4,250,000 Shares HARRIS & HARRIS GROUP, INC. Common Stock UNDERWRITING AGREEMENT
4,250,000
Shares
▇▇▇▇▇▇
& ▇▇▇▇▇▇ GROUP, INC.
Common
Stock
October
6, 2009
▇▇▇▇▇▇▇
& Company, LLC
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ Group, Inc., a New
York corporation (the “Company”), proposes, subject
to the terms and conditions stated in this underwriting agreement (this “Agreement”), to issue and
sell to ▇▇▇▇▇▇▇ & Company, LLC (the “Underwriter”), and the
Underwriter agrees to purchase, subject to the terms and conditions stated in
this Agreement, an aggregate of 4,250,000 shares (the “Firm Shares”) of the
Company’s common stock, $0.01 par value per share (the “Common
Stock”). The Shares are more fully described in the
Registration Statement (as hereinafter defined). The Company also
proposes to grant to the Underwriter, subject to the terms and conditions stated
in this Agreement, an option to purchase up to an additional 637,500 shares of
Common Stock (the “Additional
Shares”) on the terms and for the purposes set forth in Section 1
hereof. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the “Shares.”
1. Delivery and
Payment. On the basis of the representations, warranties and
agreements of the Company herein contained, and subject to the terms and
conditions set forth in this Agreement:
(a) The
Underwriter agrees to purchase from the Company an aggregate of 4,250,000 Firm
Shares at a purchase price of $4.75 per share of Common Stock (the “Purchase
Price”).
(b) Payment
of the Purchase Price for, and delivery of, the Firm Shares shall be made at a
closing (the “Closing”)
at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the
Company, located at Four Times
Square, New York, New York at 10:00 a.m., local time, on October 9, 2009
or at such other time and date as the Underwriter and the Company determine
pursuant to Rule 15c6-1(a) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")
(such date of payment and delivery being herein referred to as the “Closing Date”), and upon satisfaction of the conditions
set forth in this Agreement, the Company shall deliver the Firm Shares, which
shall be registered in the name or names and shall be in such denominations as
the Underwriter may request at least one (1) business day before the Closing Date,
to the Underwriter, which delivery, with respect to the Firm Shares, may be made
through the facilities of the Depository Trust Company. At least one
(1) business day prior to the Closing Date, the
Underwriter shall submit to the Company its bona fide written estimate of the
amount, if any, of expenses for which the Underwriter is entitled to
reimbursement pursuant hereto.
(c) For
the purpose of covering any over-allotments in connection with the distribution
and sale of the Firm Shares as contemplated by the Prospectus (as hereinafter
defined), the Underwriter may purchase all or less than all of the Additional
Shares. The price per share to be paid for the Additional Shares shall be the
Purchase Price. The Company agrees to sell to the Underwriter the number of
shares of Additional Shares specified in the written notice by the Underwriter
as described below and the Underwriter agrees to purchase such Additional
Shares. The option granted hereby may be exercised as to all or any
part of the Additional Shares at any time not more than twice during the thirty
(30) calendar days subsequent to the date of this Agreement. No Additional
Shares shall be sold and delivered unless the Firm Shares previously have been,
or simultaneously are, sold and delivered to and purchased by the Underwriter in
accordance with this Agreement. The right to purchase the Additional
Shares or any portion thereof may be surrendered and terminated at any time upon
notice by the Underwriter to the Company.
The
option granted hereby may be exercised by written notice being given to the
Company by the Underwriter setting forth the number of the Additional Shares to
be purchased by the Underwriter and the date and time for delivery of and
payment for the Additional Shares. Each date and time for delivery of
and payment for the Additional Shares (which may be the Closing Date, but not
earlier) is herein referred to as the “Option Closing Date” and
shall in no event be earlier than two (2) business days nor later than five (5)
business days after written notice is given. The Option Closing Date and the
Closing Date are collectively referred to as the “Closing Dates.”
The
Company will deliver the Additional Shares to the Underwriter in uncertificated
form through the facilities of the
Depository Trust Company, issued in such name and in such denominations
as the Underwriter may direct by notice in writing to the Company given at or
prior to 12:00 Noon, New York time, on the second full business day preceding
the Option Closing Date. The Option Closing Date and the location of
delivery of, and the form of payment for, the Additional Shares may be varied by
agreement between the Company and the Underwriter.
(d) Prior
to the earlier of (i) the date on which this Agreement is terminated and (ii)
either of the Closing Dates, the Company shall not, without the prior written
consent of the Underwriter, solicit or accept offers to purchase shares of the
Common Stock (other than pursuant to the exercise of options or warrants to
purchase shares of Common Stock that are outstanding at the date hereof)
otherwise than through the Underwriter in accordance herewith.
(e) No
Shares which the Company has agreed to sell pursuant to this Agreement shall be
deemed to have been purchased and paid for, or sold by the Company, until such
Shares shall have been delivered to the Underwriter against payment by the
Underwriter. If the Company shall default in its obligations to
deliver Shares to the Underwriter, the Company shall indemnify and hold the
Underwriter harmless against any loss, claim, damage or expense arising from or
as a result of such default by the Company in accordance with the procedures set
forth in Section
6(c) herein.
2. Representations and Warranties of
the Company. The Company represents and warrants to the
Underwriter as of the date hereof, and as of each of the Closing Dates, as
follows:
(a) Registration
Statement. The Company meets the requirements for the use of
Form N-2 under the Securities Act of 1933 (the "Securities Act"), and the
rules and regulations (collectively referred to as the “Rules and Regulations”) of
the Securities and Exchange Commission (the “Commission”) thereunder, and
a registration statement (Registration No. 333-160781) on Form N-2, including a
Preliminary Prospectus (as defined below), relating to the Shares being offered
by the Company, and such amendments thereof as may have been required to the
date of this Agreement, have been prepared by the Company in accordance with the
provisions of the Securities Act and the Rules and Regulations, and such
registration statement has been filed with and has been declared effective by
the Commission. A final prospectus supplement containing information permitted
to be omitted at the time of effectiveness by Rule 430C of the Rules and
Regulations will be filed promptly by the Company with the Commission in
accordance with Rule 497 of the Rules and Regulations.
-2-
(i) The
term “Registration
Statement” as used in this Agreement means the registration statement, as
amended at the time it became effective, including all documents filed as a part
thereof, and including any information contained in a prospectus subsequently
filed with the Commission pursuant to Rule 497 under the Securities Act and
deemed to be a part of the registration statement at the time of effectiveness
pursuant to Rule 430C under the Securities Act, and as supplemented or amended,
prior to the execution of this Agreement, including all financial schedules and
exhibits thereto. If the Company has filed one or more abbreviated
registration statements to register additional shares of Common Stock pursuant
to Rule 462(b) under the Rules and Regulations (each a “Rule 462(b) Registration
Statement”), then any reference herein to the term “Registration Statement” shall
also be deemed to include any such Rule 462(b) Registration
Statement.
(ii) The
term “Base Prospectus”
as used in this Agreement means the base prospectus (in the form made available
to the Underwriter by the Company to meet requests of purchasers pursuant to
Rule 173 under the Securities Act), dated as of September 21, 2009, included in
the Registration Statement at the time it was declared effective by the
Commission. The term “Preliminary Prospectus” as
used in this Agreement means any preliminary prospectus supplement specifically
relating to the Shares in the form that is first filed with the Commission
pursuant to Rule 497 under the Securities Act, together with the Base Prospectus
attached thereto. The term “Prospectus Supplement” as
used in this Agreement means the final prospectus supplement specifically
relating to the Shares in the form that is first filed with the Commission
pursuant to Rule 497 under the Securities Act after the date and time this
Agreement is executed and delivered by the parties hereto. The term
“Prospectus” as used in
this Agreement means the Base Prospectus together with the Prospectus
Supplement.
(iii) The
term “Time of Sale” as
used in this Agreement means the time of execution of this
Agreement.
(v) The term “Disclosure Package” as used in this
Agreement, means the Preliminary Prospectus and the Pricing Information,
all considered together.
(b) Registration Statement; Disclosure
Package and Prospectus. No order preventing or suspending the
use of the Base Prospectus, any Preliminary Prospectus or the Prospectus has
been issued by the Commission, and no stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment thereto has been
issued, and no proceedings for that purpose have been instituted or, to the
Company's knowledge, are threatened by the Commission. The
Registration Statement and any post effective amendment thereto complied when it
became effective and at each of the Closing Dates, in all material respects,
with the requirements of Form N-2 under the Securities Act. The
conditions to the use of Form N-2 in connection with the offering and sale of
the Shares as contemplated hereby have been satisfied. The
Registration Statement, including any amendment thereto, did not, as of the Time
of Sale, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; the Disclosure Package, as of the Time of Sale, did not
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and the Prospectus, as
of the date that it is filed with the Commission and as of each of the Closing
Dates, will not contain an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided, in
each case, that the Company makes no representations or warranties with respect
to any Underwriter Information (as defined in Section
6(a)).
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(c) Offering
Materials. The Company has not, directly or indirectly,
distributed and will not distribute any offering material in connection with the
Offering other than any Preliminary Prospectus, the Prospectus and other
materials, if any, permitted under the Securities Act.
(d) Organization. The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of New York, with the corporate power
and authority necessary to own, lease and operate its properties and to conduct
its business as described in the Registration Statement, the Disclosure Package
and the Prospectus.
(e) Capitalization. As
of the date hereof, the authorized capital stock of the Company consists of (i)
45,000,000 shares of Common Stock and (ii) 2,000,000 shares of preferred stock,
par value $0.10 per share (the "Preferred
Stock"). As of the date hereof, 25,966,758 shares of Common
Stock are issued and outstanding and no shares of Preferred Stock are issued and
outstanding; and 4,581,567 shares of Common Stock are issuable upon the exercise
of all options, warrants and convertible securities outstanding as of such
date. None of the outstanding shares of Common Stock were issued in
violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase securities of the Company. There
are no authorized or outstanding shares of capital stock, options, warrants,
preemptive rights, rights of first refusal or other rights to purchase, or
equity or debt securities convertible into or exchangeable or exercisable for,
any capital stock of the Company or any of its Subsidiaries other than those
described above or described in the Disclosure Package.
(f) Registration
Rights. No holder of securities of the Company has rights to
the registration of any securities of the Company in connection with the
Offering, which rights have not been waived by the holder thereof as of the date
hereof.
(g) The Shares. The
Shares have been duly and validly authorized by the Company and, when issued,
delivered and paid for in accordance with the terms of this Agreement, will have
been duly and validly issued and will be fully paid and
nonassessable.
(h) Description of Capital
Stock. The terms of the capital stock of the Company,
including the Shares, conform in all material respects to the description
thereof contained in the Registration Statement, the Disclosure Package and the
Prospectus.
(i) Authorization and
Execution. This Agreement has been duly authorized, executed
and delivered by the Company and, when delivered in accordance with the terms
hereof and thereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws affecting
creditors’ and contracting parties’ rights generally or by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law) and except as to the enforceability of any rights to
indemnification or contribution that may be violative of the public policy
underlying any law, rule or regulation (including any federal or state
securities law, rule or regulation). The consummation by the Company
of the transactions contemplated hereunder and thereunder have been duly
authorized by all necessary corporate action on the part of the Company. The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by this Agreement and otherwise to
carry out its obligations hereunder and thereunder.
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(j) Subsidiaries. None
of the Company’s subsidiaries are significant subsidiaries (as such term is
defined in Rule 1-02(w) of Regulation S-X promulgated by the
Commission). The Company owns all of the issued and outstanding
capital stock of each of the subsidiaries listed on Schedule II attached
hereto (collectively, the “Subsidiaries”). Each of the
Subsidiaries has been duly organized and is validly existing and in good
standing under the laws of its jurisdiction of organization; each of the
Subsidiaries has the power and authority to own, lease and operate its
properties and conduct its business as described in the Disclosure Package and
the Prospectus. All of the outstanding shares of capital stock of each of the
Subsidiaries held directly or indirectly by the Company have been duly
authorized and validly issued, are fully paid and non-assessable, have been
issued in compliance with all applicable securities laws, were not issued in
violation of any preemptive right, resale right, right of first refusal or
similar right to subscribe for or purchase securities of the Subsidiaries and
are owned by the Company or another Subsidiary subject to no claim, lien,
security interest, restriction upon voting or transfer, other encumbrance or
adverse claims.
(k) No Violation or
Default. The Company is not in breach or violation of or in
default under (i) the provisions of its charter or by-laws, (ii) any material
agreement filed as an exhibit to the Registration Statement, or (iii) any
federal or state statute or law, any rule or regulation issued pursuant to any
federal or state statute or law, or any order issued pursuant to any federal or
state statute or law by any court or governmental agency or body having
jurisdiction over the Company, except, with respect to clauses (ii) and (iii)
above, as described in the Disclosure Package and the Prospectus or, to the
extent any such contravention would not, individually or in the aggregate, have
a material adverse effect on the (1) business, properties, prospects, financial
condition, results of operations or assets of the Company and its subsidiaries
taken as a whole, or (2) impair in any material respect the ability of the
Company to perform its obligations under this Agreement or to consummate any of
the transactions contemplated by this Agreement, the Disclosure Package or the
Prospectus (any such effect as described in clauses (1) or (2), a "Material Adverse
Effect").
(l) No Conflicts. The
execution, delivery and performance by the Company of this Agreement, including
the issuance and sale by the Company of the Shares will not conflict with or
result in a breach or violation of or constitute a default under (i) the
provisions of its charter or by-laws, (ii) any material agreement or instrument
filed as an exhibit to the Registration Statement, or (iii) any federal or state
statute or law, any rule or regulation issued pursuant to any federal or state
statute or law, or any order issued pursuant to any federal or state statute or
law by any court or governmental agency or body having jurisdiction over the
Company, except, with respect to clauses (ii) and (iii) above, as described in
the Disclosure Package and the Prospectus or, to the extent any such
contravention would not, individually or in the aggregate, have a Material
Adverse Effect.
(m) No Consents
Required. No filing with, or authorization, approval, consent
or order of any court or governmental agency or body is required for the
execution, delivery and performance of this Agreement by the Company, the
issuance and sale of the Shares, except as referred to in this Agreement, the
Registration Statement, the Disclosure Package or the Prospectus and (i) such as
have been already obtained or as may be required under the Securities Act, the
Investment Company Act of 1940, as amended (the “Investment Company Act”) or
the Exchange Act, (ii) such as may be required under the rules and regulations
of the Financial Industry Regulatory Authority (“FINRA”), or (iii) such as may
be required under the “blue sky” laws of any jurisdiction in connection with the
purchase and distribution of the Shares in the manner contemplated in this
Agreement, the Registration Statement, the Disclosure Package and the
Prospectus.
-5-
(n) Disclosure. The
statements set forth in the Prospectus under the captions “Taxation” and
“Certain Governmental Regulations,” insofar as they purport to describe the
provisions of the laws referred to therein, are accurate and complete in all
material respects.
(o) Absence of Material Changes.
Subsequent to the respective dates as of which information is given in
the Disclosure Package and the Prospectus, and other than as contemplated
therein, there has not been (i) any material adverse change in the business,
properties, prospects, financial condition or results of operations of the
Company and its Subsidiaries taken as a whole, (ii) any transaction which is
material to the Company, (iii) any material change in the capital stock, or any
material change in the outstanding indebtedness, of the Company or (iv) any
dividend or distribution declared, paid or made on the capital stock of the
Company.
(p) Legal or Governmental Proceedings. Except as
described in the Disclosure Package and the Prospectus, there are no legal or
governmental proceedings, pending or, to the Company's knowledge, threatened to
which the Company or any of its properties is or would be subject at law or in
equity, before or by any federal or state court or governmental agency or body,
except any such legal or governmental proceedings, which if resolved adversely
to the Company, would not result in a judgment, decree or order having,
individually or in the aggregate, a Material Adverse Effect.
(q) Good Title to
Property. The Company has good and valid title to all
property (whether real or personal) described in the Disclosure Package, the
Prospectus Supplement and, except to the extent modified by the Prospectus
Supplement, the Base Prospectus as being owned by it, except such property as
shall have been disposed of in the ordinary course after the date thereof, in
each case free and clear of all liens, claims, security interests, other
encumbrances or defects except such as are described in the Disclosure Package
and the Prospectus and those that would not, individually or in the aggregate
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the
Company. All of the property described in the Disclosure Package, the
Prospectus Supplement and, except to the extent modified by the Prospectus
Supplement, the Base Prospectus as being held under lease by the Company, except
such property as shall have been disposed of in the ordinary course after the
date thereof, is held thereby under valid, subsisting and enforceable leases
(except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles), without any
liens, restrictions, encumbrances or claims, except those
that, individually or in the aggregate, are not material or do not
materially interfere with the use made and proposed to be made of such property
by the Company.
(r) Intellectual Property
Rights. Except as set forth on Schedule 2(r)
attached hereto, the Company does not own any patent applications, patents,
trademarks (both registered and unregistered), tradenames, copyrights, trade
secrets or other proprietary information which are necessary for the conduct of
its business, except where the failure to own such rights would not,
individually or in the aggregate, result in a Material Adverse
Effect.
(s) Financial
Statements. The consolidated financial statements of the
Company, together with the related schedules and notes thereto, set forth or
incorporated by reference in the Registration Statement, the Disclosure Package
and the Prospectus present fairly in all material respects the consolidated
financial condition of the Company and its consolidated Subsidiaries as of the
dates indicated and the consolidated results of operations, cash flows and
changes in net assets of the Company for the periods specified and have been
prepared in conformity with United States generally accepted accounting
principles, consistently applied throughout the periods involved.
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(t) Independent Accountants. To
the Company’s knowledge, PricewaterhouseCoopers LLP, who have certified the
consolidated financial statements and related schedules of the Company, is (i)
an independent public accounting
firm within the meaning of the Securities Act and the Rules and Regulations,
(ii) a registered public accounting firm (as defined in Section 2(a)(12) of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”)), and (iii) not in
violation of the auditor independence requirements of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act as
such requirements apply to their relationship with the
Company.
(u) Taxes. The Company
has timely filed all material federal, state and local income and franchise tax
returns (or timely filed applicable extensions therefor) that have been required
to be filed and is not in default in the payment of any taxes which were payable
pursuant to said returns or any assessments with respect thereto, except to the
extent that the failure to timely file or pay would not, individually or in the
aggregate, have a Material Adverse Effect.
(v) Nasdaq; Exchange Act
Registration. The Common Stock is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act and is accepted for quotation on the
Nasdaq Global Market, and the Company has taken no action designed to terminate
the registration of the Common Stock under the Exchange Act or delisting the
Common Stock from the Nasdaq Global Market, nor, except as disclosed in the
Registration Statement, the Disclosure Package and the Prospectus, has the
Company received any notification that the Commission or FINRA is contemplating
terminating such registration or listing. Except as disclosed in the
Registration Statement, the Disclosure Package and the Prospectus, the Company
has complied in all material respects with the applicable requirements of the
Nasdaq Global Market for maintenance of inclusion of the Common Stock
thereon. No approval of the shareholders of the Company under the
rules and regulations of Nasdaq (including Rule 5635 of the Nasdaq Listing
Rules) is required for the Company to issue and deliver to the Underwriter the
Shares.
(w) Accounting
Controls. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(x) Disclosure
Controls. The Company has established, maintains and evaluates
“disclosure controls and procedures” (as such term is defined in Rules 13a-15e
and 15d-15e under the Exchange Act), which (i) are designed to ensure that
material information required to be disclosed by the Company in the reports that
it files under the Exchange Act is made known to the Company’s principal
executive officer and its principal financial officer, particularly during the
periods in which the periodic reports required under the Exchange Act are being
prepared, and such disclosure controls and procedures are effective to perform
the functions for which they were established; the Company’s auditors and the
Audit Committee of the Board of Directors of the Company have been advised of:
(i) any significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting (as such term is defined
in Rules 13a-15f and 15d-15f under the Exchange Act) which could
adversely affect the Company’s ability to record, process, summarize, and report
financial data; and (ii) any fraud, whether or not material, that involves
management or other employees who have a role in the Company’s internal control
over financial reporting; any material weaknesses in internal control over
financial reporting have been identified for the Company’s auditors; and since
the date of the most recent evaluation of such internal control over financial
reporting, there have been no changes in internal control over financial
reporting or in other factors that could significantly affect internal control
over financial reporting, including any corrective actions with regard to
significant deficiencies and material weaknesses.
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(y) ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act. The Company, and to its knowledge, all of the Company's
directors or officers, in their capacities as such, is in compliance in all
material respects with all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and
the rules and regulations promulgated thereunder.
(z) Investment Company Act;
Compliance. The Company has elected to be regulated as a
“business development company” under the Investment Company Act and has not
withdrawn such election, and the Commission has not ordered that such election
be withdrawn nor to the Company's knowledge have proceedings to effectuate such
withdrawal been initiated or threatened by the Commission. Except as
set forth in the Registration Statement, the Disclosure Package and the
Prospectus, the Company’s current business operations and investments and
contemplated business operations and investments are in compliance in all
material respects with the provisions of the Investment Company Act and the
rules and regulations of the Commission thereunder (as set forth in the Code of
Federal Regulations (“CFR”)) applicable to business
development companies and, after giving effect to the issuance and sale of the
Shares, will be in compliance in all material respects with such provisions and
rules and regulations (as set forth in the CFR). The provisions of
the corporate charter and bylaws of the Company and the investment policies
described in the Registration Statement, the Disclosure Package and the
Prospectus are not inconsistent with the requirements of the Investment Company
Act and the rules and regulations of the Commission thereunder (as set forth in
the CFR) applicable to a business development company.
(aa) Insurance. The
Company maintains insurance in such amounts and covering such risks as it
reasonably considers to be adequate for the conduct of its business and the
value of its properties and as is customary for companies engaged in similar
businesses in similar industries. All such insurance is fully in
force on the date hereof and will be fully in force as of each of the Closing
Dates. The Company has no reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse
Effect.
(bb) Brokers Fees. The Company is
not a party to any contract, agreement or understanding with any person (other
than this Agreement) that would give rise to a valid claim against the Company
or the Underwriter for a brokerage commission, finder’s fee or other like
payment in connection with the offering and sale of the Shares or any
transaction contemplated by this Agreement.
(cc) No
Stabilization. Neither the Company, nor, to the Company's
knowledge, any of the Company’s officers, directors, affiliates or controlling
persons, has taken or will take, directly or indirectly, any action designed or
intended to stabilize or manipulate the price of any security of the Company to
facilitate the sale or resale of the Shares.
(dd) FINRA
Affiliations. To the Company’s knowledge, there are no
affiliations or associations between (i) any member of FINRA and (ii) the
Company or any of the Company’s officers, directors or 5% or greater
securityholders, except as set forth in the Registration Statement, the
Disclosure Package and the Prospectus.
(ee) No Labor
Disputes. The Company is not involved in any labor dispute
nor, to the knowledge of the Company, is any such dispute imminent or
threatened, which dispute would have a Material Adverse Effect. The
Company is not aware that any key employee or significant group of employees of
the Company plans to terminate employment with the Company.
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(ff) ERISA. The Company
is in compliance in all material respects with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder (“ERISA”); no “reportable
event” (as defined in ERISA) has occurred with respect to any “pension plan” (as
defined in ERISA) maintained by the Company or for which the Company would
reasonably be expected to have any liability; the Company has not incurred and
does not expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any “pension plan” or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the “Code”); and each “pension
plan” maintained by the Company that is intended to be qualified under Section
401(a) of the Code has received a determination letter from the Internal Revenue
Service to the effect that it is so qualified and nothing has occurred, whether
by action or by failure to act, which would reasonably be expected to cause the
loss of such qualification.
(gg) Statistical or
Market-Related Data. Any statistical,
industry-related and market-related data included in the Registration Statement,
the Disclosure Package and the Prospectus, are based on or derived from sources
that the Company reasonably and in good faith believes to be reliable and
accurate, and such data agree with the sources from which they are
derived.
Any certificate signed by or on behalf
of the Company and delivered to the Underwriter or to counsel for the
Underwriter shall be deemed to be a representation and warranty by the Company
to the Underwriter to the matters covered thereby.
3. Covenants. The
Company covenants and agrees with the Underwriter as follows:
(a) Prospectus
Supplement. The Company shall file the Prospectus Supplement
with the Commission within the time periods specified by Rule 497 and Rule 430C
under the Securities Act.
(b) Notice to
Underwriter. During any period when a prospectus relating to
the Shares is required to be delivered under the Securities Act in connection
with the offering contemplated by this Agreement (the “Prospectus Delivery
Period”), the
Company will notify the Underwriter promptly, and will, if requested, confirm
such notification in writing: (i) of the receipt of any comments of, or
requests for additional or supplemental information from, the Commission; (ii)
of the time and date of any filing of any post-effective amendment to the
Registration Statement or any amendment or supplement to any Preliminary
Prospectus or the Prospectus; (iii) the time and date when any post-effective
amendment to the Registration Statement becomes effective; (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, or any post-effective amendment thereto or any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, or the initiation of any proceedings for that purpose or the threat
thereof; and (v) of receipt by the Company of any notification with respect
to any suspension of the approval of the Shares from any securities exchange
upon which they are listed for trading or included or designated for quotation,
or the initiation or threatening of any proceeding for such
purpose. The Company will use its reasonable best efforts to
prevent the issuance or invocation of any such stop order or suspension by the
Commission and, if any such stop order or suspension is so issued or invoked, to
obtain as soon as possible the withdrawal or removal thereof.
(c) Filing of Amendments or
Supplements. If, during the Prospectus Delivery Period, any event shall
occur or condition exist as a result of which, in the judgment of the Company or
in the reasonable opinion of the Underwriter, it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in the light
of the circumstances when the Prospectus is delivered to the Underwriter, not
misleading, or if it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the Commission and
furnish, at the Company’s expense, to the Underwriter, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the
Prospectus is delivered to the Underwriter, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
-9-
(d) Amendments or Supplements to the
Disclosure Package. If the Disclosure Package is being used to
solicit offers to buy the Shares at a time when the Prospectus is not yet
available to the Underwriter and any event shall occur as a result of which it
becomes necessary to amend or supplement the Disclosure Package in order 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 or supplement
the Disclosure Package to comply with any law, the Company promptly will
prepare, file with the Commission (if required) and furnish to the Underwriter
an appropriate amendment or supplement to the Disclosure Package so that the
Disclosure Package, as so amended or supplemented, will not, in the light of the
circumstances under which they were made, be misleading, or so that the
Disclosure Package will comply with law.
(e) Delivery of
Copies. The Company will deliver promptly to the Underwriter
and its counsel such number of the following documents as the Underwriter shall
reasonably request: (i) conformed copies of the Registration
Statement as originally filed with the Commission and each amendment thereto (in
each case excluding exhibits); (ii) copies of each Preliminary Prospectus, if
any; (iii) during the Prospectus Delivery Period, copies of the Prospectus (or
any amendments or supplements thereto); and (iv) all correspondence to and from,
and all documents issued to and by, the Commission in connection with the
registration of the Shares under the Securities Act.
(f) Blue Sky Laws. The
Company will promptly take or cause to be taken, from time to time, such actions
as the Underwriter may reasonably request to qualify the Shares for offering and
sale under the state securities, or blue sky, laws of such states as the
Underwriter may reasonably request and to maintain such qualifications in effect
so long as the Underwriter may reasonably request for the distribution of the
Shares, provided, that
in no event shall the Company be obligated to qualify as a foreign corporation
in any jurisdiction in which it is not so qualified or to file a general consent
to service of process in any jurisdiction or subject itself to taxation as doing
business in any jurisdiction. The Company will advise the Underwriter
promptly of the suspension of the qualification or registration of (or any
exemption relating to) the Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose,
and in the event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain the
withdrawal thereof at the earliest possible moment.
(g) Use of
Proceeds. The Company will apply the net proceeds from the
sale of the Shares in the manner set forth in the Prospectus under the heading
“Use of Proceeds.”
(h) Lock-Up
Period. Beginning on the date hereof and continuing for a
period of ninety (90) days after the date of the Prospectus (the “Lock-Up Period”), the Company
will not (1) offer to sell, hypothecate, pledge, announce the intention to
sell, sell, contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option, right or warrant to purchase
or otherwise transfer or dispose of, directly or indirectly, or establish or
increase a put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Exchange Act, with respect to,
any shares of Common Stock, or any securities convertible into, exercisable or
exchangeable for Common Stock; (2) file or cause to become effective a
registration statement under the Securities Act relating to the offer and sale
of any shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock except for a registration statement on Form S-8
relating to employee benefit plans or (3) enter into any swap or other agreement
that transfers, in whole or in part, any of the economic consequences of
ownership of the Common Stock, whether any such transaction described in clause
(1), (2) or (3) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise, without the prior written consent of the
Underwriter (which consent may be withheld in its sole discretion), other than:
(i) the Shares to be sold hereunder; (ii) the issuance of employee
stock options pursuant to equity incentive plans described in the Registration
Statement (excluding the exhibits thereto), the Disclosure Package and the
Prospectus; (iii) issuances of Common Stock upon the exercise of options or
warrants (either upon current terms thereof or upon subsequently amended terms
but excluding a general repricing) disclosed as outstanding in the Registration
Statement (excluding the exhibits thereto), the Disclosure Package and the
Prospectus or upon the conversion or exchange of convertible or exchangeable
securities outstanding as of the date of this Agreement; (iv) the issuance by
the Company of any shares of Common Stock as consideration for mergers,
acquisitions, other business combinations, or strategic alliances, occurring
after the date of this Agreement; provided that each recipient
of shares pursuant to this clause (iv) agrees that all such shares remain
subject to restrictions substantially similar to those contained in this Section 3(h); or (v)
the purchase or sale of the Company’s securities pursuant to a plan, contract or
instruction that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B)
that was in effect prior to the date hereof or that is established or amended in
accordance with the terms of the respective Lock-Up Agreement (as defined
below). Notwithstanding the foregoing, the Company shall be permitted
to establish a 10b5-1 trading plan that complies with Rule 10b5-1 under the
Exchange Act, or to amend an existing 10b5-1 trading plan in accordance with
Rule 10b5-1 under the Exchange Act, provided, in each case, that no sales or
other dispositions of shares of the Common Stock under such 10b5-1 trading plans
that were not in effect prior to the date hereof by any person that has signed
or is otherwise bound by a Lock-Up Agreement (as defined below) will be
permitted during the Lock-Up Period, as the same may be extended
hereby. For the purpose of allowing the Underwriter to comply with
FINRA Rule 2711(f)(4), if (1) during the last seventeen (17) days of the Lock-Up
Period, the Company releases quarterly or other financial results or publicly
announces other material news or a material event relating to the Company occurs
or (2) prior to the expiration of the Lock-Up Period, the Company announces that
it will release quarterly financial results during the 16-day period beginning
on the last day of the Lock-Up Period, then in each case the Lock-Up Period will
be extended until the expiration of the 18-day period beginning on the date of
release of quarterly or other financial results or the public announcement
regarding the material news or the occurrence of the material event, as
applicable, unless the Underwriter waives, in writing, such
extension. Without the prior written consent of the Underwriter, the
Company agrees not to accelerate the vesting of any option or warrant or the
lapse of any repurchase right prior to the expiration of the Lock-Up
Period.
-10-
(i) Lock-Up
Agreements. The Company will cause each of its executive
officers and directors whose names are set forth on Exhibit B hereto to
furnish to the Underwriter, on the date hereof, a letter, substantially in the
form of Exhibit
A hereto (the “Lock-Up
Agreement”).
(j) Public
Communications. Prior to the earlier of the termination of
this Agreement or either of the Closing Dates, the Company will not issue any
press release or other communication directly or indirectly or hold any press
conference with respect to the business, properties, financial condition,
results of operations or prospects of the Company, or the offering of the
Shares, without the prior consent of the Underwriter, unless in the reasonable
judgment of the Company and its counsel, and after notification to the
Underwriter, such press release or communication is required by law or by Nasdaq
rules, in which case the Company shall use its reasonable best efforts to allow
the Underwriter reasonable time to comment on such release or other
communication in advance of such issuance.
(k) Stabilization. The
Company will not take, directly or indirectly, any action designed, or that
might reasonably be expected to cause or result in, or that will constitute,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Shares.
-11-
(l) Listing. The
Company shall use its commercially reasonable efforts to cause the Shares to be
listed for quotation on the Nasdaq Global Market at the Closing Date and to
maintain a listing on a national securities exchange after the Closing
Date.
(m) Broker’s Fee. The Company
will not incur any liability for any finder’s or broker’s fee or agent’s
commission in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, except as set forth in
this Agreement.
(n) Abbreviated Registration
Statements. If the Company elects to rely upon Rule 462(b) under the
Securities Act, the Company shall file one or more registration statements under
Rule 462(b) with the Commission in compliance with Rule 462(b), and the Company
shall at the time of filing either pay to the Commission the filing fee for such
Rule 462(b) registration statements or give irrevocable instructions for the
payment of such fee pursuant to the Rules and Regulations.
4. Costs and
Expenses. The Company will pay or reimburse if paid by
the Underwriter all reasonable costs and expenses incident to the performance of
the obligations of the Company under this Agreement and in connection with the
transactions contemplated hereby, including but not limited to costs and
expenses of or relating to (i) the
preparation, printing and filing of the Registration Statement, each Preliminary
Prospectus and the Prospectus, and any amendment or supplement to any of the
foregoing and the printing and furnishing of copies of each thereof to the
Underwriter and dealers (including costs of mailing and shipment), (ii)
the registration, issue, sale and delivery of the Shares including any stock or
transfer taxes and stamp or similar duties payable upon the sale, issuance or
delivery of the Shares and the printing, delivery, and shipping of the
certificates representing the Shares, (iii) the registration or qualification of
the Shares for offer
and sale under the
securities or blue sky laws
of such jurisdictions designated pursuant to Section 3(f), (including the reasonable legal fees
and filing fees, and other disbursements of counsel to the Underwriter in
connection therewith), and, if reasonably requested by the Underwriter, the
preparation and printing and furnishing of copies of any blue sky surveys to the
Underwriter and to dealers, (iv) the fees and expenses of any transfer
agent or registrar for the Shares, (v) any filings required to be made by the
Underwriter or the Company with FINRA, and the reasonable fees, disbursements
and other charges of counsel for the Underwriter in connection therewith
(including all COBRADesk fees), (vi) fees, disbursements and other
charges of counsel to the Company (except as otherwise set forth below), (vii)
listing fees, if any, for the listing or quotation of the Shares on the Nasdaq
Global Market, (viii) fees and disbursements of the Company’s auditor incurred
in delivering the letter(s) described in Section 5(j) of this
Agreement, (ix) the reasonable out-of-pocket expenses of the Underwriter
(including the reasonable fees, disbursements and other charges of one counsel
to the Underwriter (in addition to (iii) and (v) of this Section 4) in
connection with the performance of services hereunder, and (x) the costs and expenses of the Company in
connection with the marketing of the offering and the sale of the
Shares to the Underwriter
including, but not limited to, those related to any presentations or
meetings undertaken in connection therewith including, without limitation,
expenses associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged with the written consent of the Company
in connection with the road show presentations, travel, lodging and other
expenses incurred by the officers of the Company and any such consultants, and
the cost of any aircraft or other transportation chartered in connection with
the road show. Notwithstanding the foregoing, except as set forth in
Section 8, in
no event shall the Company be obligated to reimburse the Underwriter pursuant to
this Section 4
in an amount in excess of (i) $30,000 in the aggregate for the reasonable
out-of-pocket expenses of the Underwriter (other than the reasonable fees,
disbursements and other charges of one counsel to the Underwriter) and (ii)
$125,000 in the aggregate for the reasonable fees, disbursements and other
charges of one counsel to the Underwriter.
-12-
5. Conditions of Underwriter’s
Obligations. The obligations of the Underwriter hereunder are
subject to the following conditions:
(a) Filings with the
Commission. The Preliminary Prospectus (if any) and the
Prospectus required to be filed under the Securities Act or the Rules and
Regulations shall have been filed with the Commission pursuant to Rule 497 and
Rule 430C in the manner and within
the time period so required.
(b) No Stop
Orders. Prior to either of the Closing Dates: (i) no stop
order suspending the effectiveness of the Registration Statement or any part
thereof, preventing or suspending the use of the Base Prospectus, any
Preliminary Prospectus or the Prospectus or any part thereof shall have been
issued under the Securities Act and no proceedings for that purpose or pursuant
to Section 8A under the Securities Act shall have been initiated or threatened
by the Commission, (ii) no order suspending the qualification or registration of
the Shares under the securities or blue sky laws of any jurisdiction shall be in
effect and (iii) all requests for additional information on the part of the
Commission (to be included in the Registration Statement, the Disclosure Package
or the Prospectus) shall have been complied with to the reasonable satisfaction
of the Underwriter.
(c)
Action Preventing
Issuance. No action shall have been taken and no statute,
rule, regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of each of the Closing Dates,
prevent the issuance or sale of the Shares; and no injunction, restraining order
or order of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of either of the Closing Dates which
would prevent the issuance or sale of the Shares.
(d) Objection of
Underwriter. No Prospectus or amendment or supplement to the
Registration Statement shall have been filed to which the Underwriter shall have
objected in writing, which objection shall not be unreasonable. The
Underwriter shall not have in good faith advised the Company on or prior to the
Closing Date that the Registration Statement or any amendments thereof or
supplements thereto contains an untrue statement of fact which, in its opinion,
is material, or omits to state a fact which, in its opinion, is material and is
required to be stated therein or necessary to make the statements therein not
misleading, or that the Disclosure Package or the Prospectus or any amendment
thereof or supplement thereto contains an untrue statement of fact which, in its
opinion, is material, or omits to state a fact which, in its opinion, is
material and is required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(e) Corporate
Proceedings. All corporate proceedings incident to the
authorization, form and validity of each of this Agreement, the Shares, the
Registration Statement, the Disclosure Package, and the Prospectus and all other
legal matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in all material respects to counsel for
the Underwriter, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them to
pass upon such matters.
(f) No Material Adverse Change.
Since the date of the latest audited financial statements included in the
Disclosure Package, as of the date hereof, there shall not have been any change
in the capital stock or long-term debt of the Company, or any change, or any
development involving a prospective change, in the business, properties,
prospects, financial condition or results of operations of the Company and its
Subsidiaries taken as a whole, from that described in the Disclosure Package and
the Prospectus, the effect of which is, in the judgment of the Underwriter, so
material and adverse as to make it impracticable or inadvisable to proceed with
the sale or delivery of the Shares on the terms and in the manner contemplated
in the Disclosure Package and the Prospectus.
-13-
(g) Representations and
Warranties. Each of the representations and warranties of the
Company contained herein shall be true and correct in all material respects
(except for those representations and warranties which are qualified by
materiality, in which case such representations and warranties shall be true and
correct in all respects) when made and on and as of each of the Closing Dates,
as if made on such date (except that those representations and warranties that
address matters only as of a particular date shall remain true and correct in
all material respects (except for those representations and warranties which are
qualified by materiality, in which case such representations and warranties
shall be true and correct in all respects) as of such date), and all covenants
and agreements herein contained to be performed on the part of the Company and
all conditions herein contained to be fulfilled or complied with by the Company
at or prior to each of the Closing Dates shall have been duly performed,
fulfilled or complied with in all material respects.
(h) Opinion of Counsel to the
Company. The Underwriter shall have received from Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to the Company, such counsel’s
written opinion, addressed to the Underwriter and dated the Closing Date, to the
effect set forth in Exhibit C
hereto. Such counsel
shall also have furnished to the Underwriter a letter (including a
negative assurances statement),
addressed to the Underwriter and dated the Closing Date, to the effect set forth
in Exhibit
D
hereto.
(i) Opinion of Counsel to the
Underwriter. The Underwriter shall have received from
Proskauer Rose LLP, counsel to the Underwriter, such opinion or opinions
(including negative assurance), dated the Closing Date and addressed to the
Underwriter, covering such matters
as are customarily covered in transactions of this type.
(j) Accountant’s Comfort Letter and
Bring-Down Letter. The Company shall have requested and
caused PricewaterhouseCoopers LLP to have furnished to the Underwriter, at the
Time of Sale and at the Closing Date, letters, dated respectively as of the Time
of Sale and as of the Closing Date, in form and substance satisfactory to the
Underwriter and PricewaterhouseCoopers LLP, confirming that it is an independent
registered public accounting firm within the meaning of the Securities Act and
the Investment Company Act and the Rules and Regulations thereunder and the
Public Company Accounting Oversight Board (“PCAOB”) and stating in effect
that:
(i) In
their opinion, the consolidated financial statements of the Company and its
Subsidiaries audited by them and included in the Registration Statement comply
as to form in all material respects with the applicable accounting requirements
of the Securities Act and the related Rules and Regulations adopted by the
Commission.
(ii) On
the basis of procedures (but not an audit in accordance with the standards of
the PCAOB) consisting of:
a. Reading
the minutes of meetings of the board of directors of the Company and committees
of such board of directors for the year ended December 31, 2008 and through a
specified date, as set forth in the minute books through a specified date not
more than (i) five (5) business days (with respect to the letter to be delivered
at the Time of Sale) and (ii) two (2) business days (with respect to the letter
to be delivered at the Closing Date) prior to the date of delivery of such
letter;
b. Performing
the procedures specified by the PCAOB for a review of interim financial
information as described in SAS 100, Interim Financial Information, on the
unaudited consolidated interim statements of assets and liabilities, including
the unaudited consolidated schedule of investments, as of June 30, 2009 and
unaudited consolidated statements of operations, of cash flows and unaudited
financial highlights for the six month periods ended June 30, 2009 and 2008, and
of changes in net assets for the six months ended June 30, 2009 included in the
Registration Statement; and
-14-
c. Making
inquiries of certain officials of the Company who have responsibility for
financial and accounting matters regarding the specific items for which
representations are requested below, nothing has come to their attention as a
result of the foregoing procedures that caused them to believe
that:
i. the
unaudited consolidated financial statements referred to in subclause (b) above
do not comply as to form in all material respects with the applicable accounting
requirements of the Securities Act and the related Rules and Regulations adopted
by the Commission;
ii. Any
material modifications should be made to the unaudited consolidated financial
statements included in the Registration Statement for them to be in conformity
with generally accepted accounting principles;
iii. At
the date of the latest available interim financial data and at a specified date
not more than (i) five (5) business days (with respect to the letter to be
delivered at the Time of Sale) and (ii) two (2) business days (with respect to
the letter to be delivered at the Closing Date) prior to the date of the
delivery of such letter, there was any change in the capital stock, increase in
long term debt, or decrease in consolidated net assets of the Company as
compared with amounts shown in the June 30, 2009 unaudited statements of assets
and liabilities included in the Registration Statement, except in all instances
for changes, increases or decreases which the Registration Statement discloses
have occurred or may occur.
(iii) The
letter shall also state that they have:
a. Read
certain items identified in the Registration Statement under the captions
“Selected Condensed Consolidated Financial Data”, “Selected Quarterly Data
(Unaudited)”, “Management’s Discussion and Analysis of Financial Condition and
Results of Operations”, “Risk Factors”, “Price Range of Common Stock”,
“Business”, “General Description of Portfolio Companies”, “Investment Policies”,
“Management of the Company” and “Recent Developments” which are expressed in
dollars (or percentages derived from such dollar amounts) and have been obtained
from accounting records which are subject to control over financial reporting or
which have been derived directly from such accounting records by analysis or
computation, and are in agreement with such records or computations made
therefrom.
(k) Officer’s
Certificate. The Underwriter shall have received on the
Closing Date a certificate, addressed to the Underwriter and dated the Closing
Date, of the principal executive officer and the principal financial officer of
the Company, acting in such capacities, to the effect that:
(i) each
of the representations, warranties and agreements of the Company in this
Agreement were true and correct in all material respects (except for those
representations and warranties which are qualified by materiality, in which case
such representations and warranties shall be true and correct in all respects)
when originally made and are true and correct in all material respects (except
for those representations and warranties which are qualified by materiality, in
which case such representations and warranties shall be true and correct in all
respects) as of each of the Closing Dates; and the Company has complied in all
material respects with all agreements and satisfied all the conditions on its
part required under this Agreement to be performed or satisfied at or prior to
the Closing Date;
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(ii) subsequent
to the date of the most recent financial statements included in, or incorporated
by reference in, each of the Registration Statement, the Disclosure Package and
the Prospectus, there has not been a material adverse change or any
development involving a prospective material adverse change in the
business, properties, financial condition, results of operations or prospects of
the Company taken as a
whole, and
(iii) no
stop order suspending the effectiveness of the Registration Statement or any
part thereof or any amendment thereof or the qualification of the Shares for
offering or sale, nor suspending or preventing the use of the Prospectus shall
have been issued, and no proceedings for that purpose shall be pending or, to
their knowledge, threatened by the Commission or any state or regulatory
body.
(l) Secretary’s
Certificate. On the Closing Date, the Company shall have
furnished to the Underwriter a Secretary’s Certificate of the
Company.
(m) The Nasdaq Global
Market. The Nasdaq Global Market shall not have raised any
objections to the listing or authorization for listing and trading of the Shares
as of the Closing Date, subject only to official notice of
issuance.
(n) No FINRA
Objection. FINRA shall not have raised any unresolved
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements relating to the issuance and sale of the
Shares.
(o) Lock-Up
Agreements. The Underwriter shall have received copies of the
executed Lock-Up Agreements executed by each person listed on Exhibit B hereto, and
such Lock-Up Agreements shall be in full force and effect on the Closing
Date.
(p) Abbreviated Registration
Statements. If the Company has elected to rely upon Rule
462(b), any registration statement filed under Rule 462(b) shall have become
effective in compliance with Rule 462(b).
(q) Additional
Documents. Prior to the Closing Dates, the Company shall have
furnished or caused to be furnished to the Underwriter such further information,
certificates or documents as the Underwriter shall have reasonably
requested.
6. Indemnification and
Contribution.
(a) The
Company will indemnify and hold harmless the Underwriter, the partners, members,
directors, officers, employees, agents and affiliates of the Underwriter and
each person, if any, who controls the Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, liabilities, expenses and damages (including any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them may become subject under the
Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, any Preliminary Prospectus, the Base Prospectus, the
Prospectus or any amendment or supplement thereto, or the omission or alleged
omission to state in such document a material fact required to be stated in it
or necessary to make the statements in it not misleading in the light of the
circumstances in which they were made, or arise out of or are based in whole or
in part on any inaccuracy in the representation and warranties of the Company
contained herein or any failure of the Company to perform its obligation
hereunder or under law in connection with the transactions contemplated hereby;
provided, however, that the Company
will not be liable to the extent that such loss, claim, liability, expense or
damage arises from the sale of the Shares in the public offering to any person
by the Underwriter or any selling or other agent of the Underwriter and is based
on the untrue statement or omission or alleged untrue statement or omission made
in reliance on and in conformity with information relating to the Underwriter
furnished in writing to the Company by the Underwriter, expressly for inclusion
in the Registration Statement, any Preliminary Prospectus, the Base Prospectus
or the Prospectus, or any amendment or supplement thereto. The
Company acknowledges that the statements set forth in the third and ninth
paragraphs under the caption “Underwriting” in the Preliminary Prospectus and
the Prospectus (the “Underwriter Information”)
constitutes the only information relating to the Underwriter furnished in
writing to the Company by the Underwriter expressly for inclusion in the
Registration Statement, any Preliminary Prospectus, the Base Prospectus, the
Prospectus, or any amendment or supplement thereto. This indemnity
agreement will be in addition to any liability that the Company might otherwise
have.
-16-
(b) The
Underwriter will indemnify and hold harmless the Company, each director of the
Company, each officer of the Company who signs the Registration Statement, and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, to the same extent as
the foregoing indemnity from the Company to the Underwriter, as set forth in
Section 6(a),
but only insofar as losses, claims, liabilities, expenses or damages arise out
of or are based on any untrue statement or omission or alleged untrue statement
or omission made in reliance on and in conformity with information relating to
the Underwriter furnished in writing to the Company by the Underwriter expressly
for inclusion in the Registration Statement, any Preliminary Prospectus, the
Base Prospectus, the Prospectus, or any amendment or supplement
thereto. The Company acknowledges that the Underwriter Information
constitutes the only information relating to the Underwriter furnished in
writing to the Company by the Underwriter expressly for inclusion in the
Registration Statement, any Preliminary Prospectus, the Base Prospectus, the
Prospectus, or any amendment or supplement thereto. This indemnity
will be in addition to any liability that the Underwriter might otherwise
have.
(c) Any
party that proposes to assert the right to be indemnified under this Section 6 shall,
promptly after receipt of notice of commencement of any action against such
party in respect of which a claim is to be made against an indemnifying party or
parties under this Section 6, notify
each such indemnifying party in writing of the commencement of such action,
enclosing with such notice a copy of all papers served, but the omission so to
notify such indemnifying party will not relieve it from any liability that it
may have to any indemnified party under the foregoing provisions of this Section 6 unless, and
only to the extent that, such omission results in the loss of substantive rights
or defenses by the indemnifying party. If any such action is brought
against any indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in and, to
the extent that it elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action from the
indemnified party, jointly with any other indemnifying
party similarly notified, to assume the defense of the action, with counsel
reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation incurred by the indemnified party in
connection with the defense. The indemnified party will have the
right to employ its own counsel in any such action, but the fees, expenses and
other charges of such counsel will be at the expense of such indemnified party
unless (i) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (ii) the indemnified party has
reasonably concluded (based on advice of counsel) that there may be legal
defenses available to it or other indemnified parties that are different from or
in addition to those available to the indemnifying party, (iii) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party, or (iv) the indemnifying party has not in
fact employed counsel reasonably satisfactory to the indemnified party to assume
the defense of such action within a reasonable time after receiving notice of
the commencement of the action, in each of which case the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying
party or parties shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be
reimbursed by the indemnifying party promptly as they are
incurred. No indemnifying party shall, without the prior written
consent of the indemnified party (which consent will not be unreasonably
withheld or delayed), effect any settlement of any pending or threatened action
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement (i) includes an unconditional release of such indemnified party
from all liability on any claims that are the subject matter of such action and
(ii) does not include a statement as to, or an admission of, fault, culpability
or a failure to act by or on behalf of an indemnified party. An
indemnifying party will not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be unreasonably
withheld or delayed).
-17-
(d) If
the indemnification provided for in this Section 6 is
applicable in accordance with its terms but for any reason is held to be
unavailable to or insufficient to hold harmless an indemnified party under
paragraphs (a), (b) and (c) of this Section 6 in respect
of any losses, claims, liabilities, expenses and damages referred to therein,
then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted, but after deducting any contribution received by the Company
from persons other than the Underwriter, such as persons who control the Company
within the meaning of the Securities Act, officers of the Company who signed the
Registration Statement and directors of the Company, who also may be liable for
contribution) by such indemnified party as a result of such losses, claims,
liabilities, expenses and damages in such proportion as shall be appropriate to
reflect the relative benefits received by the Company, on the one hand, and the
Underwriter, on the other hand. The relative benefits received by the
Company, on the one hand, and the Underwriter, on the other hand, shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total
underwriting discount received by the Underwriter, in each case as set forth in
the table on the cover page of the Prospectus. If, but only if, the
allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one hand,
and the Underwriter, on the other hand, with respect to the statements or
omissions that resulted in such loss, claim, liability, expense or damage, or
action in respect thereof, as well as any other relevant equitable
considerations with respect to such offering. Such relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriter, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Company and the Underwriter agree that it would not be just and equitable if
contributions pursuant to this Section 6(d) were to
be determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, liability, expense or damage, or action in respect
thereof, referred to above in this Section 6(d) shall be
deemed to include, for purposes of this Section 6(d),
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 6(d), the
Underwriter shall not be required to contribute any amount in excess of the
underwriting discount received by it and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 6(d),
any person who controls a party to this Agreement within the meaning of the
Securities Act will have the same rights to contribution as that party, and each
officer of the Company who signed the Registration Statement will have the same
rights to contribution as the Company, subject in each case to the provisions
hereof. Any party entitled to contribution, promptly after receipt of
notice of commencement of any action against any such party in respect of which
a claim for contribution may be made under this Section 6(d),
will notify any such party or parties from whom contribution may be sought, but
the omission so to notify will not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have under
this Section 6(d). No
party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be unreasonably
withheld).
-18-
(e) The indemnity and contribution
agreements contained in this Section 6 and the representations and warranties
of the Company contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any investigation made by or on behalf of the
Underwriter, and (ii) acceptance of any of the Shares and payment therefor,
or (iii) any termination of this Agreement.
(f) Notwithstanding
anything to the contrary contained in this Agreement, any
losses, claims, liabilities, expenses and damages for which an indemnified party
is entitled to indemnification, reimbursement or interim payment or contribution
under this Agreement shall be
subject to the requirements of the Investment Company Act Release No. 11330
under and Section 17(i) of the Investment Company Act and, subject thereto,
shall be paid by the indemnifying party to the indemnified party as such losses,
claims, liabilities, expenses and damages are incurred.
(g) Reimbursement of Certain
Expenses. In addition to its other obligations under Section 6(a) of this
Agreement, the Company hereby agrees to reimburse the Underwriter on a quarterly
basis for all reasonable legal and other expenses incurred in connection with
investigating or defending any claim, action, investigation, inquiry or other
proceeding arising out of or based upon, in whole or in part, any statement or
omission or alleged statement or omission, or any inaccuracy in the
representations and warranties of the Company contained herein or failure of the
Company to perform its or their respective obligations hereunder or under law,
all as described in Section 6(a),
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the obligations under this Section 6(g) and the
possibility that such payment might later be held to be improper; provided, however, that, to
the extent any such payment is ultimately held to be improper, the persons
receiving such payments shall promptly refund them.
7. Termination. The
obligations of the Underwriter under this Agreement may be terminated at any
time on or prior to the Closing Date (or, with respect to the Additional Shares,
on or prior to the Option Closing Date), by notice to the Company from the
Underwriter, without liability on the part of the Underwriter to the Company,
if, prior to delivery and payment for the Firm Shares or Additional Shares, as
the case may be, in the sole judgment of the Underwriter, (i) trading in
any of the equity securities of the Company shall have been suspended or limited
by the Commission or by the NASDAQ Stock Market, (ii) trading in securities
generally on the NASDAQ Stock Market shall have been suspended or limited or
minimum or maximum prices shall have been generally established on such
exchange, or additional material governmental restrictions, not in force on the
date of this Agreement, shall have been imposed upon trading in securities
generally by such exchange, by order of the Commission or any court or other
governmental authority or the NASDAQ Stock Market, (iii) a general banking
moratorium shall have been declared by either federal or New York State
authorities or any material disruption of the securities settlement or clearance
services in the United States shall have occurred, or (iv) any material
adverse change in the financial or securities markets in the United States or in
political, financial or economic conditions in the United States, any outbreak
or material escalation of hostilities involving the United States, a declaration
of a national emergency or war by the United States, or other calamity or
crisis, either within or outside the United States, shall have occurred, the
effect of which is such as to make it, in the sole judgment of the
Underwriter, impracticable or
inadvisable to proceed with completion of the public offering or the delivery of
and payment for the Shares. Any such termination shall
be without liability of any party to any other party except that the provisions
of Sections 4,
6, 7, 11 and 15 hereof shall at
all times be effective notwithstanding such termination.
-19-
8. Reimbursement of Underwriter’s
Expenses.
Notwithstanding anything to the contrary in this Agreement, if (a) this
Agreement shall have been terminated pursuant to Section 7, (b) the
Company shall fail to tender the Shares for delivery to the Underwriter for any
reason not permitted under this Agreement, (c) the Underwriter shall decline to
purchase the Shares for any reason permitted under this Agreement or (d) the
sale of the Shares is not consummated because (i) any condition to the
obligations of the Underwriter set forth herein is not satisfied or (ii) of the
refusal, inability or failure on the part of the Company to perform any
agreement herein or to satisfy any condition or to comply with the provisions
hereof, then in addition to the payment of amounts in accordance with clauses
(iii) and (v) of Section 4, the
Company shall reimburse the Underwriter for the documented and reasonable fees
and expenses of the Underwriter’s counsel and for such other reasonable
out-of-pocket expenses as shall have been reasonably incurred by them in
connection with this Agreement and the proposed purchase of the Shares, and upon
demand the Company shall pay the full amount thereof to the Underwriter; provided, however, that, unless this
Agreement has been terminated pursuant to Sections 8(b) or
8(d)(ii), the Company shall not be obligated to reimburse the Underwriter
pursuant to this Section 8 in an
amount in excess of (x) $30,000 in the aggregate for the reasonable accountable
out of pocket expenses of the Underwriter (other than the reasonable fees,
disbursements and other charges of one counsel to the Underwriter) and (ii)
$125,000 in the aggregate for the reasonable fees, disbursements and other
charges of one counsel to the Underwriter.
9. Notices. All
statements, requests, notices and agreements hereunder shall be in writing or by
facsimile, and:
(a) if
to the Underwriter, shall be delivered or sent by mail or facsimile transmission
to:
▇▇▇▇▇▇▇
& Company, LLC
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile
No.: ▇▇▇-▇▇▇-▇▇▇▇
with a
copy (which shall not constitute notice) to:
Proskauer
Rose LLP
▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Facsimile
No.: ▇▇▇-▇▇▇-▇▇▇▇
-20-
|
|
(b)
|
if
to the Company shall be delivered or sent by mail or facsimile
transmission to:
|
▇▇▇▇▇▇
& ▇▇▇▇▇▇ Group, Inc.
▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
General Counsel
Facsimile
No.: ▇▇▇-▇▇▇-▇▇▇▇
with a
copy (which shall not constitute notice) to:
Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, Esq.
Facsimile
No.: ▇▇▇-▇▇▇-▇▇▇▇
Any such
statements, requests, notices or agreements shall be effective only upon
receipt. Any party to this Agreement may change such address for such
statements, requests, notices or agreements by sending to the parties to this
Agreement written notice of a new address for such purpose.
10. Persons Entitled to Benefit of
Agreement. This Agreement has been and is made for the benefit
of the Underwriter, the Company and their respective successors and assigns and,
to the extent expressed herein, for the benefit of persons controlling the
Underwriter or the Company, and the directors and officers of the Company and
the Underwriter, and their respective successors and assigns, and no other
person shall acquire or have any right under or by virtue of this
Agreement.
11. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
12. No Fiduciary
Relationship.
Notwithstanding any preexisting relationship, advisory or otherwise, between the
parties or any oral representations or assurances previously or subsequently
made by the Underwriter, the Company acknowledges and agrees that (i) the
purchase and sale of the Shares pursuant to this Agreement (including the
determination of the terms of the offering of the Shares) is an arm’s-length
commercial transaction between the Company and the Underwriter, (ii) in
connection therewith and with the process leading to such transaction, the
Underwriter is acting solely as a principal and not the agent or fiduciary of
the Company, (iii) the Underwriter has not assumed an advisory or fiduciary
responsibility in favor of the Company with respect to the offering contemplated
hereby or the process leading thereto (irrespective of whether the Underwriter
has advised or is currently advising the Company on other matters) or any other
obligation to the Company except the obligations expressly set forth in this
Agreement, (iv) the Underwriter and its affiliates may be engaged in a
broad range of transactions that involve interests that differ from those of the
Company and have no obligation to disclose or account to the Company for any of
such differing interests, and (v) the Company has consulted its own legal,
tax, accounting and financial advisors to the extent it deemed
appropriate. The Company hereby agrees that it will not claim that
the Underwriter has rendered advisory services of any nature or respect, or owes
a fiduciary or similar duty to the Company in connection with such transaction
or the process leading thereto.
13. Headings. The
section headings in this Agreement have been inserted as a matter of convenience
of reference and are not a part of this Agreement.
-21-
14. Amendments and
Waivers. No supplement, modification or waiver of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby. The failure of a party to exercise any right or remedy shall not
be deemed or constitute a waiver of such right or remedy in the future. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (regardless of whether
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
15. Submission to
Jurisdiction. Except as set forth below, no proceeding may be
commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and the Company and the
Underwriter each hereby consents to the jurisdiction of such courts and personal
service with respect thereto.
16. Counterparts. This
Agreement may be executed in one or more counterparts and, if executed in more
than one counterpart, the executed counterparts shall each be deemed to be an
original and all such counterparts shall together constitute one and the same
instrument. Delivery of an executed counterpart by facsimile shall be
effective as delivery of a manually executed counterpart thereof.
17. Entire Agreement. This
Agreement constitutes the entire agreement of the parties to this Agreement and
supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter
hereof.
18. Partial Unenforceability. The
invalidity or unenforceability of any section, paragraph, clause or provision of
this Agreement shall not affect the validity or enforceability of any other
section, paragraph, clause or provision hereof.
-22-
If the
foregoing is in accordance with your understanding of the agreement between the
Company and the Underwriter, kindly indicate your acceptance in the space
provided for that purpose below.
|
Very
truly yours,
|
|||
| ▇▇▇▇▇▇ & ▇▇▇▇▇▇ GROUP, INC. | |||
|
By:
|
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||
| Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
| Title: Chief Executive Officer | |||
Accepted
as of
the date
first above written:
|
▇▇▇▇▇▇▇
& COMPANY, LLC
|
||
|
By:
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇ | ||
| Title: Managing Director | ||