted to the Representative and the Representative did not object
thereto in good faith; and (v) all of the representations and warranties of
the Company contained in this Agreement shall be true and correct in all
respects on and as of the date hereof and on and as of the Closing Date as
if made on and as of the Closing Date except to the extent such
representations and warranties specifically relate to another date, and the
Representative shall have received a certificate, dated the Closing Date
and signed by the chief executive officer and the chief financial officer
of the Company (or such other officers as are acceptable to the
Representative) to the effect set forth in this Section 9(f) and in
Sections 9(b) and 9(g) hereof.
(g) The Company shall not have failed in any material respect at or
prior to the Closing Date to have performed or complied with any of its
agreements herein contained and required to be performed or complied with
by it hereunder at or prior to the Closing Date.
(h) The Company shall have furnished or caused to have been furnished
to the Representative such further certificates and documents as the
Representative shall have reasonably requested.
(i) At or prior to the date of this Agreement, the Representative
shall have received telephonic notice from the Corporate Financing
Department of the NASD confirming that such Department has determined to
raise no objections with respect to the fairness or reasonableness of the
underwriting terms and arrangements of the offering contemplated hereby.
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(j) At or prior to the Closing Date, the Representative shall have
received Lock-Up Agreements from each of Xxxxxxx X. Xxxxxx, Xxxxxxx X.
Xxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxx, Xxxxxx X. Xxxxx, Xxxxxx Xxxxxxx
Xxxxxx and Xxxxxxxx Xxxx.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Representative and its counsel.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the satisfaction on and as of the Additional Closing
Date of the conditions set forth in this Section 9, except that, if the
Additional Closing Date is other than the Closing Date, the certificates,
opinions and letters referred to in this Section 9 shall be dated as of the
Additional Closing Date and the opinions called for by paragraph (c) shall be
revised to reflect the sale of Additional Shares.
If any of the conditions hereinabove provided for in this Section 9 shall
not have been satisfied when and as required by this Agreement, this Agreement
may be terminated by the Representative by notifying the Company of such
termination in writing or by telegram at or prior to such Closing Date, but the
Representative shall be entitled to waive any of such conditions.
10. Default by an Underwriter. If any one or more Underwriters shall fail
to purchase and pay for any of the Shares agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Shares set forth
opposite their names in Schedule I hereto bears to the aggregate amount of
Shares set forth opposite the names of all the remaining Underwriters) the
Shares which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Shares which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Shares set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Shares, and
if such nondefaulting Underwriters do not purchase all the Shares, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
Section 10, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the Representative shall determine in order that the
required changes in the Registration Statement and the Prospectus or in any
other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
11. Effective Date of Agreement. This Agreement shall become effective upon
the execution and delivery hereof by the parties hereto; provided, however, that
the provisions of Section 8 shall at all times be effective.
12. Termination of Agreement. This Agreement shall be subject to
termination in the Representative's absolute discretion, without liability on
the part of the Underwriters to the Company by notice to the Company, if prior
to the Closing Date or the Additional Closing Date (if different from the
Closing Date and then only as to the Additional Shares, as the case may be (i)
trading in the Company's common stock shall have been suspended by the
Commission or the Nasdaq/NMS, (ii) trading in securities generally on the New
York Stock Exchange, American Stock Exchange or Nasdaq/NMS shall have been
suspended or materially limited, or minimum or maximum prices shall have been
generally established on such exchange, or additional material governmental
restrictions, not in force on the date of this Agreement, shall have been
imposed upon trading in securities generally by any such exchange or by order of
the Commission or any court or other governmental authority, (iii) a general
moratorium on commercial banking activities shall have been declared by either
federal or New York State authorities or (iv) there shall have occurred any
outbreak or escalation of hostilities or other international or domestic
calamity, crisis or change in political, financial or economic conditions or
other material event the effect of which on the financial markets of the United
States is such as to make it, in the Representative's good faith judgment,
impracticable or inadvisable to market the Shares or to enforce contracts for
the sale of the Shares. Notice of such cancellation shall be promptly given to
the Company and its counsel by telegraph, telecopy or telephone and shall be
subsequently confirmed by letter.
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13. Information Furnished by the Underwriters. The Company acknowledges
that the information under the caption "Underwriting" in any Prepricing
Prospectus and in the Prospectus, constitute the only information furnished by
or on your behalf as such information is referred to in Sections 6(a), 6(b) and
9 hereof.
14. Miscellaneous. Except as otherwise provided in Sections 5 and 12
hereof, notice given pursuant to any of the provisions of this Agreement shall
be in writing and shall be delivered (i) if to the Company, to the office of the
Company at 000 Xxxx 00 Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxxx X. Xxxxxx, Chairman and Chief Executive Officer (with copy to Xxxxxxx X.
Xxxxx, Esq., Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Four Times Square, New
York, New York 10036), or (ii) if to you, to ThinkEquity Partners LLC, 00 Xxxx
00xx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxxxx,
Managing Director (with copy to Xxxxxxxxx Xxxxxxx, P.A., 0000 Xxxxxxxx Xxxxxx,
Xxxxx, Xxxxxxx 00000, Attention: Xxx X. Xxxxxx, Esq.).
This Agreement has been and is made solely for the benefit of each of the
Underwriters, the Company, its directors and officers, and the other controlling
persons referred to in Section 9 hereof, to the extent provided herein, and no
other person shall acquire or have any right under or by virtue of this
Agreement. Neither of the terms "successor" and "successors and assigns" as used
in this Agreement shall include a purchaser from you of any of the Shares in his
status as such purchaser.
15. Applicable Law; Counterparts. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without reference
to choice of law principles thereunder.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
This Agreement shall be effective when, but only when, at least one
counterpart hereof shall have been executed on behalf of each party hereto.
The Company and each of the Underwriters each hereby irrevocably waive any
right they may have to a trial by jury in respect to any claim based upon or
arising out of this Agreement or the transactions contemplated hereby.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and each of the Underwriters.
Very truly yours,
XXXXXX & XXXXXX GROUP, INC.
By:
--------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President, Chief Financial Officer and
Chief Operating Officer
CONFIRMED as of the date first above mentioned for itself and as Representative
of the other Underwriters named in Schedule I hereto.
ThinkEquity Partners LLC
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
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EXHIBIT A
Form of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP Opinion
SCHEDULE I
Name of Underwriter Number of Firm Shares
ThinkEquity Partners LLC _________
Punk, Xxxxxx & Company _________
TOTAL _________
