1
EXHIBIT (h)
2
[KL Draft 2/20/96]
5,000,000
SHARES OF COMMON STOCK
XXXXXX XXXX GROWTH FUND, INC.
UNDERWRITING AGREEMENT
Tulsa, Oklahoma
__________ ___, 1996
RAS Securities Corp.
0 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxxx Xxxx Growth Fund, Inc., a Delaware corporation (the "Company")
proposes to offer and sell to the public up to 5,000,000 shares of the
Company's common stock, $.01 par value per share (the "Shares"), subject to the
terms and conditions herein stated. The Shares are more fully described in the
Registration Statement and the Prospectus referred to below. The Company
hereby appoints RAS Securities Corp. (the "Underwriter") as its exclusive
agent, on a best efforts basis, to sell the Shares, on behalf of the Company
subject to the terms and conditions herein stated.
Xxxxxx Xxxx Capital Advisors, Inc., a Delaware corporation (the
"Adviser"), will act as investment adviser for the Company pursuant to an
investment advisory agreement (the "Investment Advisory Agreement"), dated
September 21, 1995, between the Company and the Adviser.
1. Representations and Warranties. (a) The Company and the
Adviser each, jointly and severally, represent and warrant to, and agree with,
the Underwriter, as of the date hereof, and as of the Closing Date (hereinafter
defined), as follows:
(i) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement, and an
amendment or amendments thereto, on Form N-2 (No. 33-96108), including any
related preliminary prospectus
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("Preliminary Prospectus"), for the registration of the Shares under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended (collectively, the "Acts"), which registration statement and amendment
or amendments have been prepared by the Company in conformity with the
requirements of the Acts, and the Rules and Regulations of the Commission
thereunder. The Company will promptly file a further amendment to said
registration statement in the form heretofore delivered to the Underwriter and
will not file any other amendment thereto to which the Underwriter shall have
objected in writing after having been furnished with a copy thereof. Except as
the context may otherwise require, such registration statement, as amended, on
file with the Commission at the time the registration statement becomes
effective (including the prospectus, financial statements, schedules, exhibits
and all other documents filed as a part thereof or incorporated therein
(including, but not limited to those documents or information incorporated by
reference therein) and all information deemed to be a part thereof as of such
time pursuant to paragraph (b) of Rule 430(A) of the rules and regulations), is
hereinafter called the "Registration Statement", and the form of prospectus in
the form first filed with the Commission pursuant to Rule 497 of the rules and
regulations, is hereinafter called the "Prospectus." For purposes hereof,
"Rules and Regulations" mean the rules and regulations adopted by the
Commission under either the Securities Act of 1933, as amended (the "Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Investment Company Act of 1940, as amended (the "1940 Act") or the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), as applicable.
(ii) Neither the Commission nor any state regulatory authority
has issued any order preventing or suspending the use of any Preliminary
Prospectus, the Registration Statement or Prospectus or any part of any thereof
and no proceedings for a stop order suspending the effectiveness of the
Registration Statement or any of the Company's securities have been instituted
or are pending or threatened. Each of the Preliminary Prospectus, the
Registration Statement and Prospectus at the time of filing thereof conformed
with the requirements of the Acts and the Rules and Regulations, and none of
the Preliminary Prospectus, the Registration Statement or Prospectus at the
time of filing thereof contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein and necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, except that this representation and warranty does
not apply to statements made in reliance upon and in conformity with written
information furnished to the Company with respect to the Underwriter by or on
behalf of the Underwriter expressly for use in such Preliminary Prospectus,
Registration Statement or Prospectus. The Company and the Adviser acknowledge
that the only such information so furnished by the Underwriter is the paragraph
relating to stabilization on the inside front cover page of the Prospectus and
the statements under the caption "Underwriting" in the Prospectus.
(iii) When the Registration Statement becomes effective and at
all times subsequent thereto up to the Closing Date and during such longer
period as the Prospectus may be required to be delivered in connection with
sales by the Underwriter or a dealer, the Registration Statement and the
Prospectus will contain all statements which are required to be stated therein
in accordance with the Acts and the Rules and Regulations, and will conform to
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the requirements of the Acts and the Rules and Regulations; neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, will contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, provided, however, that this representation and warranty does
not apply to statements made or statements omitted in reliance upon and in
conformity with information furnished to the Company in writing by or on behalf
of the Underwriter (as set forth in paragraph 1(a)(ii) hereof) expressly for
use in the Preliminary Prospectus, Registration Statement or Prospectus or any
amendment thereof or supplement thereto.
(iv) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware. The Company does not own an interest in any corporation,
partnership, trust, joint venture or other business entity. The Company is not
qualified as a foreign corporation in any jurisdiction, there being no
jurisdiction in which failure to so qualify would have a material adverse
effect upon the Company. The Company has all requisite power and authority
(corporate and other), and has obtained any and all necessary authorizations,
approvals, orders, licenses, certificates, franchises and permits of and from
all governmental or regulatory officials and bodies (including, without
limitation, those having jurisdiction over environmental or similar matters),
materially necessary to own or lease its properties and conduct its business as
described in the Prospectus; the Company is and has been doing business in
compliance with all such authorizations, approvals, orders, licenses,
certificates, franchises and permits and all federal, state, local and foreign
laws, rules and regulations, except where the failure to so comply does not and
will not have a material adverse effect on the Company; and the Company has not
received any notice of proceedings relating to the revocation or modification
of any such authorization, approval, order, license, certificate, franchise, or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect the
condition, financial or otherwise, or the earnings, position, prospects, value,
operation, properties, business or results of operations of the Company. The
disclosures in the Registration Statement concerning the effects of federal,
state, local, and foreign laws, rules and regulations on the Company's business
as currently conducted and as contemplated are correct in all material respects
and do not omit to state a material fact necessary to make the statements
contained therein not misleading in light of the circumstances in which they
were made.
(v) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, and will have the adjusted
capitalization set forth therein on the Closing Date based upon the assumptions
set forth therein, and the Company is not a party to or bound by any
instrument, agreement or other arrangement providing for it to issue any
capital stock, rights, warrants, options or other securities, except for this
Agreement and as described in the Prospectus. The Securities and all other
securities issued or issuable by the Company conform or, when issued and paid
for, will conform, in all respects to all statements with respect thereto
contained in the Registration Statement and the Prospectus. All issued and
outstanding securities of the Company have been duly authorized and validly
issued and are
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fully paid and non-assessable and the holders thereof have no rights of
rescission with respect thereto, and are not subject to personal liability
under the laws of the State of Delaware as currently in effect by reason of
being such holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. The Shares are not and will not be
subject to any preemptive or other similar rights of any stockholder, have been
duly authorized and, when issued, paid for and delivered in accordance with the
terms hereof, will be validly issued, fully paid and non-assessable and will
conform to the description thereof contained in the Prospectus; the holders
thereof will not be subject to any liability under the laws of the State of
Delaware as currently in effect solely as such holders; all corporate action
required to be taken for the authorization, issue and sale of the Shares has
been duly and validly taken; and the certificates representing the Shares will
be in due and proper form. Upon the issuance and delivery pursuant to the
terms hereof of the Securities to be sold by the Company hereunder or the
Underwriter, as the case may be, will acquire good and marketable title to such
Shares free and clear of any lien, charge, claim, encumbrance, pledge, security
interest defect or other restriction or equity of any kind whatsoever (except
those arising out of acts of or claims against the Underwriter).
(vi) The financial statements of the Company together with the
related notes and schedules thereto, included in the Registration Statement,
each Preliminary Prospectus and the Prospectus fairly present the financial
position, changes in cash flow, changes in stockholders' equity and the results
of operations of the Company at the respective dates and for the respective
periods to which they apply and such financial statements have been prepared in
conformity with generally accepted accounting principles and the Rules and
Regulations, consistently applied throughout the periods involved. There has
been no material adverse change or development involving a material prospective
change in the condition, financial or otherwise, or net assets of the Company
or in the management, capital stock, investment objectives, investment
policies, earnings, liabilities, business affairs or business prospects of the
Company whether or not arising in the ordinary course of business, since the
date of the financial statements included in the Registration Statement and the
Prospectus.
(vii) The Company (A) has paid all federal, state, local, and
foreign taxes for which it is liable, including, but not limited to,
withholding taxes and amounts payable under Chapters 21 through 24 of the
Internal Revenue Code of 1986, as amended (the "Code"), and has furnished all
information returns it is required to furnish pursuant to the Code, (B) has
established adequate reserves for such taxes which are not due and payable, and
(C) does not have any tax deficiency or claims outstanding, proposed or
assessed against it.
(viii) No transfer tax, stamp duty or other similar tax is
payable by or on behalf of the Underwriter in connection with (A) the issuance
by the Company of the Securities, (B) the purchase by the Underwriter of the
Securities from the Company, (C) the consummation by the Company of any of its
obligations under this Agreement, or (D) resales of the Securities in
connection with the distribution contemplated hereby.
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(ix) The Company maintains insurance policies, including, but
not limited to, general liability and property insurance, which insures the
Company and its employees, against such losses and risks generally insured
against by comparable businesses. The Company (A) has not failed to give
notice or present any insurance claim with respect to any matter, including but
not limited to the Company's business, property or employees, under the
insurance policy or surety bond in a due and timely manner, (B) does not have
any disputes or claims against any underwriter of such insurance policies or
surety bonds or has not failed to pay any premiums due and payable thereunder,
or (C) has not failed to comply with all conditions contained in such insurance
policies and surety bonds. There are no facts or circumstances under any such
insurance policy or surety bond which would relieve any insurer of its
obligation to satisfy in full any valid claim of the Company.
(x) There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental proceeding (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, pending or threatened against (or circumstances
that may give rise to the same), or involving the properties or business of the
Company which (A) questions the validity of the capital stock of the Company,
this Agreement, the Investment Advisory Agreement (as defined herein), or of
any action taken or to be taken by the Company pursuant to or in connection
with this Agreement or the Investment Advisory Agreement, (B) is required to be
disclosed in the Registration Statement which is not so disclosed (and such
proceedings as are summarized in the Registration Statement are accurately
summarized in all material respects), or (C) if adversely determined, might
materially and adversely affect the condition, financial or otherwise, or the
business affairs or business prospects, earnings, liabilities, prospects,
stockholders' equity, value, properties, business or assets of the Company.
(xi) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Shares, enter into this Agreement and
the Investment Advisory Agreement and to consummate the transactions provided
for in such agreements; and this Agreement and the Investment Advisory
Agreement have each been duly and properly authorized, executed and delivered
by the Company. Each of this Agreement and the Investment Advisory Agreement
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, and none of the Company's
issue and sale of the Shares, execution or delivery of this Agreement and the
Investment Advisory Agreement, its performance hereunder and thereunder, its
consummation of the transactions contemplated herein and therein, or the
conduct of its business as described in the Registration Statement, the
Prospectus, and any amendments or supplements thereto, conflicts with or will
conflict with or results or will result in any breach or violation of any of
the terms or provisions of, or constitutes or will constitute a default under,
or result in the creation or imposition of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or equity
of any kind whatsoever upon, any property or assets (tangible or intangible) of
the Company pursuant to the terms of, (A) the certificate of incorporation or
by-laws of the Company, (B) any license, contract, indenture, mortgage, deed of
trust, voting trust agreement, stockholders agreement, note, loan or credit
agreement or any other
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agreement or instrument to which the Company is a party or by which it is or
may be bound or to which its properties or assets (tangible or intangible) is
or may be subject, or any indebtedness, or (C) any statute, judgment, decree,
order, rule or regulation applicable to the Company of any arbitrator, court,
regulatory body or administrative agency or other governmental agency or body
(including, without limitation, those having jurisdiction over environmental or
similar matters), domestic or foreign, having jurisdiction over the Company or
any of its activities or properties, in each case except for conflicts,
breaches, violations, defaults, creations or impositions which do not and would
not have a material adverse effect on the Company.
(xii) Except as described in the Prospectus, no consent,
approval, authorization or order of, and no filing with, any court, regulatory
body, government agency or other body, domestic or foreign, is required for the
issuance of the Shares pursuant to the Prospectus and the Registration
Statement, and the transactions contemplated hereby and thereby, including
without limitation, any waiver of any preemptive, first refusal or other rights
that any entity or person may have for the issue and/or sale of any of the
Shares, except such as have been or may be obtained under the Acts or may be
required under state securities or Blue Sky laws in connection with the
Underwriter's purchase and distribution of the Shares, to be sold by the
Company hereunder.
(xiii) All executed agreements, contracts or other documents or
copies of executed agreements, contracts or other documents filed as exhibits
to the Registration Statement to which the Company is a party or by which it
may be bound or to which its assets, properties or business may be subject have
been duly and validly authorized, executed and delivered by the Company and
constitute the legal, valid and binding agreements of the Company, enforceable
against the Company, in accordance with their respective terms. The
descriptions in the Registration Statement of agreements, contracts and other
documents are accurate and fairly present the information required to be shown
with respect thereto by Form N-2, and there are no contracts or other documents
which are required by the Acts to be described in the Registration Statement or
filed as exhibits to the Registration Statement which are not described or
filed as required, and the exhibits which have been filed are complete and
correct copies of the documents of which they purport to be copies.
(xiv) Subsequent to the respective dates as of which information
is set forth in the Registration Statement and Prospectus, and except as may
otherwise be indicated or contemplated herein or therein, the Company has not
(A) issued any securities or incurred any liability or obligation, direct or
contingent, for borrowed money, (B) entered into any transaction other than in
the ordinary course of business, or (C) declared or paid any dividend or made
any other distribution on or in respect of its capital stock of any class, and
there has not been any change in the capital stock, or any change in the debt
(long or short term) or liabilities or material adverse change in or affecting
the business affairs or prospects, management, stockholders' equity,
properties, business or assets of the Company.
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(xv) No default exists in the due performance and observance of
any term, covenant or condition of any license, contract, indenture, mortgage,
installment sale agreement, lease, deed of trust, voting trust agreement,
stockholders agreement, partnership agreement, note, loan or credit agreement,
purchase order, or any other material agreement or instrument evidencing an
obligation for borrowed money, or any other material agreement or instrument to
which the Company is a party or by which the Company may be bound or to which
the property or assets (tangible or intangible) of the Company is subject or
affected, which default would have a material adverse effect on the Company.
(xvi) Neither the Company, the Adviser, nor any of their
respective employees, directors, stockholders, partners, or affiliates (within
the meaning of the Rules and Regulations) of any of the foregoing has taken or
will take, directly or indirectly, any action designed to or which has
constituted or which might be expected to cause or result in, under the
Exchange Act, or otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares or
otherwise.
(xvii) The Company has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property
stated in the Prospectus, to be owned or leased by it free and clear of all
liens, charges, claims, encumbrances, pledges, security interests, defects, or
other restrictions or equities of any kind whatsoever, other than those
referred to in the Prospectus and liens for taxes not yet due and payable.
(xviii) KPMG Peat Marwick LLP, whose report is filed with the
Commission as a part of the Registration Statement, are independent certified
public accountants as required by the Acts and the Rules and Regulations.
(xix) There are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Shares hereunder or
any other arrangements, agreements, understandings, payments or issuance with
respect to the Company, or any of its officers, directors, stockholders,
partners, employees or affiliates that may affect the Underwriter's
compensation, as determined by the National Association of Securities Dealers,
Inc. ("NASD").
(xx) Neither the Company, nor any of its officers, employees,
agents or any other person acting on behalf of the Company has, directly or
indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business)
to any customer, supplier, employee or agent of a customer or supplier, or
official or employee of any governmental agency (domestic or foreign) or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or other person who was, is, or
may be in a position to help or hinder the business of the Company (or assist
the Company in connection with any actual or proposed transaction) which (A)
might subject the Company, or any other such person to any damage or penalty in
any civil, criminal or governmental litigation or proceeding (domestic or
foreign), (B) if not given in the past, might have had a materially adverse
effect on the assets,
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business or operations of the Company, or (C) if not continued in the future,
might adversely affect the assets, business, operations or prospects of the
Company.
(xxi) Except as set forth in the Prospectus, no officer,
director, or stockholder of the Company, or any "affiliate" or "associate" (as
these terms are defined in Rule 405 promulgated under the Rules and
Regulations) of any of the foregoing persons or entities has or has had, either
directly or indirectly, (A) an interest in any person or entity which (1)
furnishes or sells services or products which are furnished or sold or are
proposed to be furnished or sold by the Company, or (2) purchases from or sells
or furnishes to the Company any goods or services, or (B) a beneficiary
interest in any contract or agreement to which the Company is a party or by
which it may be bound or affected. Except as set forth in the Prospectus under
"Certain Transactions," there are no existing agreements, arrangements,
understandings or transactions, or proposed agreements, arrangements,
understandings or transactions between or among the Company, and any officer or
director of the Company, or any partner, affiliate or associate of any of the
foregoing persons or entities.
(xxii) Any certificate signed by any officer of the Company and
delivered to the Underwriter or to Underwriter's Counsel (as defined herein)
shall be deemed a representation and warranty by the Company to the Underwriter
as to the matters covered thereby.
(xxiii) The minute books of the Company have been made available
to the Underwriter and contain a complete summary of all meetings and actions
of the directors and stockholders of the Company, since the time of its
incorporation, and reflect all transactions referred to in such minutes
accurately in all material respects.
(xxiv) Except and to the extent described in the Prospectus, no
holders of any securities of the Company have the right to include any
securities issued by the Company in the Registration Statement or any
registration statement to be filed by the Company or to require the Company to
file a registration statement under the Acts and no person or entity holds any
anti-dilution rights with respect to any securities of the Company.
(xxv) The rules adopted by the Commission concerning "blank
check" and "blind pool" offerings are not applicable to the Company's offering
of the Shares.
(xxvi) The Company has entered into the Investment Advisory
Agreement substantially in the form filed as Exhibit 10.2 to the Registration
Statement with the Adviser in form and substance satisfactory to the
Underwriter (the "Investment Advisory Agreement"). The Investment Advisory
Agreement has been duly and validly authorized by the Company and, assuming due
execution by the parties thereto other than the Company, constitutes a valid
and legally binding agreement of the Company, enforceable against the Company
in accordance with its terms.
(xxvii) The Company is registered with the Commission under the
1940 Act as a closed-end, non-diversified investment company. The Company is,
and at all times through
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the Closing Date, as hereinafter defined, will be, in compliance with the terms
and provisions of the Acts in all material respects. No person is serving or
acting as an officer or director of, or investment adviser to, the Company
except in accordance with the provisions of the 1940 Act, the Advisers Act, and
the Rules and Regulations thereunder.
(b) The Adviser represents to the Underwriter as follows:
(i) The Adviser (A) is duly registered as an investment
adviser under the Advisers Act and (B) is not prohibited by the Advisers Act,
the 1940 Act, or the Rules and Regulations thereunder from acting as investment
adviser for the Company as contemplated under the Investment Advisory
Agreement.
(ii) The Adviser has been duly organized and is validly
existing as a corporation in good standing under the laws of Delaware, with
full power and authority, to own or lease all assets owned or leased by it and
to conduct its business as described in the Registration Statement and
Prospectus, and is duly licensed or qualified as a foreign entity and in good
standing in each other jurisdiction in which its ownership of property or the
conduct of its business requires such qualification or license and owns,
possesses, or has obtained and currently maintains all material governmental
licenses, permits, consents, orders, approvals and authorizations
(collectively, the "Authorizations"), whether foreign or domestic, necessary to
carry on its business as contemplated in the Prospectus, except where the
failure to be so licensed or qualified or obtaining such Authorizations would
not have a material adverse effect on the Adviser.
(iii) Each of this Agreement and the Investment Advisory
Agreement has been duly and validly authorized, executed and delivered by the
Adviser and the Investment Advisory Agreement complies with the all applicable
provisions of the 1940 Act, the Advisers Act, and the Rules and Regulations
thereunder, as the case may be, and, assuming due authorization, execution and
delivery by the other parties thereto, each of this Agreement and the
Investment Advisory Agreement constitutes a legal, valid and binding obligation
of the Adviser, enforceable in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, fraudulent transfer, moratorium,
reorganization, insolvency or other similar laws relating to or affecting
creditors' rights generally and to general equitable principles, except, with
respect to this Agreement, as rights to indemnity and contribution thereunder
may be limited by U.S. federal or state securities laws.
(iv) No consent, approval, authorization or order (each, a
"Consent"), of any court or governmental agency or body or securities exchange
or securities association having jurisdiction over the Adviser, whether foreign
or domestic, is required to be obtained by the Adviser for the consummation by
the Adviser of the transactions contemplated in, or the performance by the
Adviser of its obligations under, this Agreement or the Financial Advisory,
Agreement, except (A) for any consent required pursuant to state or foreign
securities or "blue sky" laws and (B) such as have been obtained under the 1940
Act, the Advisers Act, and the Rules and Regulations thereunder.
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(v) Neither the execution and delivery by the Adviser of this
Agreement or the Investment Advisory Agreement, nor the performance by the
Adviser of its obligations under such agreements or the consummation by the
Adviser of the transactions contemplated by such agreements, conflicts or will
conflict with, or results or will result in any breach or violation of any of
the terms or provisions of, or constitutes or will constitute a default under,
or result in the creation or imposition of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or equity
of any kind whatsoever upon, any property or assets (tangible or intangible) of
the Adviser pursuant to the terms of, (A) the certificate of incorporation or
by-laws of the Adviser, (B) any license, contract, indenture, mortgage, deed of
trust, voting trust agreement, stockholders agreement, note, loan or credit
agreement or any other agreement or instrument to which the Adviser is a party
or by which it is or may be bound or to which its properties or assets
(tangible or intangible) is or may be subject, or any indebtedness, or (C) any
statute, judgment, decree, order, rule or regulation applicable to the Adviser
of any arbitrator, court, regulatory body or administrative agency or other
governmental agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or foreign,
having jurisdiction over the Adviser or any of its activities or properties, in
each case except for conflicts, breaches, violations, defaults, creations or
impositions which do not and would not have a material adverse effect on the
Adviser.
(vi) The description of the Adviser in the Registration
Statement and the Prospectus complies with the requirements of the Acts and the
Rules and Regulations and does not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(vii) There is no action, suit or providing before or by any
court or governmental agency or body, foreign or domestic, now pending or, to
the knowledge of the Adviser, threatened against the Adviser of a nature
required to be disclosed in the Registration Statement or the Prospectus (other
than as may be disclosed therein) that might result in any material adverse
change in the condition, financial or otherwise, or business affairs of the
Adviser or the ability of the Adviser to perform its obligations hereunder or
under the Investment Advisory Agreement, as the case may be.
(viii) The information with respect to the prior performance of
Xxxxx Venture Partners I, Alliance Business Investment Company, and Allied
Bancshares Capital Corporation, included in the Registration Statement and the
Prospectus, presents fairly and accurately the information set forth therein
for the periods specified and complies as to form and content in all material
respects with the requirements of the Acts and the Rules and Regulations.
(ix) Any certificate signed by any officer of the Adviser and
delivered to the Underwriter or to Underwriter' counsel (as defined herein)
shall be deemed a representation and warranty by the Company to the Underwriter
as to the matters covered thereby.
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2. Purchase, Sale and Delivery of the Securities. (a) The
Company and the Underwriter hereby mutually agree as follows:
(i) The Company hereby appoints the Underwriter as its exclusive
agent ("Agent") to sell for its account up to 5,000,000 Shares ; provided, that
the Company reserves the right to reject any prospective purchaser. The
Underwriter hereby agrees to use its best efforts as such Agent, promptly
following the receipt of notice (thereafter confirmed in writing) of the
effective date of the Registration Statement, to sell the Shares, for the
account and risk of the Company, subject to the terms, provisions, and
conditions set forth herein and in the Prospectus and the Registration
Statement. The retention of the Agent hereunder shall terminate on the Closing
Date (as hereinafter defined); provided, however, that if the Underwriter does
not sell a minimum of [__________] Shares within [___] days from the effective
date of the Registration Statement (which period may be extended for an
additional period of up to [___] days upon the mutual consent of the Company
and the Underwriter) (the "Effective Period"), the retention hereunder shall
terminate.
(ii) The Underwriter may use the services of other brokers or
dealers who are members in good standing of the National Association of
Securities Dealers, Inc. and who are registered or qualified under all
applicable blue-sky laws in connection with the offer and sale of the Shares
(hereinafter referred to as "Selected Dealer"). The Underwriter's agreement
with any Selected Dealer shall be subject to the Company's approval, which
approval will not be unreasonably withheld, and shall be substantially in the
form of the Selected Dealer's Agreement attached hereto as Exhibit A. The
Underwriter shall have the right to allow such brokers or dealers, if any, such
concessions out of the commissions to be received by the Underwriter as the
Underwriter may determine.
(iii) In the event that a minimum of [____________] Shares shall
not be sold within the Effective Period, the Company and the Underwriter shall
cause Continental Stock Transfer & Company (the "Escrow Agent"), under the form
of Escrow Agreement attached hereto as Exhibit B, to refund, to all persons who
have subscribed for any of the Shares the full amount, without interest or
deduction for commissions and expenses, which may have been received from such
subscribers by the Underwriter and deposited by it with the Escrow Agent.
Appropriate arrangements for placing the funds received on the sale of the
Shares in escrow shall be made prior to the commencement of the offering
hereunder, with provision for refund to the purchasers as set forth in this
Subsection 2(a)(iii), and for delivery on the Closing Date to the Company if a
minimum of [_____________] (or a larger number of) Shares are sold. Except as
provided in this Subsection 2(a)(iii) , and in Sections 7, 8, and 10 hereof,
the Company will not be under any liability to the Underwriter and the
Underwriter will not be under any liability to the Company in the event that
the Underwriter does not sell a minimum of 500,000 Shares within the Effective
Period.
(iv) The Company will pay the Underwriter, as compensation for its
services hereunder, a commission of [$____] per share with respect to all
Shares sold and for which payment is actually received by the Company, which
compensation the Underwriter shall be
- 11 -
13
entitled to deduct and retain from the proceeds of the sale for such Shares
concurrently with transmittal of payment to the Company by the Escrow Agent.
(b) Payment of the purchase price for, and delivery of
certificates evidencing the Shares shall be made at the offices of RAS
Securities Corp. at 0 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other
place as shall be agreed upon by the Underwriter and the Company. Such
delivery and payment shall be made at 10:00 a.m. (New York City time) on
_________________ ___, 1996 or at such other time and date as shall be agreed
upon by the Underwriter and the Company, but not less than three (3) nor more
than ten (10) full business days after the effective date of the Registration
Statement (such time and date of payment and delivery being herein called
"Closing Date"). Delivery of the certificates for the Shares shall be made to
the Underwriter against payment by the Underwriter of the purchase price for
the Shares to the order of the Company by New York Clearing House Funds.
Certificates for the Shares shall be in definitive, fully registered form,
shall bear no restrictive legends and shall be in such denominations and
registered in such names as the Underwriter may request in writing at least two
(2) business days prior to Closing Date. The certificates for the Shares shall
be made available to the Underwriter at such office or such other place as the
Underwriter may designate for inspection, checking and packaging no later than
9:30 a.m. on the last business day prior to Closing Date.
3. Public Offering of the Shares. As soon after the Registration
Statement becomes effective as the Representatives deem advisable, the
Underwriters shall make a public offering of the Shares (other than to
residents of or in any jurisdiction in which qualification of the Shares is
required and has not become effective) at the price and upon the other terms
set forth in the Prospectus. The Representatives may from time to time
increase or decrease the public offering price after distribution of the Shares
has been completed to such extent as the Representatives, in their sole
discretion deem advisable. The Underwriters may enter into one of more
agreements as the Underwriters, in each of their sole discretion, deem
advisable with one or more broker- dealers who shall act as dealers in
connection with such public offering.
4. Covenants and Agreements of the Company. The Company
covenants and agrees with the Underwriter as follows:
(a) The Company shall use its best efforts to cause the
Registration Statement and any amendments thereto to become effective as
promptly as practicable and will not at any time, whether before or after the
effective date of the Registration Statement, file any amendment to the
Registration Statement or supplement to the Prospectus or file any document
under the Acts or Exchange Act before termination of the offering of the Shares
by the Underwriter of which the Underwriter shall not previously have been
advised and furnished with a copy, or to which the Underwriter shall have
objected or which is not in compliance with the Acts, the Exchange Act or the
Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Underwriter and confirm the notice in
writing, (i) when the
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14
Registration Statement, as amended, becomes effective, if the provisions of
Rule 497 promulgated under the Act will be relied upon, when the Prospectus has
been filed in accordance with said Rule 497 and when any post-effective
amendment to the Registration Statement becomes effective, (ii) of the issuance
by the Commission of any stop order or of the initiation, or the threatening,
of any proceeding, suspending the effectiveness of the Registration Statement
or any order preventing or suspending the use of the Preliminary Prospectus or
the Prospectus, or any amendment or supplement thereto, or the institution of
proceedings for that purpose, (iii) of the issuance by the Commission or by any
state securities commission of any proceedings for the suspension of the
qualification of any of the Securities for offering or sale in any jurisdiction
or of the initiation, or the threatening, of any proceeding for that purpose,
(iv) of the receipt of any comments from the Commission; and (v) of any request
by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information. If
the Commission or any state securities commission authority shall enter a stop
order or suspend such qualification at any time, the Company will make every
effort to obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and
substance satisfactory to the Underwriter) or transmit the Prospectus by a
means reasonably calculated to result in filing with the Commission pursuant to
Rule 497 not later than the Commission's close of business on the earlier of
(i) the second business day following the execution and delivery of this
Agreement and (ii) the third business day after the effective date of the
Registration Statement.
(d) The Company will give the Underwriter notice of its
intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company proposes for use
by the Underwriter in connection with the offering of the Securities which
differs from the corresponding prospectus on file at the Commission at the time
the Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 497 of the Rules and
Regulations), and will furnish the Underwriter with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such prospectus to
which the Underwriter or Kramer, Levin, Naftalis, Nessen, Xxxxx & Xxxxxxx
("Underwriter's Counsel"), shall reasonably object.
(e) The Company shall endeavor in good faith, in cooperation
with the Underwriter, at or prior to the time the Registration Statement
becomes effective, to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as the Underwriter may designate to
permit the continuance of sales and dealings therein for as long as may be
necessary to complete the distribution, and shall make such applications, file
such documents and furnish such information as may be required for such
purpose; provided, however, the Company shall not be required to qualify as a
foreign corporation or file a general or limited consent to service of process
in any such jurisdiction. In each jurisdiction where such qualification shall
be effected, the Company will, unless the Underwriter agrees
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15
that such action is not at the time necessary or advisable, use all reasonable
efforts to file and make such statements or reports at such times as are or may
reasonably be required by the laws of such jurisdiction to continue such
qualification.
(f) During the time when a prospectus is required to be
delivered under the Acts, the Company shall comply with all requirements
imposed upon it by the Acts and the Exchange Act, as now and hereafter amended
and by the Rules and Regulations, as from time to time in force, so far as
necessary to permit the continuance of sales of or dealings in the Securities
in accordance with the provisions hereof and the Prospectus, or any amendments
or supplements thereto. If at any time when a prospectus relating to the
Securities is required to be delivered under the Acts, any event shall have
occurred as a result of which, in the reasonable opinion of counsel for the
Company or Underwriter' Counsel, the Prospectus, as then amended or
supplemented, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Acts and the Rules and Regulations, the Company will notify
the Underwriter promptly and prepare and file with the Commission an
appropriate amendment or supplement in accordance with Section 10 of the Act,
each such amendment or supplement to be satisfactory to Underwriter' Counsel,
and the Company will furnish to the Underwriter copies of such amendment or
supplement as soon as available and in such quantities as the Underwriter may
request.
(g) As soon as practicable, but in any event not later than 45
days after the end of the 12-month period beginning on the day after the end of
the fiscal quarter of the Company during which the effective date of the
Registration Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the Company shall make
generally available to its security holders, in the manner specified in Rule
158(b) of the Rules and Regulations, and to the Underwriter, an earnings
statement which will be in the detail required by, and will otherwise comply
with, the provisions of Section 11(a) of the Act and Rule 158(a) of the Rules
and Regulations, which statement need not be audited unless required by the
Act, covering a period of at least 12 consecutive months after the effective
date of the Registration Statement.
(h) During a period of five years after the date hereof, the
Company will furnish to its stockholders, as soon as practicable, annual
reports (including financial statements audited by independent public
accountants) and unaudited quarterly reports of earnings, and will deliver to
the Underwriter:
(i) concurrently with furnishing such quarterly reports
to its stockholders, statements of income of the Company for each quarter in
the form furnished to the Company's stockholders and certified by the Company's
principal financial or accounting officer;
(ii) concurrently with furnishing such annual reports to
its stockholders, a balance sheet of the Company as at the end of the preceding
fiscal year, together with
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16
statements of operations, stockholders' equity, and cash flows of the Company
for such fiscal year, accompanied by a copy of the certificate thereon of
independent certified public accountants;
(iii) as soon as they are available, copies of all reports
(financial or other) mailed to stockholders;
(iv) as soon as they are available, copies of all reports
and financial statements furnished to or filed with the Commission, the NASD or
any securities exchange;
(v) every press release and every material news item or
article of interest to the financial community in respect of the Company or its
affairs which was released or prepared by or on behalf of the Company; and
(vi) any additional information of a public nature
concerning the Company (and any future subsidiaries) or its businesses which
the Underwriter may reasonably request.
(i) The Company will maintain a Transfer Agent and, if
necessary under the jurisdiction of incorporation of the Company, a Registrar
(which may be the same entity as the Transfer Agent) for its Common Stock.
(j) The Company will furnish to the Underwriter, without
charge, at such place as the Underwriter may designate, copies of each
Preliminary Prospectus, the Registration Statement and any pre-effective or
post-effective amendments thereto (two of which copies will be signed and will
include all financial statements and exhibits), the Prospectus, and all
amendments and supplements thereto, including any Prospectus prepared after the
effective date of the Registration Statement, in each case as soon as available
and in such quantities as the Underwriter may reasonably request.
(k) Neither the Company, the Adviser, nor any of their
respective officers, directors, stockholders or affiliates (within the meaning
of the Rules and Regulations) will take, directly or indirectly, any action
designed to, or which might in the future reasonably be expected to cause or
result in, stabilization or manipulation of the price of any securities of the
Company.
(l) The Company shall apply the net proceeds from the sale of
the Securities in the manner, and subject to the conditions, set forth under
"Use of Proceeds" in the Prospectus. No portion of the net proceeds will be
used, directly or indirectly, to acquire any securities issued by the Company.
(m) The Company shall timely file all such reports, forms or
other documents as may be required (including, but not limited to, a Form SR as
may be required pursuant to Rule 463 under the Act) from time to time, under
the Act, the Exchange Act, the 1940 Act, the
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17
Advisers Act and the Rules and Regulations, and all such reports, forms and
documents filed will comply as to form and substance with the applicable
requirements under the Act, the Exchange Act, the Advisers Act, the 1940 Act,
and the Rules and Regulations.
(n) The Company shall furnish to the Underwriter as early as
practicable prior to each of the date hereof, the Closing Date and each Option
Closing Date, if any, but no later than two (2) full business days prior
thereto, a copy of the latest available unaudited interim financial statements
of the Company (which in no event shall be as of a date more than thirty (30)
days prior to the date of the Registration Statement) which have been read by
the Company's independent public accountants, as stated in their letters to be
furnished pursuant to Section 6(j) hereof.
(o) For a period of five (5) years from the Closing Date, the
Company shall furnish to the Underwriter at the Underwriter's reasonable
request and at the Company's sole expense, (i) daily consolidated transfer
sheets relating to the Shares, (ii) the list of holders of all of the Company's
securities and (iii) a Blue Sky "Trading Survey" for secondary sales of the
Company's securities prepared by counsel to the Company.
(p) As soon as practicable, (i) but in no event more than five
business days before the effective date of the Registration Statement, file a
Form 8-A with the Commission providing for the registration under the Exchange
Act of the Securities and (ii) but in no event more than 30 days from the
effective date of the Registration Statement, take all necessary and
appropriate actions to be included in Standard and Poor's Corporation
Descriptions and Xxxxx'x Manual and to use its best efforts to continue such
inclusion for a period of not less than seven (7) years.
(q) Until the completion of the distribution of the
Securities, the Company shall not without the prior written consent of the
Underwriter and Underwriter's Counsel, issue, directly or indirectly any press
release or other communication or hold any press conference with respect to the
Company or its activities or the offering contemplated hereby, other than trade
releases issued in the ordinary course of the Company's business consistent
with past practices with respect to the Company's operations.
[ (r) For a period of three (3) years after the effective date
of the Registration Statement, the Underwriter shall have the right to
designate one (1) individual for election to the Company's Board of Directors
("Board") and the Company shall use its best efforts to elect such individuals
to the Board. In the event the Underwriter shall not have designated such
individual at the time of any meeting of the Board or such person is
unavailable to serve, the Company shall notify the Underwriter of each meeting
of the Board and an individual designated by the Underwriter shall be permitted
to attend all meetings of the Board and to receive all notices and other
correspondence and communications sent by the Company to members of the Board.
Such individual shall be reimbursed for all out-of-pocket expenses incurred in
connection with his or her service on, or attendance at meetings of, the
Board.]
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18
[ (s) For a period of five (5) years after the effective date of
the Registration Statement, the Underwriter shall have a preferential right on
the terms and subject to the conditions set forth in this paragraph, to
purchase for its account, or to sell for the account of the Company, any
securities of the Company, with respect to which the Company may seek a sale of
such securities; and the Company will consult with the Underwriter with regard
to any such offering and will offer to the Underwriter the opportunity, on
terms not more favorable to the Company than they can secure elsewhere, to
purchase or sell any such securities. If the Underwriter fails to accept in
writing such proposal made by the Company thereof within ten (10) business days
after receipt of a notice contained in such proposal, then the Underwriter
shall have no further claim or right with respect to the proposal contained in
such notice. If, thereafter such proposal is modified, the Company shall again
consult with the Underwriter in connection with such modification and shall in
all respects have the same obligations and adopt the same procedures with
respect to such proposal as are provided hereinabove with respect to the
original proposal. In addition, the Underwriter shall have a preferential
right, on the same terms and subject to the same conditions with respect to
sales of securities of the Company set forth in this paragraph, with respect to
any sale of securities by any business development company involved in
restructurings of financially distressed companies that the Adviser or any of
its affiliates, as such term is defined in Rule 405 promulgated under the Act,
sponsors.]
5. Payment of Expenses.
(a) The Company hereby agrees to pay on the Closing Date all
expenses and fees (other than fees of Underwriter's Counsel, except as provided
in (iv) below) incident to the performance of the obligations of the Company
under this Agreement, including, without limitation, (i) the fees and expenses
of accountants and counsel for the Company, (ii) all costs and expenses
incurred in connection with the preparation, duplication, printing (including
mailing and handling charges), filing, delivery and mailing (including the
payment of postage with respect thereto) of the Registration Statement and the
Prospectus and any amendments and supplements thereto and the printing, mailing
(including the payment of postage with respect thereto) and delivery of this
Agreement, the Selected Dealer Agreements, and related documents, including the
cost of all copies thereof and of the Preliminary Prospectuses and of the
Prospectus and any amendments thereof or supplements thereto supplied to the
Underwriter and such dealers as the Underwriter may request, in quantities as
hereinabove stated, (iii) the printing, engraving, issuance and delivery of the
Shares, (iv) the qualification of the Shares under state or foreign securities
or "Blue Sky" laws and determination of the status of such securities under
legal investment laws, including the costs of printing and mailing the
"Preliminary Blue Sky Memorandum," the "Supplemental Blue Sky Memorandum" and
"Legal Investments Survey," if any, and disbursements and fees of counsel in
connection therewith, (v) advertising costs and expenses, including but not
limited to costs and expenses in connection with the "road show," information
meetings and presentations, bound volumes and prospectus memorabilia and
"tomb-stone" advertisement expenses, (vi) costs and expenses in connection with
Company counsel's due diligence investigations, including but not limited to
the fees of any independent counsel or consultant retained, (vii) fees and
expenses of the
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19
transfer agent and registrar, (viii) applications for assignments of a rating
of the Securities by qualified rating agencies, and (ix) the fees payable to
the Commission and the NASD.
(b) If this Agreement is terminated by the Underwriter in
accordance with the provisions of Section 6 or Section 12, the Company shall
reimburse and indemnify the Underwriter for all of its actual out-of-pocket
expenses, including the fees and disbursements of Underwriter's Counsel.
(c) The Company further agrees that, in addition to the
expenses payable pursuant to subsection (a) of this Section 5, it will pay to
the Underwriter on the Closing Date by certified or bank cashier's check to, at
the election of the Underwriter, by deduction from the proceeds of the offering
contemplated herein a non-accountable expense allowance equal to one-half of
one percent (0.5%) of the gross proceeds received by the Company from the sale
of the Shares.
6. Conditions of the Underwriter' Obligations. The obligations
of the Underwriter hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing Date, as if they had been or his made on and as of the
Closing Date; the accuracy on and as of the Closing Date of the statements of
the officers of the Company made pursuant to the provisions hereof; and the
performance by the Company on and as of the Closing Date of its covenants and
obligations hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 12:00 p.m., New York time, on the date of this Agreement or such
later date and time as shall be consented to in writing by the Underwriter and,
at the Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or contemplated by the
Commission and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
Underwriter's Counsel.
(b) The Underwriter shall not have advised the Company that
the Registration Statement, or any amendment thereto, contains an untrue
statement of fact which, in the Underwriter's opinion, is material, or omits to
state a fact which, in the Underwriter's opinion, is material and is required
to be stated therein or is necessary to make the statements therein not
misleading, or that the Prospectus, or any supplement thereto, contains an
untrue statement of fact which, in the Underwriter's opinion, is material, or
omits to state a fact which, in the Underwriter's opinion, is material and is
required to be stated therein or is necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the Underwriter shall
have received from Underwriter's Counsel, such opinion or opinions with respect
to the organization of the Company, the validity of the Shares, the
Registration Statement, the Prospectus and other
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20
related matters as the Underwriter may request and Underwriter's Counsel shall
have received such papers and information as they request to enable them to
pass upon such matters.
(d) At Closing Date, the Underwriter shall have received the
favorable opinion of Xxxxxx & Xxxxxx L.L.P., counsel to the Company, dated the
Closing Date, addressed to the Underwriter and in form and substance
satisfactory to Underwriter's Counsel, to the effect that:
(i) the Company (A) has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, and (B) has all requisite corporate power and authority, and has
obtained any and all authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental or regulatory officials and
bodies (including, without limitation, those having jurisdiction over
environmental or similar matters), materially necessary to own or lease its
properties and conduct its business as described in the Prospectus; the Company
is not qualified as a foreign corporation in any jurisdiction (to such
counsel's knowledge, there being no jurisdiction in which failure to so qualify
would have a material adverse effect on the Company); to such counsel's
knowledge, the Company has not received any notice of proceedings relating to
the revocation or modification of any such authorization, approval, order,
license, certificate, franchise, or permit which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding would materially
adversely affect the business, operations, condition, financial or otherwise,
or the earnings, business affairs or prospects, properties, business or assets
of the Company. The disclosures in the Registration Statement concerning the
effects of federal, state and local laws, rules and regulations on the
Company's business as currently conducted and as contemplated are correct in
all material respects and do not omit to state a fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which they were made.
(ii) to such counsel's knowledge, the Company does not own
an interest in any other corporation, partnership, joint venture, trust or
other business entity;
(iii) the Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus, and any amendment or
supplement thereto, under "Capitalization," and, to such counsel's knowledge,
the Company is not a party to or bound by any instrument, agreement or other
arrangement providing for it to issue any capital stock, rights, warrants,
options or other securities, except for this Agreement and as described in the
Prospectus. The Shares, and all other securities issued or issuable by the
Company, conform in all material respects to all statements with respect
thereto contained in the Registration Statement and the Prospectus. All issued
and outstanding securities of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; the holders thereof have no
rights of rescission with respect thereto, and are not subject to personal
liability under the laws of the State of Delaware as currently in effect by
reason of being such holders; and none of such securities were issued in
violation of the preemptive rights of any holders of any security of the
Company. The Shares to be sold by the Company hereunder are not and will
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21
not be subject to any preemptive or other similar rights of any stockholder,
have been duly authorized and, when issued, paid for and delivered in
accordance with the terms hereof, will be validly issued, fully paid and
non-assessable and conform to the description thereof contained in the
Prospectus; the holders thereof will not be subject to any liability under the
laws of the State of Delaware as currently in effect solely as such holders;
all corporate action required to be taken for the authorization, issue and sale
of the Shares has been duly and validly taken; and the certificates
representing the Shares are in due and proper form. Upon the issuance and
delivery pursuant to this Agreement of the Shares to be sold by the Company,
the Underwriter will acquire good and marketable title to the Shares free and
clear of any pledge, lien, charge, claim, encumbrance, pledge, security
interest, or other restriction or equity of any kind whatsoever (except those
arising out of acts or claims against the Underwriter). No transfer tax is
payable by or on behalf of the Underwriter in connection with (A) the issuance
by the Company of the Shares, (B) the purchase by the Underwriter of the Shares
from the Company, (C) consummation by the Company of any of its obligations
under this Agreement, or (D) resales of the Shares in connection with the
distribution contemplated hereby.
(iv) the Registration Statement is effective under the
Acts,and, to such counsel's knowledge, no stop order suspending the use of the
Preliminary Prospectus, the Registration Statement or Prospectus or any part of
any thereof or suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or are
pending or, to the best of such counsel's knowledge, threatened or contemplated
under the Acts;
(v) each of the Preliminary Prospectus, the Registration
Statement, and the Prospectus and any amendments or supplements thereto (other
than the financial statements and other financial and statistical data included
therein, as to which no opinion need be rendered) comply as to form in all
material respects with the requirements of the Acts and the Rules and
Regulations.
(vi) to the best of such counsel's knowledge, (A) there
are no agreements, contracts or other documents required by the Acts to be
described in the Registration Statement and the Prospectus and filed as
exhibits to the Registration Statement other than those described in the
Registration Statement (or required to be filed under the Exchange Act if upon
such filing they would be incorporated, in whole or in part, by reference
therein) and the Prospectus and filed as exhibits thereto, and the exhibits
which have been filed are correct copies of the documents of which they purport
to be copies; (B) the descriptions in the Registration Statement and the
Prospectus and any supplement or amendment thereto of contracts and other
documents to which the Company is a party or by which it is bound, including
any document to which the Company is a party or by which it is bound,
incorporated by reference into the Prospectus and any supplement or amendment
thereto, are accurate in all material respects and fairly represent the
information required to be shown by Form N-2; (C) there is not pending or
threatened against the Company any action, arbitration, suit, proceeding,
inquiry, investigation, litigation, governmental or other proceeding
(including,
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22
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, pending or threatened against (or circumstances
that may give rise to the same), or involving the properties or business of the
Company which (1) is required to be disclosed in the Registration Statement
which is not so disclosed (and such proceedings as are summarized in the
Registration Statement are accurately summarized in all respects), (2)
questions the validity of the capital stock of the Company or this Agreement or
the Investment Advisory Agreement, or of any action taken or to be taken by the
Company pursuant to or in connection with any of the foregoing; (D) no statute
or regulation or legal or governmental proceeding required to be described in
the Prospectus is not described as required; and (E) except as disclosed in the
Prospectus, there is no action, suit or proceeding pending, or threatened,
against or affecting the Company before any court or arbitrator or governmental
body, agency or official (or any basis thereof known to such counsel) in which
an adverse decision which may result in a material adverse change in the
condition, financial or otherwise, or the earnings, position, prospects,
stockholders' equity, value, operation, properties, business or results of
operations of the Company, which could materially adversely affect the present
or prospective ability of the Company to perform its obligations under this
Agreement or the Investment Advisory Agreement, or which in any manner draws
into question the validity or enforceability of this Agreement or the
Investment Advisory Agreement;
(vii) the Company has full legal right, power and authority
to enter into each of this Agreement and the Investment Advisory Agreement, and
to consummate the transactions provided for therein; and each of this Agreement
and the Investment Advisory Agreement has been duly authorized, executed and
delivered by the Company. Each of this Agreement and the Investment Advisory
Agreement, assuming due authorization, execution and delivery by each other
party thereto constitutes a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law), and none of the Company's
execution or delivery of this Agreement or the Investment Advisory Agreement,
its performance hereunder or thereunder, its consummation of the transactions
contemplated herein or therein, or the conduct of its business as described in
the Registration Statement, the Prospectus, and any amendments or supplements
thereto, conflicts with or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitutes or
will constitute a default under, or result in the creation or imposition of any
lien, charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or assets
(tangible or intangible) of the Company pursuant to the terms of, (A) the
certificate of incorporation or by-laws of the Company, (B) any license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement or any other agreement
or instrument to which the Company is a party or by which it is or may be bound
or to which any of its properties or assets (tangible or intangible) is or may
be subject, or any indebtedness, or (C) any statute, judgment, decree, order,
rule or regulation applicable to the
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23
Company of any arbitrator, court, regulatory body or administrative agency or
other governmental agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or foreign,
having jurisdiction over the Company or any of its activities or properties,
except for conflicts, breaches, violations, defaults, creations or impositions
which do not and would not have a material adverse effect on the Company.
(viii) except as described in the Prospectus, no consent,
approval, authorization or order, and no filing with, any court, regulatory
body, government agency or other body (other than such as may be required under
Blue Sky laws, as to which no opinion need be rendered) is required in
connection with the issuance of the Shares pursuant to the Prospectus and the
Registration Statement, the performance of this Agreement and the Investment
Advisory Agreement and the transactions contemplated hereby and thereby;
(ix) to such counsel's knowledge, the properties and
business of the Company conform to the description thereof contained in the
Registration Statement and the Prospectus;
(x) to such counsel's knowledge, the Company is not in
breach of, or in default under, any term or provision of any license, contract,
indenture, mortgage, installment sale agreement, deed of trust, lease, voting
trust agreement, stockholders' agreement, partnership agreement, note, loan or
credit agreement or any other agreement or instrument evidencing an obligation
for borrowed money, or any other agreement or instrument to which the Company
is a party or by which any of the Company may be bound or to which the property
or assets (tangible or intangible) of any of the Company is subject or
affected, which could materially adversely affect the Company;
(xi) the statements in the Prospectus under "INVESTMENT
OBJECTIVES AND POLICIES," "INVESTMENT OPERATIONS" "REGULATION," "MANAGEMENT,"
"CONFLICTS OF INTEREST," "CERTAIN TRANSACTIONS," "FEDERAL INCOME TAX MATTERS,"
and "DESCRIPTION OF CAPITAL STOCK," have been reviewed by such counsel, and
insofar as they refer to statements of law, descriptions of statutes, licenses,
rules or regulations or legal conclusions, are correct in all material
respects;
(xii) to such counsel's knowledge, except as described in
the Prospectus, no person, corporation, trust, partnership, association or
other entity has the right to include and/or register any securities of the
Company in the Registration Statement, require the Company to file any
registration statement or, if filed, to include any security in such
registration statement;
(xiii) to such counsel's knowledge, except as described in
the Prospectus, there are no claims, payments, issuances, arrangements or
understandings for services in the nature of a finder's or origination fee with
respect to the sale of the Shares hereunder or any
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other arrangements, agreements, understandings, payments or issuances that may
affect the Underwriter's compensation, as determined by the NASD;
(xiv) The Company is duly registered with the Commission
under the 1940 Act as a closed-end non-diversified investment company, and all
action under the Acts necessary to make the public offering and consummate the
sale of the Shares as provided in this Agreement has been taken by the Company.
The provisions of the Certificate of Incorporation and Bylaws of the Company
comply as to form in all material respects with the Acts and the Rules and
Regulations; and
(xv) The statements set forth under the heading "Federal
Income Tax Matters" in the Prospectus, insofar as such statements describe or
summarize United States tax laws, doctrines or practices, fairly summarize the
matters described therein in all material respects as of the date of the
Prospectus.
Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company and
representatives of the independent public accountants for the Company, at which
conferences such counsel made inquiries of such officers, representatives and
accountants and discussed the contents of the Preliminary Prospectus, the
Registration Statement, the Prospectus, and related matters were discussed and,
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Preliminary Prospectus, the Registration Statement and
Prospectus, on the basis of the foregoing, no facts have come to the attention
of such counsel which lead them to believe that either the Registration
Statement or any amendment thereto, at the time such Registration Statement or
amendment became effective or the Preliminary Prospectus or Prospectus or
amendment or supplement thereto as of the date of such opinion contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading (it being understood that such counsel need express no opinion with
respect to the financial statements and schedules and other financial and
statistical data included in the Preliminary Prospectus, the Registration
Statement or Prospectus).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriter's Counsel) of
other counsel acceptable to Underwriter's Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper, on
certificates and written statements of responsible officers of the Company and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to Underwriter's Counsel if requested. The
opinion of such counsel for the Company shall state that the opinion of any
such other counsel
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25
is in form satisfactory to such counsel and that the Underwriter and they are
justified in relying thereon.
(e) At Closing Date, the Underwriter shall have received the
favorable opinion of Xxxxxx & Xxxxxx L.L.P., counsel to the Adviser, dated the
Closing Date, addressed to the Underwriter and in form and substance
satisfactory to Underwriter's Counsel, to the effect that
(i) The Adviser is duly registered as an investment
adviser under the Advisers Act, and is not prohibited by the Advisers Act, the
1940 Act, or the Rules and Regulations thereunder from acting as contemplated
by the Prospectus.
(ii) The Adviser has been duly organized and is validly
existing as a corporation under the laws of the State of Delaware and is duly
qualified as a foreign entity and in good standing in each other jurisdiction
in which its ownership of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the Adviser, and the Adviser has full power and
authority necessary to own or lease its properties and conduct its business as
described in the Registration Statement and the Prospectus.
(iii) The Adviser owns, possesses or has obtained and
currently maintains all material governmental licenses, permits, consents,
orders, approvals and other authorizations (collectively, the "Authorizations")
as is necessary for the Adviser to carry on its business as Adviser to the Fund
as set forth in and contemplated by the Registration Statement and Prospectus,
except where the failure to own, possess or obtain such Authorizations would
have a material adverse effect on the Adviser.
(iv) The Adviser has full power to enter into this
Agreement and the Investment Advisory Agreement, and to carry out all the terms
and provisions thereof to be carried out by it.
(v) Each of this Agreement and the Investment Advisory
Agreement has been duly and validly authorized, executed and delivered by the
Adviser; each of the Advisory Agreement and the Consulting Agreement complies
in all material respects with all applicable provisions of the 1940 Act, the
Advisers Act, and the Rules and Regulations thereunder, as the case may be;
and, assuming due authorization, execution and delivery by the other parties
thereto, each of this Agreement and the Investment Advisory Agreement
constitutes a legal, valid and binding obligation of the Adviser enforceable in
accordance with its terms subject, as to enforcement, to applicable bankruptcy,
fraudulent transfer, moratorium, reorganization, insolvency or other similar
laws relating to or affecting creditors' rights generally and to general
equitable principles and except, with respect to this Agreement, as rights to
indemnity and contribution thereunder may be limited by United States federal
or state securities laws.
(vi) No consent, approval, authorization or order of any
federal, Delaware or New York State court, governmental agency or body or
securities exchange or securities
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26
association having jurisdiction over the Adviser, under the laws of the United
States or the State of New York is required to be obtained by the Adviser for
the performance by the Adviser of its obligations under this Agreement or the
Investment Advisory Agreement, except such as have been obtained.
(vii) Neither the execution and delivery of this Agreement
or the Investment Advisory Agreement nor the performance by the Adviser of in
obligations under such agreements, conflicts with, or results in a breach of,
the Certificate of Incorporation or By-laws of the Adviser or, to such
counsel's knowledge, any material agreement or instrument to which the Adviser
is a party or by which the Adviser is bound which would have a material adverse
effect on the ability of the Adviser to carry out its obligations under such
agreements, or any law, rule or regulation (including without limitation, the
1940 Act, the Advisers Act and Rules and Regulations), or order of which we are
aware, applicable to the Adviser of any federal, Delaware or New York state
court, governmental instrumentality, stock exchange or association or
arbitrator, material to the business of the Adviser.
(viii) The description of the Adviser and its business in
the Prospectus complies with the requirements of the Acts and the Rules and
Regulations, and does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading in light of the
circumstances under which they were made.
(ix) To the best of our knowledge, there is no action,
suit or proceeding before or by any court or governmental agency or body, now
pending or threatened against the Adviser that is required to be disclosed in
the Prospectus or the Registration Statement (other than as disclosed therein)
that might result in any material adverse change in the condition, financial or
otherwise, or business affairs of the Adviser of the ability of the Adviser to
perform its obligations under this Agreement or the Investment Advisory
Agreement.
(f) On or prior to the Closing Date, Underwriter's Counsel
shall have been furnished such documents, certificates and opinions as they may
reasonably require for the purpose of enabling them to review or pass upon the
matters referred to in subsection (c) of this Section 6, or in order to
evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions of the Company, or herein contained.
(g) Prior to the Closing Date: (i) there shall have been no
adverse change nor development involving a prospective change in the condition,
financial or otherwise, prospects, stockholders' equity or the business
activities of the Company or the Adviser, whether or not in the ordinary course
of business, from the latest dates as of which such condition is set forth in
the Registration Statement and Prospectus; (ii) there shall have been no
transaction, not in the ordinary course of business, entered into by the
Company, from the latest date as of which the financial condition of the
Company is set forth in the Registration Statement and Prospectus which is
adverse to the Company; (iii) the Company shall not be in default under any
provision of any instrument relating to any outstanding indebtedness; (iv) the
Company shall not have
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27
issued any securities (other than the Securities) or declared or paid any
dividend or made any distribution in respect of its capital stock of any class
and there has not been any change in the capital stock or any change in the
debt (long or short term) or liabilities or obligations of the Company
(contingent or otherwise); (v) no material amount of the assets of the Company
shall have been pledged or mortgaged, except as set forth in the Registration
Statement and Prospectus; (vi) no action, suit or proceeding, at law or in
equity, shall have been pending or threatened (or circumstances giving rise to
same) against the Company or the Adviser, or affecting any of their respective
properties or business before or by any court or federal, state or foreign
commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding may adversely affect the business, operations,
management prospects or financial condition or assets of the Company or the
ability of the Adviser to fulfill its obligations under this Agreement or the
Investment Advisory Agreement, except as set forth in the Registration
Statement and Prospectus; and (vii) no stop order shall have been issued under
the Acts and no proceedings therefor shall have been initiated, threatened or
contemplated by the Commission.
(h) At the Closing Date, the Underwriter shall have received a
certificate of the principal executive officer and the chief financial or chief
accounting officer of each of the Company and the Adviser, dated the Closing
Date, to the effect that each of such persons has carefully examined the
Registration Statement, the Prospectus and this Agreement, and that:
(i) The representations and warranties in this Agreement
of the Company (with respect to certificates from Company and Adviser officers)
and of the Adviser (with respect to the certificates from Adviser officers) are
true and correct, as if made on and as of the Closing Date, and the Company
(with respect to certificates from Company and Adviser officers) and the
Adviser (with respect to certificates from Adviser officers) has complied with
all agreements and covenants and satisfied all conditions contained in this
Agreement on its part to be performed or satisfied at or prior to the Closing
Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued, and no proceedings
for that purpose have been instituted or are pending or, to the best of each of
such person's knowledge, after due inquiry are contemplated or threatened under
the Acts;
(iii) The Registration Statement and the Prospectus and, if
any, each amendment and each supplement thereto, contain all statements and
information required to be included therein, and none of the Registration
Statement, the Prospectus nor any amendment or supplement thereto includes any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading and neither the Preliminary Prospectus or any supplement thereto
included any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and
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(iv) Since the dates as of which information is given in
the Registration Statement and the Prospectus, (A) there must not have been any
material change in the Shares or liabilities of the Company except as set forth
in or contemplated by the Prospectus; (B) there must not have been any material
adverse change in the general affairs, management, business, financial
condition or results of operations of the Company or (with respect to the
certificate of Adviser officers) the Adviser, whether or not arising from
transactions in the ordinary course of business, as set forth in or
contemplated by the Prospectus; (C) the Company must not have sustained any
material loss or interference with its business from any court or from
legislative or other governmental action, order or decree, whether foreign or
domestic, or from any other occurrence, not described in the Registration
Statement and Prospectus; and (D) there must not have occurred any event that
makes untrue or incorrect in any material respect any statement or information
contained in the Registration Statement or Prospectus or that is not reflected
in the Registration Statement or Prospectus but should be reflected therein in
order to make the statements or information therein, in light of the
circumstances in which they were made, not misleading in any material respect.
References to the Registration Statement and the Prospectus in this subsection
(h) are to such documents as amended and supplemented at the date of such
certificate.
(i) By the Closing Date, the Underwriter will have received
clearance from the NASD as to the amount of compensation allowable or payable
to the Underwriter, as described in the Registration Statement.
(j) At the time this Agreement is executed, the Underwriter
shall have received a letter, dated such date, addressed to the Underwriter in
form and substance satisfactory (including the non-material nature of the
changes or decreases, if any, referred to in clause (iii) below) in all
respects to the Underwriter and Underwriter' Counsel, from KPMG Peat Marwick
LLP:
(i) confirming that they are independent accountants with
respect to the Company within the meaning of the Acts and the applicable Rules
and Regulations;
(ii) stating that it is their opinion that the financial
statements and supporting schedules of the Company included in the Registration
Statement comply as to form in all material respects with the applicable
accounting requirements of the Acts and the Rules and Regulations thereunder
and that the Underwriter may rely upon the opinion of KPMG Peat Marwick LLP
with respect to the financial statements and supporting schedules included in
the Registration Statement;
(iii) stating that, on the basis of a limited review which
included a reading of the latest available unaudited interim financial
statements of the Company (with an indication of the date of the latest
available unaudited interim financial statements), a reading of the latest
available minutes of the stockholders and board of directors and the various
committees of the boards of directors of the Company, consultations with
officers and other employees of the
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Company responsible for financial and accounting matters and other specified
procedures and inquiries, nothing has come to their attention which would lead
them to believe that (A) the unaudited financial statements and supporting
schedules of the Company included in the Registration Statement do not comply
as to form in all material respects with the applicable accounting requirements
of the Acts and the Rules and Regulations or are not fairly presented in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements of the
Company included in the Registration Statement, or (B) at a specified date not
more than five (5) days prior to the effective date of the Registration
Statement, there has been any change in the capital stock or long-term debt of
the Company, or any decrease in the stockholders' equity or net current assets
or net assets of the Company as compared with amounts shown in the July 26,
1995 balance sheet included in the Registration Statement, other than as set
forth in or contemplated by the Registration Statement, or, if there was any
change or decrease, setting forth the amount of such change or decrease;
(iv) setting forth, at a date not later than five (5) days
prior to the effective date of the Registration Statement, the amount of
liabilities of the Company;
(v) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and earnings, statements
and other financial information pertaining to the Company set forth in the
Prospectus in each case to the extent that such amounts, numbers, percentages,
statements and information may be derived from the general accounting records,
including work sheets, of the Company and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the application
of specified readings, inquiries and other appropriate procedures (which
procedures do not constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter and found them to be in
agreement;
(vi) statements as to such other matters incident to the
transaction contemplated hereby as the Underwriter may request.
(k) On the Closing Date there shall have been duly tendered to
the Underwriter the appropriate number of Shares.
(l) No order suspending the sale of the Shares in any
jurisdiction designated by the Underwriter pursuant to subsection (e) of
Section 4 hereof shall have been issued on the Closing Date, and no proceedings
for that purpose shall have been instituted or shall be contemplated.
(m) On or before the Closing Date, the Company shall have
executed the Investment Advisory Agreement, substantially in the form filed as
Exhibit 10.2 to the Registration Statement, in final form and substance
satisfactory to the Underwriter.
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If any condition to the Underwriter's obligations hereunder to be
fulfilled prior to or at the Closing Date, is not so fulfilled, the Underwriter
may terminate this Agreement or, if the Underwriter so elects, it may waive any
such conditions which have not been fulfilled or extend the time for their
fulfillment.
7. Indemnification.
(a) Each of the Company and the Adviser, jointly and
severally, will indemnify and hold harmless the Underwriter (for purposes of
this Section 7 "Underwriter" shall include the officers, directors, partners,
employees, agents and counsel of the Underwriter), and each person, if any, who
controls the Underwriter ("controlling person") within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, from and against any and
all losses, claims, damages, expenses or liabilities, joint or several (and
actions in respect thereof), whatsoever (including but not limited to any and
all expenses whatsoever reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever), as such are incurred, to which the Underwriter or such controlling
person may become subject under the Acts, the Exchange Act, the Advisers Act or
any other statute or at common law or otherwise or under the laws of foreign
countries, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained (i) in any Preliminary Prospectus, the
Registration Statement or the Prospectus (as from time to time amended and
supplemented); (ii) in any post-effective amendment or amendments or any new
registration statement and prospectus in which is included securities of the
Company issued or issuable upon exercise of the Securities; or (iii) in any
application or other document or written communication (in this Section 7
collectively called "Application") executed by the Company or based upon
written information furnished by the Company or the Adviser in any jurisdiction
in order to qualify the Shares under the securities laws thereof or filed with
the Commission, any securities commission or agency, or any securities
exchange; 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 (in the case of the Prospectus, in the light of the circumstances
under which they were made), unless such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company with respect to the Underwriter by or on behalf of such Underwriter
expressly for use in any Preliminary Prospectus, the Registration Statement or
Prospectus, or any amendment thereof or supplement thereto, or in any
Application, as the case may be.
The indemnity agreement in this subsection (a) shall be in addition
to any liability which the Company may have at common law or otherwise.
(b) The Underwriter agrees to indemnify and hold harmless the
Company, the Adviser, each of their respective directors, each of the Company's
officers who has signed the Registration Statement, and each other person, if
any, who controls the Company or the Adviser within the meaning of the Act, to
the same extent as the foregoing indemnity from the Company and the Adviser to
the Underwriter but only with respect to statements or omissions, if any, made
in any Preliminary Prospectus, the Registration Statement or Prospectus or any
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amendment thereof or supplement thereto or in any Application made in reliance
upon, and in strict conformity with, written information furnished to the
Company with respect to the Underwriter by the Underwriter expressly for use in
such Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment thereof or supplement thereto or in any such Application, provided
that such written information or omissions only pertain to disclosures in the
Preliminary Prospectus, the Registration Statement or Prospectus directly
relating to the transactions effected by the Underwriter in connection with
this offering. The Company and the Adviser each acknowledges that the
statements with respect to the public offering of the Shares set forth under
the heading "Underwriting" and the stabilization legend in the Prospectus have
been furnished by the Underwriter expressly for use therein and constitute the
only information furnished in writing by or on behalf of the Underwriter for
inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against
one or more indemnifying parties under this Section 7, notify each party
against whom indemnification is to be sought in writing of the commencement
thereof (but the failure so to notify an indemnifying party shall not relieve
it from any liability which it may have under this Section 7 except to the
extent that it has been prejudiced in any material respect by such failure or
from any liability which it may have otherwise). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party or
parties of the commencement thereof, the indemnifying party or parties will be
entitled to participate therein, and to the extent it may elect 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.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of such
action at the expense of the indemnifying party, (ii) the indemnifying parties
shall not have employed counsel reasonably satisfactory to such indemnified
party to have charge of the defense of such action within a reasonable time
after notice of commencement of the action, or (iii) such indemnified party or
parties shall have reasonably concluded that there may be defenses available to
it or them which are different from or additional to those available to one or
all of the indemnifying parties (in which case the indemnifying parties shall
not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and expenses of
one additional counsel shall be borne by the indemnifying parties. In no event
shall the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. Anything in this Section 7 to the
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any
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claim or action effected without its written consent; provided, however, that
such consent was not unreasonably withheld.
(d) In order to provide for just and equitable contribution in
any case in which (i) an indemnified party makes claim for indemnification
pursuant to this Section 7, but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of this Section 7 provide for indemnification in
such case, or (ii) contribution under the Act may be required on the part of
any indemnified party, then each indemnifying party shall contribute to the
amount paid as a result of such losses, claims, damages, expenses or
liabilities (or actions in respect thereof) (A) in such proportion as is
appropriate to reflect the relative benefits received by each of the
contributing parties, on the one hand, and the party to be indemnified on the
other hand, from the offering of the Shares or (B) if the allocation provided
by clause (A) 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 each of the contributing parties, on
the one hand, and the party to be indemnified on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages,
expenses or liabilities, as well as any other relevant equitable
considerations. In any case where the Company or the Adviser is a contributing
party and the Underwriter is the indemnified party, the relative benefits
received by the Company or the Adviser on the one hand, and the Underwriter, on
the other, shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities (before deducting expenses) bear
to the total underwriting discounts received by the Underwriter hereunder, in
each case as set forth in the table on the Cover Page of the Prospectus.
Relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or the Adviser, or by the Underwriter, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, expenses or
liabilities (or actions in respect thereof) referred to above in this
subdivision (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subdivision (d) the Underwriter shall not be required to contribute any amount
in excess of the underwriting discount applicable to the Securities purchased
by the Underwriter hereunder. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any, who
controls the Company within the meaning of the Act, each officer of the Company
who has signed the Registration Statement, and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to this subparagraph (d). Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect to which a claim for contribution may be made
against another party or parties under
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this subparagraph (d), notify such party or parties from whom contribution may
be sought, but the omission so to notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
obligation it or they may have hereunder or otherwise than under this
subparagraph (d), or to the extent that such party or parties were not
adversely affected by such omission. The contribution agreement set forth
above shall be in addition to any liabilities which any indemnifying party may
have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company or the Adviser submitted
pursuant hereto, shall be deemed to be representations, warranties and
agreements at the Closing Date, and such representations, warranties and
agreements of the Company and the respective indemnity agreements contained in
Section 7 hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Underwriter, the
Company, the Adviser, any controlling person of the Underwriter, the Company or
the Adviser, and shall survive termination of this Agreement or the issuance
and delivery of the Shares to the Underwriter.
9. Effective Date. This Agreement shall become effective at
10:00 a.m., New York City time, on the next full business day following the
date hereof, or at such earlier time after the Registration Statement becomes
effective as the Underwriter, in it's sole discretion, shall release the Shares
for the sale to the public; provided, however, that the provisions of Sections
5, 7 and 10 of this Agreement shall at all times be effective. For purposes of
this Section 9, the Shares to be purchased hereunder shall be deemed to have
been so released upon the earlier of dispatch by the Underwriter of telegrams
to securities dealers releasing such shares for offering or the release by the
Underwriter for publication of the first newspaper advertisement which is
subsequently published relating to the Shares.
10. Termination.
(a) Subject to subsection (b) of this Section 10, the
Underwriter shall have the right to terminate this Agreement, (i) if any
domestic or international event or act or occurrence has disrupted, or in the
Underwriter's opinion will in the immediate future disrupt the financial
markets; or (ii) any material adverse change in the financial markets shall
have occurred; or (iii) if trading on the New York Stock Exchange, the American
Stock Exchange, or in the over-the-counter market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required on the over-the-counter
market by the NASD or by order of the Commission or any other government
authority having jurisdiction; or (iv) if the United States shall have become
involved in a war or major hostilities, or if there shall have been an
escalation in an existing war or major hostilities or a national emergency
shall have been declared in the United States; or (v) if a banking moratorium
has been declared by a state or federal authority; or (vi) if a moratorium in
foreign exchange trading has been declared; or (vii) if the Company shall have
sustained a loss material or substantial to the Company by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or malicious
act which, whether or not such loss
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34
shall have been insured, will, in the Underwriter's opinion, make it
inadvisable to proceed with the delivery of the Securities; or (viii) if there
shall have been such a material adverse change in the condition (financial or
otherwise), business affairs or prospects of the Company or the Adviser,
whether or not arising in the ordinary course of business, which would render,
in the Underwriter's judgment, either of such parties unable to perform
satisfactorily its respective obligations as by this Agreement, the Investment
Advisory Agreement or the Registration Statement, or such material adverse
change in the general market, political or economic conditions, in the United
States or elsewhere as in the Underwriter's judgment would make it inadvisable
to proceed with the offering, sale and/or delivery of the Shares.
(b) If this Agreement is terminated by the Underwriter in
accordance with the provisions of Section 10(a), the Company and the Adviser
shall promptly reimburse and indemnify the Underwriter for all of its actual
out-of-pocket expenses, including the fees and disbursements of counsel for the
Underwriter (less amounts previously paid pursuant to Section 5(c) above).
Notwithstanding any contrary provision contained in this Agreement, if this
Agreement shall not be carried out within the time specified herein, or any
extension thereof granted to the Underwriter, by reason of any failure on the
part of the Company or the Adviser to perform any undertaking or satisfy any
condition of this Agreement by it to be performed or satisfied (including,
without limitation, pursuant to Section 6 or Section 12) then, the Company and
the Adviser shall promptly reimburse and indemnify the Underwriter for all of
its actual out-of-pocket expenses, including the fees and disbursements of
counsel for the Underwriter (less amounts previously paid pursuant to Section
5(c) above). In addition, the Company shall remain liable for all Blue Sky
counsel fees and expenses and Blue Sky filing fees. Notwithstanding any
contrary provision contained in this Agreement, any election hereunder or any
termination of this Agreement (including, without limitation, pursuant to
Sections 6, 10, 11 and 12 hereof), and whether or not this Agreement is
otherwise carried out, the provisions of Section 5 and Section 7 shall not be
in any way affected by such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
11. Default by the Company. If the Company shall fail at the
Closing Date to deliver the number of Shares which it is obligated to deliver
hereunder on such date, then this Agreement shall terminate without any
liability on the part of the Underwriter, other than pursuant to Section 5,
Section 7 and Section 10 hereof. No action taken pursuant to this Section
shall relieve the Company from liability, if any, in respect of such default.
12. Notices. All notices and communications hereunder, except as
herein otherwise specifically provided, shall be in writing and shall be deemed
to have been duly given if mailed or transmitted by any standard form of
telecommunication.
Notices to the Underwriter shall be directed to the Underwriter at:
RAS Securities Corp.
0 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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35
Attention: Xxxx Xxxxxxxx
with a copy to:
Kramer, Levin, Naftalis, Nessen, Xxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Notices to the Company shall be directed to the Company at:
Xxxxxx Xxxx Growth Fund, Inc.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
with a copy to:
Xxxxxx & Xxxxxx, L.L.P.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxx, Esq.
13. Parties. This Agreement shall inure solely to the benefit of
and shall be binding upon, the Underwriter, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof, and their
respective successors, legal representatives and assigns and no other person
shall have or be construed to have any legal or equitable right, remedy or
claim under or in respect of or by virtue of this Agreement or any provisions
herein contained. No purchaser of Shares from the Underwriter shall be deemed
to be a successor by reason merely of such purchase.
14. Construction. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without giving effect to the choice of law or conflict of laws principles.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
16. Entire Agreement; Amendments. This Agreement constitutes the
entire agreement of the parties hereto and supersede all prior written or oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may not be amended except in a writing, signed by the
Underwriter and the Company.
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36
If the foregoing correctly sets forth the understanding between the
Underwriter and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
XXXXXX XXXX GROWTH FUND, INC.
By:______________________________________
Name:
Title:
XXXXXX XXXX CAPITAL ADVISORS, INC.
By:______________________________________
Name:
Title:
Confirmed and accepted as of
the date first above written
RAS SECURITIES CORP.
By:_____________________________
Name:
Title:
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