EXHIBIT h
[__________] SHARES
XXXXXXXX MEZZANINE CAPITAL CORP.
COMMON STOCK
UNDERWRITING AGREEMENT
_________, 2004
XXXXXXXXX & COMPANY, INC.
As Representative of the several Underwriters
c/o JEFFERIES & COMPANY, INC.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
INTRODUCTORY. Xxxxxxxx Mezzanine Capital Corp., a Maryland
corporation (the "COMPANY"), proposes to issue and sell to the several
underwriters named in Schedule A (the "UNDERWRITERS") an aggregate of [___]
shares (the "FIRM SHARES") of its common stock, par value $0.01 per share (the
"SHARES"). In addition, the Company has granted to the Underwriters an option to
purchase up to an additional [___] Shares (the "OPTIONAL SHARES"), as provided
in Section 2. The Firm Shares and, if and to the extent such option is
exercised, the Optional Shares are collectively called the "OFFERED SHARES."
Jefferies & Company, Inc. ("JEFFERIES") has agreed to act as representative of
the several Underwriters (in such capacity, the "REPRESENTATIVE") in connection
with the offering and sale of the Offered Shares.
The Company and the Underwriters agree that up to [250,000] of
the Firm Shares to be purchased by the Underwriters (the "DIRECTED SHARES")
shall be reserved for sale by the Underwriters to certain eligible directors and
officers of the Company and persons having business relationships with the
Company (collectively, the "PARTICIPANTS"), as part of the distribution of the
Offered Shares by the Underwriters (the "DIRECTED SHARE PROGRAM") subject to the
terms of this Agreement, the applicable rules, regulations and interpretations
of the National Association of Securities Dealers, Inc. and all other applicable
laws, rules and regulations. One of the Underwriters (the "DESIGNATED
UNDERWRITER") shall be selected to process the sales to the Participants under
the Directed Share Program. To the extent that such Directed Shares are not
orally confirmed for purchase by the Participants by the end of the first
business day after the date of this Agreement, such Directed Shares may be
offered to the public as part of the public offering contemplated hereby.
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form N-2
(File No. 333-111356), which contains a form of prospectus to be used in
connection with the public offering and sale of the Offered Shares. A N-54A
Notification of Election to be Subject to Sections 55 Through 65 of the
Investment Company Act of 1940 filed pursuant to Section 54(a) of the Investment
Company Act (File No. 814-00641) (the "NOTIFICATION OF ELECTION") was filed with
the Commission on December 19, 2003 under the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder (collectively, the "INVESTMENT
COMPANY ACT"). The 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, as amended, and the rules and regulations
promulgated thereunder (collectively, the "SECURITIES ACT"), including any
information contained in a prospectus subsequently filed with the Commission
pursuant to Rule 497 under the Securities Act and deemed to be a part of the
registration statement 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) 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. The prospectus, in the form first used by the Underwriters to confirm
sales of the Offered Shares, is called the "PROSPECTUS"; provided, however, if
the Company has, with the consent of Jefferies, 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 497(c) 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 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").
The Company has entered into an investment advisory agreement,
dated as of [____________], 2004 (the "INVESTMENT ADVISORY AGREEMENT"), with
Xxxxxxxx Capital Management, L.L.C., a Delaware limited liability company (the
"ADVISER") registered as an investment adviser under the Investment Advisers Act
of 1940, as amended, and the rules and regulations thereunder (collectively, the
"ADVISERS ACT").
The Company and the Adviser hereby agree with the Underwriters
as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES.
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents, warrants and covenants 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. The Company has complied
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 knowledge of the Company,
are contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed with the
Commission complied in all material respects with the Securities Act and
Investment Company Act and, if filed by electronic transmission pursuant to
XXXXX, was identical to the copy thereof delivered to the Underwriters for use
in connection with the offer and sale of the Offered Shares (except as may be
permitted by Regulation S-T under the Securities Act). Each of the Registration
Statement, any Rule 462(b) Registration Statement and any post-effective
amendment thereto, at the time it became effective complied and will comply in
all material respects with the Securities Act and Investment Company Act, as
applicable to business development companies, 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, did not
and will not contain any
2
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 Representative expressly for use therein, it being understood and agreed
that the only such information furnished by the Representative to the Company
consists of the information described in Section 8(c) below. 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.
(b) Offering Materials Furnished to Underwriters. The Company has
delivered to the Representative one complete manually signed copy 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 Representative has
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 (i) the
expiration or termination of the option granted to the several Underwriters in
Section 2, (ii) the completion of the Underwriters' distribution of the Offered
Shares and (iii) the expiration of twenty-five (25) days after the date of the
Prospectus, any offering material in connection with the offering and sale of
the Offered Shares other than a preliminary prospectus, the Prospectus or the
Registration Statement.
(d) The Underwriting Agreement and the Investment Advisory Agreement.
Each of this Agreement and the Investment Advisory Agreement has been duly
authorized, executed and delivered by, and each is a valid and binding agreement
of, the Company, enforceable against the Company in accordance with its terms
except as the enforcement hereof or thereof 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 and except as rights to indemnity and contribution hereunder may be
limited by general equitable principles or federal or state securities laws or
public policy underlying such laws.
(e) Authorization of the Offered Shares. The Offered 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 against payment therefor 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 by the holders thereof.
(g) Subsidiaries. The Company does not own or control, directly or
indirectly, any corporation, association or other entity.
(h) 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 financial condition, or business, regulatory environment,
management, operations or
3
prospects, whether or not arising from transactions in the ordinary course of
business (any such change is called a "MATERIAL ADVERSE Change"), of the
Company; (ii) the Company has 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 on any class of capital stock or
repurchase or redemption by the Company of any class of capital stock.
(i) Independent Accountants. KPMG LLP, who have expressed their
opinion with respect to the financial statements and the related notes thereto
filed with the Commission as a part of the Registration Statement and included
in the Prospectus (the "FINANCIAL STATEMENTS"), are: (i) independent public or
certified public accountants as required by the Securities Act and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (collectively, the "EXCHANGE ACT"); (ii) in compliance
with the applicable requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X; and (iii) a registered public accounting firm
as defined by the Public Company Accounting Oversight Board (the "PCAOB") whose
registration has not been suspended or revoked and who has not requested such
registration to be withdrawn.
(j) Preparation of the Financial Statements. The Financial Statements
present fairly the financial position of the Company as of and at the dates
indicated and the results of their operations and cash flows for the periods
specified. Such Financial Statements 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. No other financial statements or supporting schedules are
required to be included in the Registration Statement. The financial data set
forth in the Prospectus under the caption "Capitalization" fairly presents the
information set forth therein on a basis consistent with that of the audited
financial statements and related notes thereto contained in the Registration
Statement. To the Company's knowledge after due inquiry, no person who has been
suspended or barred from being associated with a registered public accounting
firm, or who has failed to comply with any sanction pursuant to Rule 5300
promulgated by the PCAOB, has participated in or otherwise aided the preparation
of, or audited, the Financial Statements, supporting schedules or other
financial data filed with the Commission as a part of the Registration Statement
and included in the Prospectus.
(k) Company's Accounting System. The Company makes and keeps accurate
books and records and 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.
(l) Incorporation and Good Standing of the Company. The Company has
been duly incorporated and is validly existing as a corporation, in good
standing under the laws of the State of Maryland and has the 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
this Agreement and the Investment Advisory Agreement. The Company is duly
qualified as a foreign corporation to transact business and is in good standing
in the State of Ohio 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 where the failure to so qualify or be in good
standing would not result in a Material Adverse Change with respect to the
Company.
4
(m) 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". The Shares (including the Offered
Shares) conform in all material respects to the description thereof contained in
the Prospectus. All of the issued and outstanding Shares 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 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 other than those accurately described in the
Prospectus. The description, if any, 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 the
information required to be shown with respect to such plans, arrangements,
options and rights. Except as described in the Prospectus, the Company has not
sold or issued any Shares during the six-month period preceding the date of the
Prospectus, including any sales pursuant to Rule 144A promulgated under, or
Regulations D or S of, the Securities Act other than Shares issued pursuant to
employee benefit plans, qualified stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or warrants.
(n) Stock Exchange Listing. The Offered Shares have been approved for
inclusion on the Nasdaq National Market, subject only to official notice of
issuance.
(o) Non-Contravention of Company Existing Instruments; No Further
Authorizations or Approvals Required. The Company is not in violation of its
charter or by-laws and is not in default (or, with the giving of notice or lapse
of time, would be in default) (a "COMPANY DEFAULT") under any indenture,
mortgage, loan or credit agreement, note, contract, franchise, lease or other
instrument to which the Company is a party or by which it may be bound, or to
which any of the property or assets of the Company is subject (each, a "COMPANY
EXISTING INSTRUMENT"). The Company's execution, delivery and performance of this
Agreement and the Investment Advisory Agreement, the consummation of the
transactions contemplated hereby, by the Investment Advisory Agreement, and by
the Prospectus and the issuance and sale of the Offered Securities: (i) will not
result in any violation of the provisions of the charter or by-laws of the
Company; (ii) will not conflict with or constitute a breach of, or Company
Default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to, or require
the consent of any other party to, any Company Existing Instrument, except where
any such conflict or breach would not result in a Material Adverse Change with
respect to the Company; and (iii) will not result in any violation of any law,
administrative regulation or administrative or court decree applicable to the
Company, except where such violation would not result in a Material Adverse
Change with respect to the Company. 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 or the Investment Advisory Agreement and
consummation of the transactions contemplated hereby, by the Investment Advisory
Agreement and by the Prospectus, except (A) such as have been obtained or made
by the Company and are in full force and effect, or (B) the failure to be
obtained or made would not result in a Material Adverse Change with respect to
the Company
(p) No Material Actions or Proceedings. Except as otherwise disclosed
in the Prospectus, there are no legal or governmental actions, suits or
proceedings pending or, to the Company's knowledge, threatened: (i) against or
affecting the Company; (ii) which has as the subject thereof any executive
officer or director of, or property owned or leased by, the Company; 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 executive officer or director, and
5
any such action, suit or proceeding, if so determined adversely, would
reasonably be expected to result in a Material Adverse Change with respect to
the Company, or adversely affect the consummation of the transactions
contemplated by this Agreement or (B) any such action, suit or proceeding is or
would be material in the context of the sale of Shares.
(q) Intellectual Property Rights. The Company owns, possesses or has
the right to use sufficient trademarks, trade names, patent rights, copyrights,
domain names, licenses, approvals, trade secrets and other similar rights
(collectively, "INTELLECTUAL PROPERTY RIGHTS") necessary to conduct its business
as now conducted, except where the failure to have such ownership or possession
would not result in a Material Adverse Change with respect to the Company. The
Company has not received, and has no reason to believe that it will receive, any
notice of infringement or conflict with asserted Intellectual Property Rights of
others. The Company is not a party to or bound by any options, licenses or
agreements with respect to the Intellectual Property Rights of any other person
or entity that are required to be set forth in the Prospectus and are not
described therein.
(r) All Necessary Permits. The Company possesses such valid and
current material certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies necessary to
conduct its business, and the Company has not received any notice of proceedings
relating to the revocation or modification of, or non-compliance with, any such
certificate, authorization or permit and has no reason to believe that it will
receive any such notice which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could result in a Material Adverse
Change with respect to the Company.
(s) Title to Properties. The Company has good and marketable title to
all of the personal property and other assets reflected as owned in the
Financial Statements, in each case free and clear of any security interests,
mortgages, liens, encumbrances, equities, adverse claims and other defects. The
Company does not have (or purport to have) title to any real property. The real
property, improvements, equipment and personal property held under lease by the
Company are held under valid and enforceable leases, with such exceptions as are
not material and do not materially interfere with the use made or proposed to be
made of such real property, improvements, equipment or personal property by the
Company.
(t) Employees. Except for Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxx, Xxxxxxx X.
Xxxxxx and Tab X. Xxxxxxxxx, the Company has no employees.
(u) Tax Law Compliance. The Company has filed all necessary federal,
state and foreign income and franchise tax returns and has 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 Financial Statements in
respect of all federal, state and foreign income and franchise taxes for all
periods as to which the tax liability of the Company has not been finally
determined. The Company is not aware of any tax deficiency that has been or
might be asserted or threatened against the Company that could result in a
Material Adverse Change with respect to the Company.
(v) Insurance. The Company has not been denied any insurance coverage
which it has sought or for which it has applied.
(w) No Price Stabilization or Manipulation; Compliance with Regulation
M. The Company has not taken, 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 Shares or any other "REFERENCE SECURITY" (as
defined in Rule 100 of Regulation M under the Exchange Act ("REGULATION M"))
whether to facilitate the
6
sale or resale of the Offered Shares or otherwise, and has taken no action which
would directly or indirectly violate Regulation M.
(x) Related Party Transactions. There are no business relationships or
related-party transactions involving the Company or any other person required to
be described in the Prospectus which have not been described as required.
(y) ERISA. The Company does not maintain, contribute to, or have any
obligation to contribute to, and has never maintained, contributed to or had any
obligation to contribute to, any "employee pension benefit plan" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
(collectively, "ERISA")), which is subject to Title IV of ERISA, Section 302 of
ERISA or Section 412 of the Internal Revenue Code of 1986, as amended
(collectively with the rules and published interpretations thereunder, the
"CODE").
(z) Brokers. Except as otherwise disclosed in the Prospectus, there is
no broker, finder or other party that is entitled to receive from the Company
any brokerage or finder's fee or other fee or commission as a result of any
transactions contemplated by this Agreement.
(aa) No Outstanding Loans or Other Extensions of Credit. The Company
has not extended or maintained credit, arranged for the extension of credit, or
renewed any extension of credit, in the form of a personal loan, to or for any
director or executive officer (or equivalent thereof) of the Company except for
such extensions of credit as are (i) expressly permitted by Section 13(k) of the
Exchange Act or (ii) fully repaid, discharged, forgiven or otherwise no longer
outstanding or owing in any way on the date of this Agreement.
(bb) Notification of Election. When the Notification of Election was
filed with the Commission, it (i) contained all statements required to be stated
therein in accordance with, and complied in all material respects with the
requirements of, the Investment Company Act, as applicable to business
development companies, and (ii) did not include any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein not misleading.
(cc) Election as a Business Development Company. The Company has duly
elected to be treated by the Commission under the Investment Company Act as a
"business development company" (the "BDC ELECTION") and the Company has not
filed with the Commission any notice of withdrawal of the BDC Election pursuant
to Section 54(c) of the Investment Company Act. The BDC Election is effective
and no order of suspension or revocation of such election has been issued or
proceedings therefor initiated or, to the Company's knowledge, threatened by the
Commission.
(dd) Letters of Intent. The Company, or the Adviser acting on behalf
of the Company, has duly authorized, executed and delivered the non-binding
letters of intent as described in the Prospectus under the caption "Business."
(ee) Termination of Agreements. The Company has not sent or received
any communication regarding termination of, or intent not to renew, any of the
contracts, agreements or letters of intent referred to or described in, or filed
as an exhibit to, the Registration Statement, and no such termination or
non-renewal has been threatened by the Company or, to the Company's knowledge
after reasonable inquiry, any other party to any such contract or agreement.
7
(ff) No Affiliations. To the Company's knowledge, except as set forth
in the Prospectus, none of the Company's officers, directors or 5% or greater
securityholders are associated persons of any member of the NASD.
(gg) Investment Advisory Agreement in Compliance with Laws. The terms
of the Investment Advisory Agreement, including compensation terms, comply with
Section 15 of the Investment Company Act and Section 205 of the Advisers Act,
each as applicable to business development companies.
(hh) All Necessary Approvals of Investment Advisory Agreement. The
approvals by the board of directors and the sole stockholder of the Company of
the Investment Advisory Agreement have been made in accordance with the
requirements of Section 15 of the Investment Company Act applicable to companies
that have elected to be "business development companies" under the Investment
Company Act.
(ii) Interested Persons. Except as disclosed in the Prospectus, (i) no
person is serving or acting as an officer, director or investment adviser of the
Company except in accordance with the provisions of the Investment Company Act
and the Advisers Act, and (ii) no director of the Company is an "interested
person" (as defined in the Investment Company Act) of the Company or an
"affiliated person" (as defined in the Investment Company Act) of any of the
Underwriters.
(jj) Operations Comply with Investment Company Act. The operations of
the Company are in compliance in all material respects with the provisions of
the Investment Company Act applicable to "business development companies". The
provisions of the corporate charter and by-laws of the Company and the
investment objectives, policies and restrictions described in the Prospectus,
assuming they are implemented as so described, will comply in all material
respects with the requirements of the Investment Company Act.
(kk) No Transfer Taxes or Other Fees. There are no transfer taxes or
other similar fees or charges under federal law or the laws of any state, or any
political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance and sale by the Company
of the Shares.
(ll) RIC. As required by Subchapter M of the Code, the Company is
currently in compliance with requirements to qualify as a regulated investment
company thereunder.
(mm) Lock-Up Agreements. Each officer and director of the Company
signed an agreement in the form attached hereto as Exhibit A (the "LOCK-UP
AGREEMENTS"). The Company has provided to counsel for the Underwriters true,
accurate and complete copies of all the Lock-up Agreements.
(nn) Conditions for Use of Form N-2. The Company has satisfied the
conditions for the use of Form N-2, as set forth in the general instructions
thereto, with respect to the Registration Statement.
(oo) Directed Share Program.(pp) The Company has not offered and will
not offer, or has not caused and will not cause the Underwriters to offer, any
Offered Shares to any person pursuant to the Directed Share Program (A) with the
intent to unlawfully influence (i) a customer or supplier of the Company to
alter the customer's or supplier's level or type of business with the Company or
(ii) a trade journalist or publication to write or publish favorable information
about the Company or its products or (B) in a foreign jurisdiction or outside
the United States.
The Company acknowledges that the Underwriters and, for purposes of
the opinions to be delivered pursuant to Section 5 hereof, counsel to the
Company, counsel to the Adviser and counsel to the
8
Underwriters, will rely upon the accuracy and truthfulness of the foregoing
representations and hereby consents to such reliance.
B. REPRESENTATIONS AND WARRANTIES OF THE ADVISER. The Adviser hereby
represents, warrants and covenants to each Underwriter as follows:
(a) The Underwriting Agreement and the Investment Advisory Agreement.
Each of this Agreement and the Investment Advisory Agreement have been duly
authorized, executed and delivered by, and each is a valid and binding agreement
of, the Adviser, enforceable against the Adviser in accordance with its terms
except as the enforcement hereof or thereof 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 and except as rights to indemnity and contribution hereunder may be
limited by general equitable principles or federal or state securities laws or
public policy underlying such laws.
(b) 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 with respect to
the Adviser; and (ii) the Adviser has 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.
(c) Incorporation and Good Standing of the Adviser. The Adviser has
been duly formed and is validly existing as a Delaware limited liability
company, in good standing under the laws of the State of Delaware, and has the
full 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 this Agreement and the Investment Advisory Agreement. The
Adviser is duly qualified to do business as a foreign entity to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of ownership or leasing of property
or the conduct of business, except where the failure to so qualify or be in good
standing would not result in a Material Adverse Change with respect to the
Adviser.
(d) Registration. The Adviser is duly registered with the Commission
as an investment adviser under the Advisers Act and is not prohibited by the
Advisers Act or the Investment Company Act from acting under the Investment
Advisory Agreement for the Company as contemplated by the Prospectus (or any
amendment or supplement thereto). There does not exist any proceeding or, to the
Adviser's knowledge, any facts or circumstances the existence of which could
lead to any proceeding which might adversely affect the registration of the
Adviser with the Commission.
(e) Non-Contravention of Adviser Existing Instruments; No Further
Authorizations or Approvals Required. The Adviser is not in violation of its
organizational documents and is not in default (or, with the giving of notice or
lapse of time, would be in default) (an "ADVISER DEFAULT") under its limited
liability company operating agreement, any indenture, mortgage, loan or credit
agreement, note, contract, franchise, lease or other instrument to which the
Adviser is a party or by which it may be bound, or to which any of the property
or assets of the Adviser is subject (each, an "ADVISER EXISTING INSTRUMENT"),
except where such violation or default would not result in a Material Adverse
Change with respect to the Adviser. The Adviser's execution, delivery and
performance of this Agreement and the Investment Advisory Agreement, the
consummation of the transactions contemplated hereby, by the Investment Advisory
Agreement and by the Prospectus: (i) will not result in any violation of the
provisions of the organizational documents of the Adviser; (ii) will not
conflict with or constitute a breach of, or Adviser Default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Adviser pursuant to, or require the consent of any other party
to, any Adviser
9
Existing Instrument, except where any such conflict or breach would not result
in a Material Adverse Change with respect to the Company and/or the Adviser; and
(iii) will not result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Adviser, except where such
violation would not result in a Material Adverse Change with respect to the
Adviser. 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 Adviser's execution, delivery and performance of this
Agreement or the Investment Advisory Agreement and consummation of the
transactions contemplated hereby, by the Investment Advisory Agreement and by
the Prospectus, except such as have been obtained or made by the Adviser and are
in full force and effect, or where the failure to be obtained or made would not
result in a Material Adverse Change with respect to the Adviser.
(f) No Material Actions or Proceedings. Except as otherwise disclosed
in the Prospectus, there are no legal or governmental actions, suits or
proceedings pending or, to the Adviser's knowledge, threatened: (i) against or
affecting the Adviser; (ii) which has as the subject thereof any member or
director of, or property owned or leased by the Adviser; 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 Adviser, such officer or director, and any such action, suit or
proceeding, if so determined adversely, would reasonably be expected to result
in a Material Adverse Change with respect to the Adviser, or adversely affect
the consummation of the transactions contemplated by this Agreement or (B) any
such action, suit or proceeding is or would be material in the context of the
sale of Shares. No material labor dispute with the employees of the Adviser
exists or, to the best of the Adviser's knowledge, is threatened or imminent.
(g) All Necessary Permits. The Adviser possesses such valid and
current material certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies necessary to
conduct its business, and the Adviser has not received, any notice of
proceedings relating to the revocation or modification of, or non-compliance
with, any such certificate, authorization or permit and has no reason to believe
that it will receive any such notice which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, could result in a
Material Adverse Change with respect to the Adviser.
(h) Description. The description of the Adviser in the Prospectus, as
amended or supplemented, complies and will comply as to form and substance in
all material respects with the provisions of the Investment Company Act, as
applicable to business development companies, and the Securities Act and does
not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(i) Financial Resources. The Adviser has the financial resources
available to it necessary for the performance of its services and obligations as
contemplated in the Prospectus and under this Agreement and the Investment
Advisory Agreement.
(j) No Price Stabilization or Manipulation; Compliance with Regulation
M. Neither the Adviser nor any of its respective members, directors, officers,
or controlling persons has taken, 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 Shares or any other "REFERENCE SECURITY" (as
defined in Rule 100 of Regulation M) whether to facilitate the sale or resale of
the Offered Shares or otherwise, and has taken no action which would directly or
indirectly violate Regulation M.
(k) Employees. The Adviser is not aware that any executive, key
employee or significant group of employees of the Adviser plans to terminate
employment with the Company or the Adviser.
10
The Adviser acknowledges that the Underwriters and, for purposes of
the opinions to be delivered pursuant to Section 5 hereof, counsel to the
Company, counsel to the Adviser and counsel to the Underwriters, will rely upon
the accuracy and truthfulness of the foregoing representations and hereby
consents to such reliance.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE OFFERED SHARES.
(a) The Firm Shares. The Company agrees to issue and sell to the
several Underwriters the Firm 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 Shares set forth opposite their names on Schedule A. The purchase
price per Firm Share to be paid by the several Underwriters to the Company shall
be $[___] per share.
(b) The First Closing Date. Delivery of certificates for the Firm
Shares to be purchased by the Underwriters and payment therefor shall be made at
the offices of Jefferies, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx (or such other
place as may be agreed to by the Company and the Representative) at 9:00 a.m.
New York time, on [___], or such other time and date not later than 1:30 p.m.
New York time, on [___] as the Representative shall designate by notice to the
Company (the time and date of such closing are called the "FIRST CLOSING DATE").
The Company hereby acknowledges that circumstances under which the
Representative 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 Representative to recirculate to the public copies of an
amended or supplemented Prospectus or a delay as contemplated by the provisions
of Section 10.
(c) The Optional Shares; Option 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 Shares from the Company at the
purchase price per share to be paid by the Underwriters for the Firm Shares as
set forth in Section 2(a) above. 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 Shares. The option granted hereunder may be
exercised at any time and from time to time in whole or in part upon notice by
the Representative to the Company, which notice may be given at any time within
thirty (30) days from the date of this Agreement. Such notice shall set forth:
(i) the aggregate number of Optional Shares as to which the Underwriters are
exercising the option; (ii) the names and denominations in which the
certificates for the Optional 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 Shares and such Optional Shares). Such
time and date of delivery, if subsequent to the First Closing Date, is called an
"OPTION CLOSING DATE" and shall be determined by the Representative and shall
not be earlier than three (3) nor later than five (5) full business days after
delivery of such notice of exercise. If any Optional Shares are to be purchased,
each Underwriter agrees, severally and not jointly, to purchase the number of
Optional Shares (subject to such adjustments to eliminate fractional shares as
the Representative may determine) that bears the same proportion to the total
number of Optional Shares to be purchased as the number of Firm Shares set forth
on Schedule A opposite the name of such Underwriter bears to the total number of
Firm Shares. The Representative may cancel the option to purchase Optional
Shares pursuant to this Section 2(c) at any time prior to its expiration by
giving written notice of such cancellation to the Company.
11
(d) Public Offering of the Offered Shares. The Representative hereby
advises the Company that the Underwriters intend to offer for sale to the
public, initially on the terms set forth in the Prospectus, their respective
portions of the Offered Shares as soon after this Agreement has been executed
and the Registration Statement has been declared effective as the
Representative, in its sole judgment, has determined is advisable and
practicable.
(e) Payment for the Offered Shares. Payment for the Offered Shares
shall be made at the First Closing Date (and, if applicable, at each Option
Closing Date) by wire transfer of immediately available funds to the order of
the Company.
It is understood that the Representative has been authorized, for its
own account and the accounts of the several Underwriters, to accept delivery of
and receipt for, and make payment of the purchase price for, the Firm Shares and
any Optional Shares the Underwriters have agreed to purchase. Jefferies,
individually and not as the Representative of the Underwriters, may (but shall
not be obligated to) make payment for any Offered Shares to be purchased by any
Underwriter whose funds shall not have been received by the Representative by
the First Closing Date or an Option 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.
(f) Delivery of the Offered Shares. The Company shall deliver, or
cause to be delivered, to the Representative for the accounts of the several
Underwriters certificates for the Firm 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 Representative for the accounts of the several
Underwriters, certificates for the Optional Shares the Underwriters have agreed
to purchase at the First Closing Date or an Option 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
Offered Shares shall be in definitive form and registered in such names and
denominations as the Representative shall have requested at least two (2)
business days prior to the First Closing Date (or the applicable Option 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 applicable Option Closing
Date, as the case may be) at a location in New York City as the Representative
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.
(g) Delivery of Prospectus to the Underwriters. Not later than 12:00
p.m. on the second business day following the date the Offered Shares are first
released by the Underwriters for sale to the public, the Company shall deliver
or cause to be delivered, copies of the Prospectus in such quantities and at
such places as the Representative shall request.
SECTION 3. ADDITIONAL COVENANTS.
The Company and Adviser jointly and severally further covenant and
agree with each Underwriter as follows:
(a) Representative's Review of Proposed Amendments and Supplements.
During the 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 Rule 462(b) Registration Statement) or the Prospectus, the
Company shall furnish to the Representative for review a copy of each such
proposed
12
amendment or supplement, and the Company shall not file any such proposed
amendment or supplement without the Representative's consent.
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Representative 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
(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 Shares from any securities exchange upon
which 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 reasonable best efforts to obtain the lifting of such order as soon as
practicable. Additionally, the Company agrees that it shall comply with the
provisions of Rules 430A, 434 and 497, as applicable, under the Securities Act
and will use its reasonable efforts to confirm that any filings made by the
Company under Rule 497(c) of the Securities Act 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 Representative 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) 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.
Neither the Representative's consent to (pursuant to Section 3(a)), or delivery
of, any such amendment or supplement shall constitute a waiver of any of the
Company's obligations under this Section 3(c).
(d) Copies of Notification of Election. The Company agrees to furnish
the Underwriters with copies of the Notice of Election and all amendments
thereto (including exhibits).
(e) Copies of any Amendments and Supplements to the Prospectus. The
Company agrees to furnish the Representative, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any amendments
and supplements thereto as the Representative may request.
(f) Blue Sky Compliance. The Company shall cooperate with the
Representative and counsel for the Underwriters to qualify or register the
Offered Shares for sale under (or obtain exemptions from the application of) the
state securities or blue sky laws or Canadian provincial securities laws of
those jurisdictions designated by the Representative, shall comply with such
laws and shall continue such qualifications, registrations and exemptions in
effect so long as required for the distribution of the Offered 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 Representative
promptly of the suspension of the qualification or registration of (or any such
exemption relating to) the Offered 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
13
qualification, registration or exemption, the Company shall use its reasonable
best efforts to obtain the withdrawal thereof as soon as practicable.
(g) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Offered Shares sold by it in the manner described under the caption
"Use of Proceeds" in the Prospectus.
(h) Transfer Agent. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Shares.
(i) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representative an
earnings statement (which need not be audited) covering the twelve-month period
ending [___] 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.
(k) Directed Share Program. [In connection with the Directed Share
Program, the Company will ensure that the Directed Shares will be restricted to
the extent required by the NASD or the NASD rules from sale, transfer,
assignment, pledge or hypothecation for a period of three months following the
date of the effectiveness of the Registration Statement. The Designated
Underwriter will notify the Company as to which Participants will need to be so
restricted. The Company will direct the transfer agent to place stop transfer
restrictions upon such securities for such period of time. Should the Company
release, or seek to release, from such restrictions any of the Directed Shares,
the Company agrees to reimburse the Underwriters for any reasonable expenses
(including, without limitation, legal expenses) they incur in connection with
such release.]
(l) Listing. The Company will use its best efforts to effect and
maintain the inclusion and quotation of the Offered Shares on the Nasdaq
National Market and to maintain the inclusion and quotation of the Shares on the
Nasdaq National Market.
(m) Agreement Not to Offer or Sell Additional Shares. During the
period commencing on the date hereof and ending three hundred and sixty-five
(365) days following the date of the Prospectus (the "LOCK-UP PERIOD"), the
Company will not, without the prior written consent of Jefferies (which consent
may be withheld at the sole discretion of Jefferies), 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, options or warrants to acquire Shares or securities exchangeable or
exercisable for or convertible into Shares (other than as contemplated by this
Agreement with respect to the Offered Shares); provided, however, that the
Company may issue shares of its Shares or options to purchase its Shares, or
Shares 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 Lock-up Period without the prior written consent
of Jefferies (which consent may be withheld at the sole discretion of
Jefferies).
(n) Future Reports to the Representative. During the period of one (1)
year hereafter the Company will furnish to the Representative at 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, Attention: [Xxxxxx Xxx]: (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
14
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; (iii) as soon as available, copies of any report or
communication of the Company mailed generally to holders of its capital stock
and (iv) as soon as practically after the filing thereof, copies of all other
documents or reports filed with the Commission, the NASD or any national
securities exchange.
(o) No Stabilization or Manipulation; Compliance with Regulation M.
Neither the Company nor the Adviser will 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 Shares or any other reference
security, whether to facilitate the sale or resale of the Offered Shares or
otherwise, and the Company and the Adviser will, and shall cause each of their
respective affiliates to, comply with all applicable provisions of Regulation M.
If the limitations of Rule 102 of Regulation M ("RULE 102") do not apply with
respect to the Offered Shares or any other reference security pursuant to any
exception set forth in Section (d) of Rule 102, then promptly upon notice from
the Representative (or, if later, at the time stated in the notice), the Company
and the Adviser will, and shall cause each of their respective affiliates to,
comply with Rule 102 as though such exception were not available but the other
provisions of Rule 102 (as interpreted by the Commission) did apply.
(p) Maintain Status as a Business Development Company. The Company,
during a period of two (2) years from the effective date of the BDC Election,
will use its best efforts to maintain its status as a "business development
company" under the Investment Company Act; provided, however, the Company may
change the nature of its business so as to cease to be, or to withdraw its
election as, a business development company with the approval of the board of
directors and a vote of stockholders as required by Section 58 of the Investment
Company Act or any successor provision.
(q) Qualification as a Regulated Investment Company. The Company will
use its best efforts to qualify for and elect to be treated as a "regulated
investment company" under Subchapter M of the Code, and to maintain such
qualification and election in effect for each full fiscal year during which it
is a business development company under the Investment Company Act; provided
however, that at the discretion of the Company's board of directors, it may
elect not to be so treated.
(r) Continued Compliance with Securities Laws. The Company will comply
with the Securities Act and Investment Company Act so as to permit the
completion of the distribution of the Shares as contemplated in this Agreement
and in the Prospectus.
(s) Internal Accounting Control. The Company will maintain a system of
internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management's general or
specific authorization and with the applicable requirements of the Investment
Company Act; (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 and to maintain compliance
with the books and records requirement under the Investment Company Act and the
Code; (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.
(t) Disclosure Controls and Procedures. The Company has established
and shall maintain disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)), which: (i) are designed to ensure that
material information relating to the Company is made known to the Company's
principal executive officer and its principal financial officer by others within
the Company,
15
particularly during the periods in which the periodic reports required under the
Exchange Act are being prepared; and (ii) are effective in all material respects
to perform the functions for which they were established.
(u) Insurance. The Company shall promptly after the date hereof obtain
from recognized, financially sound and reputable institutions insurance policies
in such amounts and with such deductibles and covering such risks as are
generally deemed adequate and customary for its business including, but not
limited to, policies covering real and personal property owned or leased by the
Company against theft, damage, destruction, acts of vandalism and earthquakes.
(v) Directors and Officers Insurance. The Company shall obtain
Directors and Officers liability insurance in the minimum amount of $[__]
million which shall apply to the public offering contemplated hereby.
Jefferies, on behalf of the several Underwriters, may, in its sole
discretion, waive in writing the performance by the Company of any one or more
of the foregoing covenants or extend the time for their performance.
SECTION 4. PAYMENT OF EXPENSES. The Company and the Adviser jointly
and severally agree to pay all costs, fees and expenses incurred in connection
with the performance of their respective obligations hereunder and in connection
with the transactions contemplated hereby, including without limitation: (i) all
expenses incident to the issuance and delivery of the Offered Shares (including
all printing and engraving costs); (ii) all fees and expenses of the registrar
and transfer agent of the Shares; (iii) all necessary issue, transfer and other
stamp taxes in connection with the issuance and sale of the Offered Shares to
the Underwriters; (iv) all fees and expenses of the Company's counsel, the
Adviser'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, attorneys' fees and expenses incurred by the Company, the Adviser, or the
Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Offered 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
Representative, preparing and printing a "BLUE SKY SURVEY" or memorandum, and
any supplements thereto, advising the Underwriters of such qualifications,
registrations, determinations 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 Offered Shares; (viii) the
fees and expenses associated with including the Offered Shares on the Nasdaq
National Market; (ix) all other fees, costs and expenses referred to in Item 3
of Part A of the Registration Statement and Item 26 of Part C of the
Registration Statement; and (x) all costs and expenses of the Underwriters,
including the fees and disbursements of counsel for the Underwriters, in
connection with the offer and sale of the Directed Shares which are designated
by the Company for sale to Participants. 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 Offered
Shares as provided herein on the First Closing Date and, with respect to the
Optional Shares, each Option Closing Date, shall be subject to the accuracy of
the representations and warranties on the part of the Company and the Adviser
set forth in Sections 1(A) and 1(B) hereof, as of the date hereof and as of the
First Closing Date as though then made and, with respect to the Optional Shares,
as of each Option Closing Date as though then made, to the timely performance by
16
the Company and Adviser of their respective covenants and other obligations
hereunder, and to each of the following additional conditions:
(a) Accountants' Comfort Letter. On the date hereof, the
Representative shall have received from KPMG LLP, independent public or
certified public accountants for the Company, (i) a letter dated the date hereof
addressed to the Underwriters, in form and substance satisfactory to the
Representative, containing statements and information of the type customarily
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
Representative shall have received an additional [___] conformed copies of such
accountants' letter for each of the several Underwriters), and (ii) confirming
that they are (A) independent public or certified public accountants as required
by the Securities Act and the Exchange Act and (B) in compliance with the
applicable requirements relating to the qualification of accountants under Rule
2-01 of Regulation S-X.
(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
Shares, each Option 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 497(c) 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;
(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, to the Company's knowledge, threatened by the Commission;
(iii) the NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements; and
(iv) no Prospectus or amendment or supplement to the Registration
Statement or the Prospectus shall have been filed to which Jefferies
has reasonably objected in writing.
(c) No Material Adverse 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 Shares, each Option Closing Date in the judgment of the Representative
there shall not have occurred any Material Adverse Change with respect to the
Company or the Adviser.
(d) Opinion of Counsel for the Company. On each of the First Closing
Date and each Option Closing Date the Representative shall have received the
opinion of Xxxxxxxx & Xxxxx LLP, counsel for the Company, dated as of such
Closing Date, the form of which is attached as Exhibit B-1 (and the
Representative shall have received an additional [___] conformed copies of such
counsel's legal opinion for each of the several Underwriters).
(e) Opinion of Maryland Counsel for the Company. On each of the First
Closing Date and each Option Closing Date, the Representative shall have
received the opinion of Xxxxxxx LLP, Maryland counsel for the Company, dated as
of such Closing Date, the form of which is attached as Exhibit B-2
17
(and the Representative shall have received an additional [____] conformed
copies of such counsel's legal opinion for each of the several Underwriters).
(f) Opinion of Counsel for the Adviser. On each of the First Closing
Date and each Option Closing Date, the Representative shall have received the
opinion of Xxxxxxxx & Xxxxx LLP, counsel for the Adviser, dated as of such
Closing Date, the form of which is attached as Exhibit B-3 (and the
Representative shall have received an additional [____] conformed copies of such
counsel's legal opinion for each of the several Underwriters).
(g) Opinion of Counsel for the Underwriters. On each of the First
Closing Date and each Option Closing Date, the Representative shall have
received the opinion of Sidley Xxxxxx Xxxxx & Xxxx LLP, counsel for the
Underwriters, in form and substance satisfactory to the Underwriters, dated as
of such Closing Date.
(h) Officers' Certificate of the Company. On each of the First Closing
Date and each Option Closing Date the Representative 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 subsection (b)(ii) of this Section 5, and further to the effect
that:
(i) they have reviewed the Registration Statement and Prospectus;
(ii) 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 with respect to the Company;
(iii) the representations, warranties and covenants of the
Company set forth in Section 1(A) 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
(iv) the Company has complied with all the agreements hereunder
and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date.
(i) Officers' Certificate of the Adviser. On each of the First Closing
Date and each Option Closing Date, the Representative shall have received a
written certificate executed by the [Chief Executive Officer] or [President] and
the [Chief Financial Officer] or [Chief Accounting Officer] of the Adviser,
dated as of such Closing Date 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 with respect to the Adviser;
(ii) the representations, warranties and covenants of the Adviser
set forth in Section 1(B) 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 Adviser has complied with all the agreements hereunder
and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to such Closing Date.
(j) Bring-down Comfort Letter. On each of the First Closing Date and
each Option Closing Date the Representative shall have received from KPMG LLP,
independent public or certified public accountants for the Company, a letter
dated such date, in form and substance satisfactory to the Representative, to
the effect that they reaffirm the statements made in the letter furnished by
them
18
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 (3) business days prior to the First Closing Date or the applicable Option
Closing Date, as the case may be (and the Representative shall have received an
additional [___] conformed copies of such accountants' letter for each of the
several Underwriters).
(k) Lock-Up Agreements. On or prior to the date hereof, the Company
shall have furnished to the Representative an agreement in the form of Exhibit A
hereto from each director and officer of the Company, and such agreement shall
be in full force and effect on each of the First Closing Date and each Option
Closing Date.
(l) Nasdaq Listing Approval. The Shares shall have been approved for
quotation on the Nasdaq National Market, subject only to notice of issuance at
or prior to the time of purchase or the additional time of purchase, as the case
may be.
(m) Additional Documents. On or before each of the First Closing Date
and each Option Closing Date, the Representative 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 Offered 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
Representative by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Optional Shares, at any time prior to the
applicable Option 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 Representative pursuant to Section 5, Section 7, Section 10
or Section 11, or if the sale to the Underwriters of the Offered 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 and the Adviser jointly and severally
agree to reimburse the Representative 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 Representative and the Underwriters in connection
with the proposed purchase and the offering and sale of the Offered Shares,
including but not limited to fees and disbursements of counsel, printing
expenses, travel expenses, postage, facsimile and telephone charges.
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT. This Agreement shall not
become effective until the later of: (i) the execution of this Agreement by the
parties hereto; and (ii) notification by the Commission to the Company and the
Representative of the effectiveness of the Registration Statement under the
Securities Act. [Prior to such effectiveness, this Agreement may be terminated
by any party by notice to each of the other parties hereto, and any such
termination 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 Representative and the Underwriters pursuant to Sections 4 and 6
hereof; (b) the Adviser to any Underwriter, except that the Adviser shall be
obligated to reimburse the expenses of the Representative and the Underwriters
pursuant to Sections 4 and 6 hereof; (c) any Underwriter to the Company; or (d)
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.]
19
SECTION 8. INDEMNIFICATION.
(a) Indemnification by the Company. The Company agrees to indemnify,
defend 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 the laws or regulations of foreign
jurisdictions where Directed Shares have been offered, or at common law or
otherwise (including in settlement of any litigation), insofar as such loss,
claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon: (A) (i) 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, Rule 434 or Rule 497 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) 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 any prospectus wrapper material distributed in connection
with the reservation and sale of Directed Shares to the Participants, 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) 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 Shares 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, however, that the Company shall not be liable under this clause (iii)
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 gross negligence or willful misconduct; and (B)
the violation of any applicable laws or regulations of foreign jurisdictions
where Directed Shares have been offered; and to reimburse each Underwriter and
each such controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by Jefferies) 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; provided, further, 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 Representative expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), it being understood and agreed that the only such
information furnished by the Representative on behalf of the Underwriters to the
Company consists of the information described in subsection (c) below. 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 by the Adviser. The Adviser agrees to indemnify,
defend 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), 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 of the matters specified in clauses (i), (ii) and (iii) of
subsection (a) of this Section 8. The indemnity set forth in this Section 8(b)
shall be in addition to any liabilities that the Adviser may otherwise have.
20
(c) Indemnification by the Underwriters. Each Underwriter agrees,
severally and not jointly, to indemnify, defend and hold harmless the Company,
the Adviser, each of their respective directors, each of the Company's officers
who signed the Registration Statement and each person, if any, who controls the
Company or the Adviser 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, the Adviser or any such director, officer, member 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), 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
Representative expressly for use therein; and to reimburse the Company, the
Adviser or any such director, officer or controlling person for any legal and
other expense reasonably incurred by the Company, the Adviser 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. Each of the Company and the Adviser hereby
acknowledge that the only information that the Representative has furnished to
the Company expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) are the
statements set forth in (i) the table in the first paragraph (ii) the third
paragraph, (iii) the twelfth paragraph, (iv) the first sentence of the fifteenth
paragraph and (v) the last sentence of the seventeenth paragraph, each under the
caption "Underwriting" in the Prospectus. The indemnity agreement set forth in
this Section 8(c) shall be in addition to any liabilities that each Underwriter
may otherwise have.
(d) 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 contribution or otherwise under the
indemnity agreement contained in this Section 8 or to the extent the
indemnifying party 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. 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
21
shall have employed separate counsel in accordance with the proviso to the
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, 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.
(e) 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 such consent or if there be a final judgment for
the plaintiff, 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(d) 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 thirty (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 such request
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.
(f) Indemnification for Directed Shares. In connection with the offer
and sale of the Directed Shares, the Company agrees, promptly upon a request in
writing, to indemnify and hold harmless the Underwriters from and against any
and all losses, liabilities, claims, damages and expenses incurred by them as a
result of the failure of the Participants to pay for and accept delivery of
Directed Shares which, by the end of the first business day following the date
of this Agreement, were subject to a properly confirmed agreement to purchase.
The Company agrees to indemnify and hold harmless the Designated Underwriter,
its officer and employees, and each person, if any, who controls the Designated
Underwriter within the meaning of the Securities Act or the Exchange Act against
any loss, claim, damage, liability or expense, as incurred, to which such
Designated Underwriter or such controlling person may become subject, which is:
(i) caused by any untrue statement or alleged untrue statement of a material
fact contained in any material prepared by or with the consent of the Company
for distribution to Participants in connection with the Directed Share Program
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; (ii) caused by the failure of any Participant to pay for and accept
delivery of Directed Shares that such Participant agreed to purchase; or (iii)
related to, arising out of, or in connection with the Directed Share Program;
provided, however, that the Company shall not be liable under this clause (iii)
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 Designated Underwriter through its gross negligence or willful misconduct.
The indemnity agreement set forth in this paragraph shall be in addition to any
liabilities that the Company may otherwise have.
SECTION 9. CONTRIBUTION. If the indemnification provided for in
Section 8 is for any reason 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
22
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 and the Adviser, on the one hand, and the Underwriters, on the other
hand, from the offering of the Offered 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 and the Adviser, on the one hand, and the Underwriters, on the other
hand, in connection with the statements or omissions 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 and the
Adviser, on the one hand, and the Underwriters, on the other hand, in connection
with the offering of the Offered 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 Offered Shares pursuant to this Agreement (before deducting
expenses) received by the Company, and the total underwriting discount received
by the Underwriters, in each case as set forth on the front cover page of the
Prospectus bear to the aggregate initial public offering price of the Offered
Shares as set forth on such cover. The relative fault of the Company and the
Adviser, 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 relates to information supplied by the Company and the
Adviser, on the one hand, or the Representative, 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(d), 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(d) 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(d) for purposes of indemnification.
The Company, the Adviser 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 Offered 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 or 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 or the Exchange
Act shall have the same rights to contribution as the Company and each officer
and employee of the Adviser and each person, if any, who controls the Adviser
within the meaning of the Securities Act or the Exchange Act shall have the same
rights to contribution as the Adviser.
23
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS. If, on
the First Closing Date or the applicable Option Closing Date, as the case may
be, any one or more of the several Underwriters shall fail or refuse to purchase
Offered Shares that it or they have agreed to purchase hereunder on such date,
and the aggregate number of Offered Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Offered Shares to be purchased on such date, the
Representative may make arrangements satisfactory to the Company for the
purchase of such Offered Shares by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date, the
other Underwriters shall be obligated, severally, in the proportions that the
number of Firm Shares set forth opposite their respective names on Schedule A
bears to the aggregate number of Firm Shares set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as may be
specified by the Representative with the consent of the non-defaulting
Underwriters, to purchase the Offered Shares which such defaulting Underwriter
or Underwriters agreed but failed or refused to purchase on such date. If, on
the First Closing Date or the applicable Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Offered
Shares and the aggregate number of Offered Shares with respect to which such
default occurs exceeds 10% of the aggregate number of Offered Shares to be
purchased on such date, and arrangements satisfactory to the Representative and
the Company for the purchase of such Offered 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 6,
Section 8 and Section 9 shall at all times be effective and shall survive such
termination. In any such case either the Representative or the Company shall
have the right to postpone the First Closing Date or the applicable Option
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 Representative 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 National 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 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 Representative is material and adverse and makes it
impracticable to market the Offered Shares in the manner and on the terms
described in the Prospectus or to enforce contracts for the sale of securities;
(iv) in the judgment of the Representative there shall have occurred any
Material Adverse Change with respect to the Company and/or the Adviser; or (v)
the Company and/or the Adviser shall have sustained a loss by strike, fire,
flood, earthquake, accident or other calamity of such character as in the
judgment of the Representative may interfere materially with the conduct of the
business and operations of the Company and/or the Adviser regardless of whether
or not such loss shall have been insured. 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 Representative and the Underwriters pursuant to Sections 4 and 6
hereof; (b) the Adviser to any Underwriter, except that the Adviser shall be
24
obligated to reimburse the expenses of the Representative and the Underwriters
pursuant to Sections 4 and 6 hereof; (c) any Underwriter to the Company; or (d)
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, the Adviser, their respective officers or members and
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
behalf of any Underwriter, the Adviser 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 Offered 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 Representative:
Xxxxxxxxx & Company, Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Sidley Xxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxx
If to the Company:
Xxxxxxxx Mezzanine Capital Corp.
0000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx,
Chairman and Chief Executive Officer
with a copy to:
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, P.C.
Xxxxx X. Xxxx
25
If to the Adviser:
Xxxxxxxx Capital Management, L.L.C.
0000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
with a copy to:
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx, P.C.
Xxxxx X. Xxxx
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 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. The term "SUCCESSORS" shall not include any purchaser
of the Offered Shares as such from any of the Underwriters merely by reason of
such purchase.
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 laws of the State of New York applicable
to agreements made and to be performed in such state. Any legal suit, action or
proceeding arising out of or based upon this Agreement or the transactions
contemplated hereby ("RELATED PROCEEDINGS") may be instituted in the federal
courts of the United States of America located in the Borough of Manhattan in
the City of New York or the courts of the State of New York in each case located
in the Borough of Manhattan in the City of New York (collectively, the
"SPECIFIED COURTS"), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the enforcement of
a judgment of any such court (a "RELATED JUDGMENT"), as to which such
jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party's address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.
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
26
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 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, its business and its Adviser, 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, Investment Company Act and the Exchange Act.
27
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.
Very truly yours,
XXXXXXXX MEZZANINE CAPITAL CORP.
By:
---------------------------------
[Name]
[Title]
XXXXXXXX CAPITAL MANAGEMENT, L.L.C.
By:
---------------------------------
[Name]
[Title]
The foregoing Underwriting Agreement is hereby confirmed and accepted
by the Representative in New York, New York as of the date first above written.
XXXXXXXXX & COMPANY, INC.
Acting as Representative
of the several Underwriters
named in the attached Schedule A.
By XXXXXXXXX & COMPANY, INC.
By:
----------------------------
[Name]
[Title]
28
SCHEDULE A
UNDERWRITERS NUMBER OF FIRM
SHARES TO BE
PURCHASED
Xxxxxxxxx & Company, Inc.................... [___]
JMP Securities LLC.......................... [___]
Xxxxxx, Xxxxx Xxxxx, Inc.................... [___]
RBC Capital Markets......................... [___]
Total.................... [___]
1
