2,545,000 Shares HARRIS & HARRIS GROUP, INC. Common Stock PLACEMENT AGENCY AGREEMENT
EXECUTION
COPY
2,545,000
Shares
▇▇▇▇▇▇
& ▇▇▇▇▇▇ GROUP, INC.
Common
Stock
June
16,
2008
ThinkPanmure,
LLC
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
▇▇▇▇▇▇
& ▇▇▇▇▇▇ Group, Inc., a New York corporation (the “Company”),
proposes, subject to the terms and conditions stated herein, to
issue
and sell
to
certain investors (each an “Investor”
and,
collectively, the “Investors”),
up to
2,545,000 shares (the “Shares”)
of the
Company’s common stock, $0.01 par value per share (the “Common
Stock”).
The
Company desires to engage ThinkPanmure, LLC as its exclusive placement agent
(the “Placement
Agent”)
in
connection with such issuance and sale. The Shares are more fully described
in
the Registration Statement (as
hereinafter defined).
1. Agreement
to Act as Placement Agent; 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
Company hereby engages the Placement Agent to act as its exclusive placement
agent in connection with the issuance and sale, by the Company, of Shares to
the
Investors and the Placement Agent hereby agrees, as an agent of the Company,
to
use its best efforts to solicit offers to purchase the Shares from the Company
upon the terms and conditions set forth in the Prospectus (as defined below).
The Company expressly acknowledges and agrees that this Agreement shall not
give
rise to a commitment by the Placement Agent or any of its affiliates to
underwrite or purchase any of the Shares or otherwise provide any financing,
and
the Placement Agent shall have no authority to bind (and agrees not to purport
to bind) the Company in respect of the sale of any Shares.
(b) Concurrently
with the execution and delivery of this Agreement, the Company, the Placement
Agent and JPMorgan Chase, as escrow agent (the “Escrow
Agent”),
shall
enter into an escrow agreement, dated as of the date hereof (the “Escrow
Agreement”),
pursuant to which an escrow account will be established, at the Company's
expense, for the benefit of the Company and the Investors (the
“Escrow
Account”).
Prior to the Closing Date, (i) each Investor will deposit in the Escrow Account
an amount equal to $6.15 per Share multiplied by the number of Shares to be
purchased by such Investor (the “Purchase
Amount”),
and (ii) the Escrow Agent will notify the Company and the Placement Agent in
writing of the amount of funds deposited in the Escrow Account.
(c) Upon
the
occurrence of the Closing (as hereinafter defined), the Company shall cause
to
be paid to the Placement Agent, by wire transfer of immediately available funds
payable to the order of the Placement Agent from the Escrow Account, to an
account designated by the Placement Agent, an aggregate of six percent (6.0%)
of
the gross proceeds received by the Company from its sale of the Shares at such
Closing to all Investors (the “Agency
Fee”).
(d) Payment
of the purchase price for, and delivery of, the 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 June 20, 2008 or at such other time and date as the
Investor and the Company determine pursuant to Rule 15c6-1(a) under 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 and the
Subscription Agreements (as defined below), the Company shall deliver the
Shares, which shall be registered in the name or names and shall be in such
denominations as the Placement Agent may request at least one business day
before the Closing Date, to the Investors, which delivery, with respect to
the
Shares, may be made through the facilities of the Depository Trust Company's
DWAC system, and the Escrow Agent will disburse the aggregate funds in the
Escrow Account to the Company reduced by an amount equal to the sum of the
aggregate Agency Fee payable to the Placement Agent and the Placement Agent’s
bona fide written estimate of the amount, if any, of expenses for which the
Placement Agent is entitled to reimbursement pursuant hereto, with such amounts
being delivered to the Placement Agent, by wire in federal (same day) funds,
as
provided in the Escrow Agreement.
All such
actions taken at the Closing shall be deemed to have occurred simultaneously.
Each
of the Company and the Placement Agent hereby agree to deliver to the Escrow
Agent a Closing Notice in the form attached as Exhibit C to the Escrow
Agreement at least one day prior to the Closing Date. At least one day
prior to the Closing Date, the Placement Agent shall submit to the Company
its
bona fide written estimate of the amount, if any, of expenses for which such
Placement Agent is entitled to reimbursement pursuant hereto.
(e) The
sale
of the Shares shall be made pursuant to subscription agreements in the form
included as Exhibit
A
hereto
(the “Subscription
Agreements”).
The
Company shall have the sole right to accept offers to purchase the Shares and
may reject any such offer in whole or in part, and, except as set forth in
Section 4 hereof, in no event shall fees be payable on any proposed purchase
which is rejected for any reason or which otherwise does not close for any
reason.
(f) Prior
to
the earlier of (i) the date on which this Agreement is terminated and (ii)
the
Closing Date, the Company shall not, without the prior written consent of the
Placement Agent, solicit or accept offers to purchase Shares of the Company
(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 Placement Agent in accordance herewith.
2. Representations
and Warranties of the Company.
The
Company represents and warrants to the Placement Agent as of the date hereof,
and as of the Closing Date, 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 a
registration statement (Registration No. 333-138996) on Form N-2 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 (collectively referred to as the "Rules
and Regulations")
of the
Securities and Exchange Commission (the "Commission")
thereunder, 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.
(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.
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(ii) The
term
"Base
Prospectus"
as used
in this Agreement means the base prospectus, dated as of May 29, 2008, 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. 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.
(iv)
The
term
"Pricing
Information"
as used
in this Agreement, means the information included on Schedule
I
hereto
(which information the Placement
Agent
has
informed the Company is being conveyed orally by the Placement
Agent
to
prospective purchasers at or prior to confirming sales of the shares in the
offering).
(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 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 complied
when it became effective, 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 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 the Closing Date, 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 warranty with respect to any Placement Agent
Information (as defined in Section
7).
(c) 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.
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(d) Capitalization.
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, 23,314,573 shares of Common Stock are issued and outstanding
and no shares of Preferred Stock are issued and outstanding.
(e) 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 and the
Subscription Agreements, will have been duly and validly issued and will be
fully paid and nonassessable.
(f) Description
of Capital Stock.
The
terms of the capital stock of the Company, including the Shares, conforms in
all
material respects to the description thereof contained in the Registration
Statement, the Disclosure Package and the Prospectus.
(g) Authorization
and Execution.
This
Agreement and each Subscription Agreement has been duly authorized, executed
and
delivered by the Company.
(h) 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 security interest,
other encumbrance or adverse claims.
(i) 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
business, properties, prospects, financial condition or results of operations
of
the Company (a "Material
Adverse Effect").
(j) No
Conflicts.
The
execution, delivery and performance by the Company of this Agreement, each
Subscription Agreement and the Escrow 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 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.
-4-
(k) No
Consents Required.
No
filing with, or authorization, approval, consent or order of, any court or
governmental agency or body is required for 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
Securities Exchange Act of 1934, as amended (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.
(l) 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.
(m) 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, (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 (v) any dividend or distribution declared, paid or made on the
capital stock of the Company.
(n) Legal
Proceedings.
Except
as described in the
Disclosure Package
and the
Prospectus, there are no legal 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 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.
(o) 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.
-5-
(p) Intellectual
Property Rights.
Except
as set forth on Schedule
2(p)
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.
(q) 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
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.
(r) Independent
Accountants.
To the
Company’s knowledge, PricewaterhouseCoopers LLP, who have certified the
consolidated financial statements 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.
(s) Taxes.
The
Company has timely filed all material federal and state income and franchise
tax
returns (or timely filed applicable extensions therefore) 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.
(t) 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.
(u) 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.
(v) Disclosure
Controls.
The
Company has established, maintains and evaluates "disclosure controls and
procedures" (as such term is defined in Rule 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 Rule 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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(w) ▇▇▇▇▇▇▇▇-▇▇▇▇▇
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.
(x) 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.
(y) 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 the Closing Date. 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.
(z) 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 Placement Agent for a brokerage commission, finder’s fee or
other like payment in connection with the offering and sale of the
Shares.
(aa) No
Stabilization.
Neither
the Company, nor, to the Company's knowledge, any of its 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.
-7-
(bb) 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.
(cc) No
Labor Disputes.
The
Company is not involved in any labor dispute nor, to the knowledge of the
Company, is any such dispute threatened, which dispute would have a Material
Adverse Effect.
(dd) 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.
(ee) 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.
3. Covenants. The
Company covenants and agrees with the Placement Agent 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 Placement Agent.
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 Placement Agent 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.
-8-
(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 Placement Agent, 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 an Investor, 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
its own expense, to the Placement Agent, 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 an Investor, be misleading or so that the Prospectus, as amended
or
supplemented, will comply with law.
(d) Delivery
of Copies.
The
Company will deliver promptly to the Placement Agent and its counsel such number
of the following documents as the Placement Agent 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.
(e) Blue
Sky Laws.
The
Company will promptly take or cause to be taken, from time to time, such actions
as the Placement Agent may reasonably request to qualify the Shares for offering
and sale under the state securities, or blue sky, laws of such states as the
Placement Agent may reasonably request and to maintain such qualifications
in
effect so long as the Placement Agent 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 Placement Agent
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.
(f) 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”.
(g) Lock-Up
Period.
Beginning on the date hereof and continuing for
a period
of 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, any securities convertible into
or
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 Placement Agent (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 or restricted stock awards 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(g);
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. 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 Placement Agent to comply with FINRA
Rule 2711(f)(4), if (1) during the last 17 days of the Lock-Up Period, the
Company releases earnings 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 earnings 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 the earnings results or the
public announcement regarding the material news or the occurrence of the
material event, as applicable, unless the Placement Agent waives, in writing,
such extension. Without the prior written consent of the Placement Agent, 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.
-9-
(h) Lock-Up
Agreements.
The
Company will cause each of its executive officers and directors whose names
are
set forth on Exhibit
C
hereto
to furnish to the Placement Agent, on the date hereof, a letter, substantially
in the form of Exhibit
B
hereto
(the “Lock-Up
Agreement”).
(i) Public
Communications.
Prior
to the earlier of the termination of this Agreement or the Closing Date, 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
Placement Agent, unless in the reasonable judgment of the Company and its
counsel, and after notification to the Placement Agent, 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 Placement Agent reasonable
time to comment on such release or other communication in advance of such
issuance.
(j) 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.
-10-
(k) 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.
(l) 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.
(m) 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 Placement Agent 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
Placement Agent 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(e),
(including the reasonable legal fees and filing fees, and other disbursements
of
counsel to the Placement Agent in connection therewith), and, if reasonably
requested by the Placement Agent, the preparation and printing and furnishing
of
copies of any blue sky surveys to the Placement Agent 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 Placement Agent or the Company with FINRA,
and the reasonable fees, disbursements and other charges of counsel for the
Placement Agent 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(i)
of this
Agreement, (ix) fees of the Escrow Agent, (x) the reasonable out-of-pocket
expenses of the Placement Agent (including the reasonable fees, disbursements
and other charges of one counsel to the Placement Agent (in addition to (iii)
and (v) above) in connection with the performance of services hereunder, and
(xi) the
costs and expenses of the Company in connection with the marketing of the
offering and the sale of the Shares
to prospective investors 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, in no event shall the Company be obligated to
reimburse the Placement Agent pursuant to this Section
4
in an
amount in excess of $75,000 in the aggregate (less the reasonable and documented
fees, disbursements and other charges of counsel to the Company incurred in
connection with such counsel's representation with respect to the matter
described under the caption “Risk Factors—We may have a contingent liability
arising out of a possible violation of Section 5 of the Securities Act of 1933
in connection with the distribution of a management presentation to prospective
purchasers of our common stock” in the Preliminary Prospectus and the
Prospectus) without the Company’s prior written consent.
-11-
5. Conditions
of Placement Agent’s Obligations.
The
obligations of the Placement Agent 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 the Closing: (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 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
Placement Agent.
(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 the Closing Date, 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 the Closing
Date which would prevent the issuance or sale of the Shares.
(d) Objection
of Placement Agent.
No
Prospectus or amendment or supplement to the Registration Statement shall have
been filed to which the Placement Agent shall have objected in writing, which
objection shall not be unreasonable. The Placement Agent 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) No
Material Adverse Change.
Prior
to the Closing, there shall not have occurred any change, or any development
involving a prospective change, in the business, properties, financial
condition, results of operations or prospects of the Company, taken as a whole,
from that set forth in the
Disclosure Package and the Prospectus
that, in the Placement Agent’s judgment, is material and adverse and that makes
it, in the Placement Agent’s judgment, impracticable to market the Shares on the
terms and in the manner contemplated in the Disclosure Package and the
Prospectus.
(f) 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 the Closing Date, 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 the Closing Date
shall have been duly performed, fulfilled or complied with in all material
respects.
-12-
(g) Opinion
of Counsel to the Company.
The
Placement Agent shall have received from Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP, counsel to the Company, such counsel’s written opinion, addressed to
the Placement Agent and dated the Closing Date, to the effect set forth in
Exhibit
D
hereto.
Such
counsel shall also have furnished to the Placement Agent a letter, addressed
to
the Placement Agent and dated the Closing Date, to the effect set forth in
Exhibit
E
hereto.
(h) Opinion
of Counsel to the Placement Agent.
The
Placement Agent shall have received from ▇▇▇▇▇▇▇ Procter LLP, counsel to the
Placement Agent, such opinion or opinions (including negative assurance), dated
the Closing Date and addressed to the Placement Agent, covering
such matters as are customarily covered in transactions of this type.
(i) Accountant’s
Comfort Letter and Bring-Down Letter.
The
Company shall have requested and caused PricewaterhouseCoopers LLP to have
furnished to the Placement Agent, 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 Placement Agent 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, 2007 and through
a
specified date, as set forth in the minute books through a specified date not
more than (i) five business days (with respect to the letter to be delivered
at
the Time of Sale) and (ii) two 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 March 31, 2008 and
unaudited consolidated statements of operations, of cash flows and unaudited
financial highlights for the three month periods ended March 31, 2008 and 2007,
and of changes in net assets for the three months ended March 31, 2008 included
in the Registration Statement; and
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:
-13-
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 business days (with respect to the letter to be delivered
at
the Time of Sale) and (ii) two 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 March 31, 2008 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 is in agreement with such records or computations made
therefrom.
(j) Officer’s
Certificate.
The
Placement Agent shall have received on the Closing Date a certificate, addressed
to the Placement Agent 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 the Closing Date; 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;
(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
-14-
(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.
(k) Secretary’s
Certificate.
On the
Closing Date, the Company shall have furnished to the Placement Agent a
Secretary’s Certificate of the Company.
(l) The
Nasdaq Global Market.
The
Nasdaq Global Market shall not have raised any objections to the listing or
authorization for trading of the Shares as of the Closing Date.
(m) No
FINRA Objection.
FINRA
shall not have raised any unresolved objection with respect to the fairness
and
reasonableness of the placement agency terms and arrangements relating to the
issuance and sale of the Shares.
(n) Lock-Up
Agreements.
The
Placement Agent shall have received copies of the executed Lock-Up Agreements
executed by each person listed on Exhibit
C
hereto,
and such Lock-Up Agreements shall be in full force and effect on the Closing
Date.
(o) 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).
(p) Subscription
Agreements.
The
Company shall have entered into the Subscription Agreements with each of the
Investors, and such agreements shall be in full force and effect on the Closing
Date.
(q) Escrow
Agreement.
The
Company shall have entered into the Escrow Agreement, and such agreement shall
be in full force and effect on the Closing Date.
(r) Additional
Documents.
Prior
to the Closing Date, the Company shall have furnished or caused to be furnished
to the Placement Agent such further information, certificates or documents
as
the Placement Agent shall have reasonably requested.
6. Indemnification
and Contribution.
(a) Indemnification
of the Placement Agent.
The
Company agrees to indemnify, defend and hold harmless the Placement Agent,
its
directors and officers, and each person, if any, who controls the Placement
Agent within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and the successors and assigns of all of
the foregoing persons, from and against any loss, damage, claim or liability,
to
which, jointly or severally, the Placement Agent or any such person may become
subject under the Securities Act, the Exchange Act, or other federal or state
statutory law or regulation, the common law or otherwise, (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such loss, damage, claim or liability (or
actions in respect thereof as contemplated below) arises out of or is based
upon: (i)
any
untrue statement or alleged untrue statement of a material fact contained in
the
Registration Statement, or any amendments thereto or the omission or alleged
omission to state a material fact required to be stated therein or necessary
to
make the statements therein not misleading; or (ii)
any
untrue statement or alleged untrue statement of a material fact contained in
the
Base Prospectus, any Preliminary Prospectus or the Prospectus, or in
any
materials or information provided to investors by, or with the approval of,
the
Company in connection with the marketing of the offering of the Common Stock
(“Marketing
Materials”),
including any roadshow or investor presentations made to investors by the
Company (whether in person or electronically) or
the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein, in light of
the
circumstances under which they were made, not misleading; and, in the case
of
(i) and (ii) above, to reimburse the Placement Agent and each such controlling
person for any and all reasonable expenses (including reasonable fees and
disbursements of counsel) as such expenses are incurred by the Placement Agent
or such controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; provided,
however,
that
the foregoing indemnity shall not apply to any loss, claim, damage, liability
or
expense to the extent, but only to the extent, it arises out of or is based
upon
(x) any untrue statement or alleged untrue statement of a material fact
contained in or omitted from the Registration
Statement, the Base Prospectus, any Preliminary Prospectus, the Prospectus,
or
any such amendment or supplement, or in any Marketing Materials,
in
reliance upon and in conformity with information concerning the Placement Agent
furnished in writing by or on behalf of the Placement Agent to the Company
expressly for use therein, which information the parties hereto agree is limited
to the Placement Agent Information (as defined in Section
7)
or (y)
the matter described under the caption “Risk Factors—We may have a contingent
liability arising out of a possible violation of Section 5 of the Securities
Act
of 1933 in connection with the distribution of a management presentation to
prospective purchasers of our common stock” in the Preliminary Prospectus and
the Prospectus.
-15-
(b) Indemnification
of the Company.
The
Placement Agent agrees to indemnify, defend and hold harmless the Company,
its
directors and officers, and any person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act, and the successors and assigns of all of the foregoing
persons, from and against any loss, claim, damage, liability or expense, as
incurred to which, jointly or severally, the Company or any such person may
become subject under the Securities Act, the Exchange Act, or
other
federal or state statutory law or regulation, the
common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the written
consent of the Placement Agent), insofar
as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises
out of or is based upon (i)
any
untrue statement or alleged untrue statement of a material fact contained in
the
Registration Statement, or any amendments thereto, or the omission or alleged
omission to state a material fact required to be stated therein or necessary
to
make the statements therein not misleading; (ii)
any
untrue statement or alleged untrue statement of a material fact contained in
any
Preliminary Prospectus, the Disclosure Package, the Prospectus, or any amendment
or supplement thereto, or the omission or alleged omission to state therein
a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading, in the case of each of (i) and (ii) above, to the extent but only
to
the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, any Preliminary Prospectus, the Disclosure
Package, the Prospectus or any amendments or supplements thereto in reliance
upon and in conformity with information concerning the Placement Agent furnished
in writing by or on behalf of the Placement Agent to the Company expressly
for
use therein, which
information the parties hereto agree is limited to the Placement Agent
Information (as defined in Section
7)
and
shall reimburse the Company, or any such director, officer or controlling person
for any legal and other expenses reasonably incurred by the Company, or any
such
director, officer or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action.
Notwithstanding
the provisions of this Section
6(b),
in no
event shall any indemnity by the Placement Agent under this Section
6(b)
exceed
the total compensation received by such Placement Agent in accordance with
Section
1(c).
-16-
(c) Notice
and Procedures.
If
any action, suit or proceeding (each, a “Proceeding”)
is brought against a person (an “indemnified
party”)
in respect of which indemnity may be sought against the Company or the Placement
Agent (as applicable, the “indemnifying
party”)
pursuant to subsection (a) or (b), respectively, of this Section 6,
such indemnified party shall promptly notify such indemnifying party in writing
of the institution of such Proceeding and such indemnifying party shall assume
the defense of such Proceeding, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all reasonable fees and
expenses; provided,
however,
that the omission to so notify such indemnifying party shall not relieve such
indemnifying party from any liability which such indemnifying party may have
to
any indemnified party or otherwise, except to the extent the indemnifying party
does not otherwise learn of the Proceeding and such failure results in the
forfeiture by the indemnifying party of substantial rights or defenses. 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 party
in
connection with the defense of such Proceeding, (ii) the indemnifying party
shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to defend such Proceeding or (iii) such
indemnified party or parties shall have reasonably concluded that there may
be
one or more legal defenses available to it or them which are different from,
additional to or in conflict with those available to such indemnifying party
(in
which case such indemnifying party shall not have the right to direct the
defense of such Proceeding on behalf of the indemnified party or parties ),
in
any of which events such reasonable fees and expenses shall be borne by such
indemnifying party and paid as incurred (it being understood, however, that
such
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one Proceeding or
series of related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). An indemnifying party
shall not be liable for any settlement of any Proceeding effected without its
written consent but, if settled with its written consent or if there be a final
judgment for the plaintiff, such indemnifying party agrees to indemnify and
hold
harmless the indemnified party or parties from and against any loss or liability
by reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of
counsel as contemplated by the second sentence of this Section 6(c),
then the indemnifying party agrees that it shall be liable for any settlement
of
any Proceeding effected without its written consent if (i) such settlement
is entered into more than 60 days after receipt by such indemnifying party
of
the aforesaid request, (ii) such indemnifying party shall not have fully
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement and (iii) such indemnified party shall have given
the indemnifying party at least 30 days’ prior notice of its intention to
settle. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement, compromise or consent to the entry
of
judgment in any pending or threatened Proceeding 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 includes
an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding and does not include an admission
of fault or culpability or a failure to act by or on behalf of such indemnified
party. Notwithstanding anything to the contrary contained in this Section
6,
any losses, claims, damages, liabilities or expenses for which an indemnified
party is entitled to indemnification, reimbursement or interim payment or
contribution under this Section
6
shall be subject to the requirements of Release No. 11330 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, damages, liabilities or expenses are
incurred.
-17-
(d) Contribution.
If
the indemnification provided for in this Section 6
is unavailable to an indemnified party under subsections (a) or (b) of
this Section 6
or insufficient to hold an indemnified party harmless in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then
each
applicable indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as
a
result of the losses, claims, damages, liabilities or expenses referred to
in
subsection (a) or (b) above, (i) in such proportion as is appropriate
to reflect the relative benefits received by the indemnifying party or parties
on the one hand and the indemnified party or parties on the other from the
offering of the Shares
or
(ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only
the
relative benefits referred to in clause (i) above but also the relative
fault of the indemnifying party or parties on the one hand and the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Placement Agent on
the
other hand shall be deemed to be in the same respective proportions as the
total
net proceeds from the offering of the Shares (before deducting expenses)
received by the Company and the total placement agent commissions received
by
the Placement Agent, in each case as set forth on the cover of the Prospectus,
bear to the aggregate public offering price of the Shares. The relative fault
of
the Company on the one hand and the Placement Agent on the other hand 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, on the one
hand,
or by the Placement Agent, on the other hand, and the parties’ relevant intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Placement Agent agree that
it
would not be just and equitable if contribution pursuant to this
subsection (d) were to be determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in the first sentence of this Section 6(d).
The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
Section 6(d)
shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending against any
action or claim which is the subject of this Section 6(d).
Notwithstanding the provisions of this Section 6(d),
the
Placement Agent shall not be required to contribute any amount in excess of
the
total commissions received by such Placement Agent in accordance with
Section
1(c).
No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(e) Representations
and Agreements to Survive Delivery.
The
obligations of the Company under this Section 6
shall be
in addition to any liability which the Company may otherwise have.
The indemnity and contribution agreements contained in this Section 6
and the covenants, agreements, warranties and representations of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation
made
by or on behalf of the Placement Agent, any person who controls the Placement
Agent within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act or any affiliate of the Placement Agent, or
by or on behalf of the Company, its directors or officers or any person who
controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, and (iii) the issuance
and delivery of the Shares.
The Company and the Placement Agent agree promptly to notify each other of
the
commencement of any Proceeding against it and, in the case of the Company,
against any of the Company’s officers or directors in connection with the
issuance and sale of the Shares,
or in connection with the Registration Statement, the Disclosure
Package
or the
Prospectus.
7. Information
Furnished by Placement Agent.
The
Company acknowledges that the statements set forth in (i) the first sentence
of
the first paragraph under the caption “Risk Factors—We may have a contingent
liability arising out of a possible violation of Section 5 of the Securities
Act
of 1933 in connection with the distribution of a management presentation
to
prospective purchasers of our common stock,” and (ii) the eleventh and fifteenth
paragraphs under the caption “Plan of Distribution” in the Preliminary
Prospectus and the Prospectus (the “Placement
Agent Information”)
constitute the Placement Agent Information referred to in Sections
2
and
6
hereof.
-18-
8. Termination.
The
Placement Agent shall have the right to terminate this Agreement by giving
notice as hereinafter specified at any time at or prior to the Closing Date,
without liability on the part of the Placement Agent to the Company, if (i)
prior to delivery and payment for the Shares (A) trading in securities generally
shall have been suspended on or by the New York Stock Exchange, the American
Stock Exchange, the Nasdaq Global Market or in the over-the-counter market,
(each, a “Trading
Market”),
(B) trading in the Common Stock of the Company shall have been suspended on
any such exchange, in the over-the-counter market or by the Commission,
(C) a general moratorium on commercial banking activities shall have been
declared by federal or New York state authorities or a material disruption
shall
have occurred in commercial banking or securities settlement or clearance
services in the United States, (D) there shall have occurred any outbreak
or material escalation of hostilities or acts of terrorism involving the United
States or there shall have been a declaration by the United States of a national
emergency or war, (E) there shall have occurred any other calamity or crisis
or
any material change in general economic, political or financial conditions
in
the United States or elsewhere, if the effect of any such event specified in
clause (D) or (E), in the judgment of the Placement Agent, is material and
adverse and makes it impractical or inadvisable to proceed with the completion
of the sale of and payment for the Shares on the Closing Date on the terms
and
in the manner contemplated by this Agreement, the Disclosure Package and the
Prospectus,
(ii)
since the time of execution of this Agreement or the earlier respective dates
as
of which information is given in the Disclosure Package, there has been any
Material
Adverse Effect or the
Company shall have sustained a loss or interference with its business by strike,
fire, flood, earthquake, accident or other calamity, whether or not covered
by
insurance, of such character that in the judgment of the Placement Agent would,
individually or in the aggregate, result in a Material Adverse
Effect
and which would, in the judgment of the Placement Agent, make it impracticable
or inadvisable to proceed with the offering or the delivery of the Shares
on the terms and in the manner contemplated in the Disclosure Package, (iii)
the
Company shall have failed, refused or been unable
to
comply with the terms or perform any agreement or obligation of this Agreement
or any Subscription Agreement, other than by reason of a default by the
Placement Agent, or (iv)
any condition of the Placement Agent’s obligations hereunder is not fulfilled or
waived.
Any such
termination shall be without liability of any party to any other party except
that the provisions of Section 4,
Section 6,
and
Section
11
hereof
shall at all times be effective notwithstanding such termination.
9. Notices.
All
statements, requests, notices and agreements hereunder shall be in writing
or by
facsimile, and:
(a) if
to the
Placement Agent, shall be delivered or sent by mail or facsimile transmission
to
:
ThinkPanmure,
LLC
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile
No.: ▇▇▇-▇▇▇-▇▇▇▇
-19-
with
a
copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇
Procter LLP
The
New
York Times Building
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile
No.: ▇▇▇-▇▇▇-▇▇▇▇
|
(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 Placement Agent, the
Company and their respective successors and assigns and, to the extent expressed
herein, for the benefit of persons controlling the Placement Agent or the
Company, and the directors and officers of the Company and the Placement Agent,
and their respective successors and assigns, and no other person shall acquire
or have any right under or by virtue of this Agreement. The term “successors and
assigns” shall not include any Investor merely because of such
purchase.
11. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York, without giving effect to the conflicts of laws provisions
thereof.
12. No
Fiduciary Relationship.
The Company hereby acknowledges and agrees that the Placement Agent is acting
solely as a placement agent in connection with the offering of the Shares.
The
Company further acknowledges that the Placement Agent is acting pursuant to
a
contractual relationship created solely by this Agreement entered into on an
arm’s-length basis and in no event do the parties intend that the Placement
Agent act or be responsible as a fiduciary to the Company, its management,
stockholders, creditors or any other person in connection with any activity
that
the Placement Agent may undertake or has undertaken in furtherance of the
offering of the Shares, either before or after the date hereof. The Placement
Agent hereby expressly disclaims any fiduciary or similar obligations to the
Company, either in connection with the transactions contemplated by this
Agreement or any matters leading up to such transactions, and the Company hereby
confirms its understanding and agreement to that effect. The price of the
Shares
set forth in this Agreement was established by the Company following discussions
and arm’s-length negotiations with the Investors and the Placement Agent, and
the Company is capable of evaluating and understanding, and understands and
accepts, the terms, risks and conditions of the transactions contemplated by
this Agreement. The Company has been advised that the Placement Agent and its
affiliates are engaged in a broad range of transactions which may involve
interests that differ from those of the Company and that the Placement Agent
has
no obligation to disclose such interests and transactions to the Company by
virtue of any fiduciary, advisory or agency relationship. The Company and the
Placement Agent agree that they are each responsible for making their own
independent judgments with respect to any such transactions. The Company hereby
waives and releases, to the fullest extent permitted by law, any claims that
the
Company may have against the Placement Agent with respect to any breach or
alleged breach of any fiduciary or similar duty to the Company in connection
with the transactions contemplated by this Agreement or any matters leading
up
to such transactions and agrees that the Placement Agent shall have no liability
(whether direct or indirect) to the Company in respect of such a fiduciary
duty
claim to any person asserting a fiduciary duty claim on behalf of the
Company.
-20-
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.
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 Placement Agent 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. Research
Analyst Independence.
The Company acknowledges that the Placement Agent’s research analysts and
research department are required to be independent from its investment banking
division and are subject to certain regulations and internal policies, and
that
such Placement Agent’s research analysts may hold views and make statements or
investment recommendations and/or publish research reports with respect to
the
Company and/or the offering that differ from the views of the Placement Agent’s
investment banking division. The Company hereby waives and releases, to the
fullest extent permitted by law, any claims that the Company may have against
the Placement Agent with respect to any conflict of interest that may arise
from
the fact that the views expressed by its independent research analysts and
research department may be different from or inconsistent with the views or
advice communicated to the Company by such Placement Agent’s investment banking
division. The Company acknowledges that the Placement Agent is a full service
securities firm and as such from time to time, subject to applicable securities
laws, rules and regulations, may effect transactions for its own account or
the
account of its customers and hold long or short positions in debt or equity
securities of the Company;
provided, however,
that nothing in this Section 17 shall relieve the Placement Agent of any
responsibility or liability that it may otherwise bear in connection with
activities in violation of applicable securities laws, rules and
regulations.
-21-
18. 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.
19. 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 Placement Agent, kindly indicate your acceptance in the space
provided for that purpose below.
Very
truly yours,
▇▇▇▇▇▇
& ▇▇▇▇▇▇ GROUP, INC.
By:_/s/▇▇▇▇▇▇▇
▇. Jamison________
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
President
Accepted
as of
the
date
first above written:
THINKPANMURE,
LLC
By: _/s/▇▇▇
Mitchell______
Name:
▇▇▇
▇▇▇▇▇▇▇▇
Title:
Partner
Schedules
and Exhibits
|
Schedule
2(p):
|
Intellectual
Property
|
|
Schedule
I:
|
Information
to be Conveyed Orally
|
|
Schedule
II:
|
Subsidiaries
|
|
Exhibit
A:
|
Form
of Subscription Agreement
|
|
Exhibit
B:
|
Form
of Lock-Up Agreement
|
|
Exhibit
C:
|
List
of Directors and Executive Officers Executing Lock-Up
Agreements
|
|
Exhibit
D:
|
Form
of Opinion of Counsel to the
Company
|
|
Exhibit
E:
|
Form
of Letter of Counsel to the Company
|
Schedule
2(p)
Intellectual
Property
"▇▇▇▇▇▇
& ▇▇▇▇▇▇ Group, Inc." is a registered service ▇▇▇▇ owned by the
Company.
Schedule
I
Information
to be Conveyed Orally
Number
of
Shares to be Issued: 2,545,000
Offering
Price Per Share: $6.15
Gross
Proceeds: $15,651,750
Aggregate
Placement Agency Fees: $939,105
Schedule
II
Subsidiaries
|
Name
|
Jurisdiction
|
Percentage
Ownership
|
|
▇▇▇▇▇▇
& ▇▇▇▇▇▇ Enterprises, Inc.*
|
Delaware
|
100%*
|
|
*
|
▇▇▇▇▇▇
& ▇▇▇▇▇▇ Enterprises, Inc. is the sole general partner of ▇▇▇▇▇▇
Partners I, L.P., the sole limited partner of which is ▇▇▇▇▇▇ & ▇▇▇▇▇▇
Group, Inc.
|
Exhibit
A
Form
of Subscription Agreement
Exhibit
B
Form
of Lock-Up Agreement
___________,
2008
ThinkPanmure,
LLC
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies
and Gentlemen:
The
undersigned understands that you, as Placement Agent, propose to enter into
the
Placement Agency Agreement (the “Placement
Agreement”)
with ▇▇▇▇▇▇ & ▇▇▇▇▇▇ Group, Inc., a New York corporation (the “Company”),
providing for the offering (the “Offering”)
of shares (the “Shares”)
of common
stock, $0.01 par value per share (the “Common
Stock”),
of the Company. Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Placement Agreement.
In
consideration of the foregoing, and in order to induce you to participate in
the
Offering, and for other good and valuable consideration receipt of which is
hereby acknowledged, the undersigned hereby agrees that, without your prior
written consent (which
consent may be withheld in your sole discretion), the undersigned will not,
during the period (the “Lock-Up
Period”)
beginning on the date hereof and ending on the date 90 days
after the date of the final prospectus (including the final prospectus
supplement) to be used in confirming the sale of the Shares, (1) offer, 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 file (or participate in the filing of) a registration statement
with the Securities and Exchange Commission in respect of, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock (including without limitation, Common Stock which may be deemed
to
be beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and securities which
may
be issued upon exercise of a stock option or warrant)
except for a registration statement on Form S-8 relating to employee benefit
plans,
(2) 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) or (2) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise, (3)
make any demand for or exercise any right with respect to, the registration
of
any shares of Common Stock or any security convertible into or exercisable
or
exchangeable for Common Stock, or (4) publicly announce an intention to effect
any transaction specific in clause (1), (2) or (3) above.
Notwithstanding
the foregoing, the restrictions set forth in clause (1) and (2) above shall
not
apply to (a) transfers (i) as a bona fide gift or gifts, provided that the
donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein, (ii) to any trust for the direct or indirect benefit of the undersigned
or the immediate family of the undersigned, provided that the trustee of the
trust agrees to be bound in writing by the restrictions set forth herein, and
provided further that any such transfer shall not involve a disposition for
value, (iii) with your prior written consent or (iv) effected pursuant to any
exchange of “underwater” options with the Company, (b) the acquisition or
exercise of any stock option issued pursuant to the Company’s existing
equity
incentive
plans, including any exercise effected by the delivery of shares of Common
Stock
of the Company held by the undersigned, (c)
the surrender of shares of Common Stock to the Company to pay required tax
withholdings due upon the vesting of any restricted stock awards, or
(d)
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. For purposes of this Lock-Up
Agreement, “immediate family” shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin. None of the restrictions set forth
in this Lock-Up Agreement shall apply to Common Stock acquired in open market
transactions.
Notwithstanding
anything herein to the contrary, nothing herein shall prevent the undersigned
from establishing a 10b5-1 trading plan that complies with Rule 10b5-1 under
the
Exchange Act, or from amending 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 (including the undersigned)
will be permitted during the Lock-Up Period, as the same may be extended
hereby.
For
the purpose of allowing you to comply with FINRA Rule 2711(f)(4), if (1) during
the last 17 days of the Lock-Up Period, the Company releases earnings 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 earnings 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 the earnings results or the public announcement regarding
the material news or the occurrence of the material event, as applicable, unless
you waive, in writing, such extension. The undersigned hereby acknowledges
that
the Company has agreed 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.
In furtherance of the foregoing, the Company, and any duly appointed transfer
agent for the registration or transfer of the securities described herein,
are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Agreement.
The
foregoing restrictions are expressly agreed to preclude the undersigned from
engaging in any hedging or other transaction which is designed to or reasonably
expected to lead to or result in a sale or disposition of the Common Stock
even
if such Common Stock would be disposed of by someone other than the undersigned.
Such prohibited hedging or other transactions would include without limitation
any short sale or any purchase, sale or grant of any right (including without
limitation any put option or put equivalent position or call option or call
equivalent position) with respect to any of the Common Stock or with respect
to
any security that includes, relates to, or derives any significant part of
its
value from such Common Stock.
The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Lock-Up Agreement. All authority herein
conferred or agreed to be conferred and any obligations of the undersigned
shall
be binding upon the successors, assigns, heirs or personal representatives
of
the undersigned.
The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company’s transfer agent and registrar against the transfer of the
undersigned’s shares of Common Stock except in compliance with the foregoing
restrictions.
The
undersigned understands that, if the Placement Agreement does not become
effective by June 30, 2008, or if the Placement Agreement (other than the
provisions thereof which survive termination) shall terminate or be terminated
prior to payment for and delivery of the Shares to be sold thereunder, the
undersigned shall be released from all obligations under this Lock-Up
Agreement.
This
Lock-Up Agreement shall be governed by and construed in accordance with the
laws
of the State of New York, without regard to the conflict of laws principles
thereof.
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Very
truly yours,
Print
Name: __________________________
Print
Title: ___________________________
Signature:
____________________________
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Exhibit
C
List
of Directors and Executive Officers
Executing
Lock-Up Agreements
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Exhibit
D
Form
of Opinion of Counsel to the Company
Exhibit
E
Form
of Letter of Counsel to the Company