Exhibit No. 10.3
Exhibit
No. 10.3
CONFIDENTIAL
March 6,
2009
▇▇. ▇▇▇▇▇
▇ ▇▇▇▇▇▇
Chairman
of the Board, President & Chief Executive Officer
Blackhawk
Capital Group BDC, Inc.
▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
New York,
NY 10005
Dear ▇▇.
▇▇▇▇▇▇,
This
letter (the "Agreement") will confirm the engagement of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Associates, Inc. ("▇▇▇▇▇▇▇▇▇▇▇") by Blackhawk Capital Group BDC, Inc., a
Delaware corporation and a business development company registered under the
Investment Company Act of 1940, as amended (the "Company"), as placement agents
in connection with the Company's Rule 506 offering under Regulation D under the
Securities Act of 1933, as amended (the "Securities Act"), of up to $25 million
in common stock ("Securities") to qualified institutional buyers ("QIBs") and
"accredited investors" (as those terms are defined under the Securities Act)
(the "Investors"). The Offering will be pursuant to a Confidential
Private Placement Memorandum and a subscription agreement and purchaser
questionnaire ("Subscription Agreement"). The maximum amount to be
raised in the Offering is $25 million. The minimum amount is $3
million. The Company reserves the right to lower the minimum or
increase the maximum at its sole discretion. The purchase price shall
be $5.00 per share. The prior placement agent agreement dated January 16, 2009,
as amended, by and among the Company, ▇▇▇▇▇▇▇▇▇▇▇ and EquitySmith, Inc. was
terminated on March 5, 2009.
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1.
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Scope
of ▇▇▇▇▇▇▇▇▇▇▇'▇ Services. ▇▇▇▇▇▇▇▇▇▇▇ will distribute
Offering Materials (as hereinafter defined) to potential investors, report
the status of the Offering to the Company, and assist in consummating the
Offering, including, but not limited
to:
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a.
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familiarizing
itself to the extent it deems appropriate and feasible with the business
operations, properties, financial condition, and prospects of the
Company,
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b.
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assisting
the Company in preparing Offering Materials for distribution by
▇▇▇▇▇▇▇▇▇▇▇ to potential investors selected by ▇▇▇▇▇▇▇▇▇▇▇ and the
Company,
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c.
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screening
and contacting prospective
investors,
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▇.
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assisting
in negotiations with prospective investors,
and
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e.
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advising
and assisting the Company in structuring and pricing the
Offering.
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It is
understood by both parties that ▇▇▇▇▇▇▇▇▇▇▇ intends to solicit interest from a
limited number of potential Investors (QIBs and accredited
investors). ▇▇▇▇▇▇▇▇▇▇▇ will, in its sole discretion, determine the
reasonableness of its efforts and is under no obligation to perform at any level
other than what it deems reasonable. The Company shall retain control
of the Offering and shall have the right to determine (a) whether to accept and
close the sale of the Securities to a specific Investor, (b) whether to close or
terminate the Offering, and (c) the content of the Offering
Materials.
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2.
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Fees. In return
for ▇▇▇▇▇▇▇▇▇▇▇'▇ services in the placement of Securities, the Company
will pay ▇▇▇▇▇▇▇▇▇▇▇ a cash fee equal to 10% of the gross proceeds (the
"Financing Fee") of any Securities placed by ▇▇▇▇▇▇▇▇▇▇▇. Any
Financing Fees payable to ▇▇▇▇▇▇▇▇▇▇▇ will be due at the closing date of
the Offering and shall be payable to ▇▇▇▇▇▇▇▇▇▇▇ by the
Company. ▇▇▇▇▇▇▇▇▇▇▇ shall not be entitled to receive the
reimbursement of any expenses from the
Company.
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3.
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Term. Unless
extended or earlier terminated by mutual agreement in writing of the
parties, the term of this Agreement shall commence on the date hereof and
end March 31, 2009 (the "Term"). The parties may extend the
Term by mutual agreement. Upon any termination or expiration of
this Agreement, neither the Company, nor a potential Investor, shall have
any obligation or liability to any other party under this
Agreement. Until March 31, 2009 (the "Period"), ▇▇▇▇▇▇▇▇▇▇▇
shall have the exclusive right on behalf of the Company to solicit
prospective Investors who are QIBs and/or accredited investors regarding
the possible sale to such Investors of shares. During the
Period, ▇▇▇▇▇▇▇▇▇▇▇ shall not have the right to conduct any other
discussions on behalf of the Company regarding any matter other than the
sale of the Shares to the prospective Investors. For purposes
of clarification, the Company during the Period shall deal exclusively
with ▇▇▇▇▇▇▇▇▇▇▇ concerning the sale of the shares and discontinue any
discussions with respect to any previously received third party proposals
with respect to the sale of such shares. If this exclusivity
provision is breached, in addition to any other compensation for damages,
▇▇▇▇▇▇▇▇▇▇▇ and/or its shareholders, jointly and severally, shall promptly
upon demand pay to the Company an amount equal to all expenses incurred by
the Company in connection with the Offering, including the expenses of the
Company's agents, advisors, bankers, attorneys, accountants and the other
representatives.
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For a
period up to one year from the termination of this Agreement and if ▇▇▇▇▇▇▇▇▇▇▇
enters into a selling group of any subsequent securities offerings of the
Company, then ▇▇▇▇▇▇▇▇▇▇▇ shall receive additional financing fees ("Additional
Fees") if the Company sells securities to those Investors previously introduced
by ▇▇▇▇▇▇▇▇▇▇▇ ("Protected Investors"). Prior to the termination
date, ▇▇▇▇▇▇▇▇▇▇▇ will furnish the Company with a written list of the Protected
Investors. The Additional Fees will be equal to any underwriting or
placement fees that are listed in any future offering circular or
prospectus.
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4.
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Company
Information. The Company
will furnish ▇▇▇▇▇▇▇▇▇▇▇ such information concerning the Company as
▇▇▇▇▇▇▇▇▇▇▇ reasonable determines to be appropriate with respect to the
Offering ("Information"). The Company shall afford ▇▇▇▇▇▇▇▇▇▇▇
and its counsel and representatives full and complete access to its books
and records and will use commercially reasonable efforts to afford
▇▇▇▇▇▇▇▇▇▇▇ with full and complete cooperation of management to gather the
Information on a reasonable basis. The Company recognizes and
confirms that ▇▇▇▇▇▇▇▇▇▇▇ (a) will use and rely on the Information in
performing the services contemplated by this Agreement, without
independently verifying the accuracy and completeness of the same, (b)
does not assume responsibility for the accuracy or completeness of the
Information, and (c) will not make an appraisal of any assets or liability
of the Company.
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The
Company hereby represents to ▇▇▇▇▇▇▇▇▇▇▇ that all solicitation materials
prepared by the Company and used in connection with the Offering, including,
without limitation, the Confidential Private Placement Memorandum (the "Offering
Materials") will not, as of the date of any offer or sale in connection with the
Offering, contain any untrue statement of a material fact or omit a material
fact necessary to make the statements contained therein, not misleading, in
light of the circumstances under which they were made. If at any time
an event occurs as a result of which the Offering Materials, as then amended or
supplemented, would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made when such Offering Materials are
delivered to a prospective purchaser pursuant hereto, not misleading, the
Company will promptly notify ▇▇▇▇▇▇▇▇▇▇▇ to suspend solicitation of prospective
purchasers in connection with the Offering; and if the Company decides to amend
or supplement the Offering Materials, it will promptly advise ▇▇▇▇▇▇▇▇▇▇▇ by
telephone (with confirmation in writing) and will promptly prepare an amendment
or supplement that will correct such statement or omission.
▇▇▇▇▇▇▇▇▇▇▇
will not violate, or cause the Company to violate, any applicable federal and
state securities laws in connection with the Offering.
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5.
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Confidentiality. In
connection with this engagement, it is contemplated that ▇▇▇▇▇▇▇▇▇▇▇ will
receive from the Company certain information (including certain business
planning, investment, product, marketing, technical, financial, and other
information and materials) the Company considers
confidential. ▇▇▇▇▇▇▇▇▇▇▇ shall use this confidential
information solely for the purpose of providing services to the Company
and will not disclose to any party (other than ▇▇▇▇▇▇▇▇▇▇▇'▇ officers,
directors, employees, affiliates, and counsel who have a need to know such
information, herein “Representatives”) any such confidential information,
except with the prior written approval of the Company; provided, however,
that the foregoing restrictions shall not apply to any information that:
(a) is included in the Offering Materials and disclosed pursuant to the
distribution of the Offering Materials as permitted by the Company, (b)
the Company consents to having disclosed in connection with the Offering,
(c) is publicly available when provided or thereafter becomes publicly
available other than through disclosure by ▇▇▇▇▇▇▇▇▇▇▇ or their
Representatives, or (d) is required to be disclosed by ▇▇▇▇▇▇▇▇▇▇▇ by
judicial or administrative process in connection with any action, suit,
proceeding, or investigation; and provided, further, however, that
▇▇▇▇▇▇▇▇▇▇▇ shall give the Company notice of any such requirement
immediately upon the becoming aware of same and shall not disclose such
information except only to the extent required after the maximum time
permitted. Information shall be deemed “publicly available” if
it becomes a matter of public knowledge or is contained in materials
available to the public or is obtained by ▇▇▇▇▇▇▇▇▇▇▇ from any source
other than the Company or its representatives, provided that such source
was not to ▇▇▇▇▇▇▇▇▇▇▇'▇ actual knowledge subject to a confidentiality
agreement with the Company. ▇▇▇▇▇▇▇▇▇▇▇ will take reasonable
steps to assure that the Offering Materials are not distributed to any
persons not permitted to receive them pursuant to the terms
hereof. ▇▇▇▇▇▇▇▇▇▇▇ will not provide any confidential
information to prospective Investors or any other third party without the
express written consent of the Company unless the prospective Investor has
executed a confidentiality agreement acceptable to the
Company.
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6.
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Representations
and Warranties of ▇▇▇▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇▇▇ represents
and warrants to the Company as follows: (a) it is a licensed
broker-dealer registered with the SEC and FINRA and is licensed
under FINRA regulations to sell Securities to QIBS and accredited
investors; (b) there are no judgments, orders, decrees, or like actions,
or any proceedings pending, before the SEC, FINRA, any State, or any court
or arbitration panel that prohibit or effect it from carrying out its
obligations under this Agreement; and (c) this Agreement has been duly
authorized and approved by it, does not contravene its organizational
documents or any agreement or order to which it is a party, and is a legal
and valid obligation binding on it.
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7.
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Indemnification. The Company
acknowledges that ▇▇▇▇▇▇▇▇▇▇▇ will be acting on behalf of the Company and
will require indemnification by the Company. The Company
further acknowledges that ▇▇▇▇▇▇▇▇▇▇▇'▇ indemnification provisions
attached hereto as Exhibit A are
incorporated by reference herein or are made a part hereof for all
purposes as though set forth entirely
herein.
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8.
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Miscellaneous. The
Offering will be completed in accordance with Rule 506 under Regulation D
under the Securities Act and all applicable state or other jurisdictional
securities laws (i.e. "blue sky" laws). All prospective
Investors will be persons who qualify as QIBs and/or accredited investors
under all applicable federal and state securities laws and who execute a
Subscription Agreement.
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The
Company shall have the right to identify Investors with which it has
affiliations who would be suitable QIBs and/or accredited investors for the
Offering ("Company-Introduced Investors"). In the event that the Company decides
that these Investors are suitable for the Offering and these Investors purchase
Securities in the Offering, no fees shall be due to ▇▇▇▇▇▇▇▇▇▇▇ respecting
Securities purchased by Company-Introduced Investors pursuant to Section 2
above.
The
Company agrees that, following the closing of the Offering, ▇▇▇▇▇▇▇▇▇▇▇ shall
have the right to place advertisements in financial and other newspapers and
journals at their own expense describing its services to the Company hereunder,
provided that ▇▇▇▇▇▇▇▇▇▇▇ will submit a copy of any such advertisement to the
Company for its approval, which approval shall not be unreasonably withheld or
delayed, and that such action is not in violation of Rule 506 under Regulation D
or other federal and state securities laws.
The
parties agree that their relationship under this Agreement is an advisory
relationship only, and nothing herein shall cause ▇▇▇▇▇▇▇▇▇▇▇ to be partners,
agents or fiduciaries of, or joint venture partners with, the Company or with
each other.
This
Agreement may not be amended or modified except in writing and shall be governed
by, and construed in accordance with the laws of the State of New
York.
If this
Agreement reflects our mutual understanding, please execute two copies in the
space indicated below and return one to us.
Very
truly yours,
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇▇ ASSOCIATES, INC.
/s/ ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇
____________________________
▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇
President
Accepted
and agreed to as of March 6, 2009:
BLACKHAWK
CAPITAL GROUP BDC, INC.
/s/ ▇▇▇▇▇
▇. ▇▇▇▇▇▇
____________________________________
▇▇.
▇▇▇▇▇ ▇ ▇▇▇▇▇▇
Chairman
of the Board, President & Chief Executive Officer
Exhibit
A
Indemnification
Blackhawk
Capital Group BDC, Inc., a Delaware corporation (the "Company") agrees to
indemnify and hold harmless ▇▇▇▇▇▇▇▇▇▇▇ Inc. ("▇▇▇▇▇▇▇▇▇▇▇"), together with its
affiliates, directors, officers, agents, and employees (▇▇▇▇▇▇▇▇▇▇▇ and each
such entity or person, an "Indemnified Person"), from and against any and all
losses, claims, damages, judgments, and liabilities, expenses, or costs (and all
actions in respect thereof and any legal or other expenses in giving testimony
or furnishing documents in response to a subpoena or otherwise), including the
cost of investigating, preparing for, or defending any such action or claim,
whether or not in connection with litigation in which an Indemnified Person is a
party, as and when incurred, directly or indirectly caused by, relating to,
based upon, or arising out of ▇▇▇▇▇▇▇▇▇▇▇'▇ performance of its engagement by the
Company under the letter agreement dated as of March 6, 2009, as it may be
amended from time to time (the "Agreement"), or otherwise arising out of or in
connection with advice or services provided or to be provided by Indemnified
Persons pursuant to the Agreement, the transactions contemplated thereby, or any
Indemnified Person’s actions or inactions in connection with any such advice,
services, or transactions, including any indemnified person's sole or
contributory negligence, if such activities were performed (i) in good faith and
(ii) in such manner reasonably believed by such Indemnified Person to be within
the scope of the authority conferred by the Agreement or by law and to be on
behalf of the Company or in furtherance of the performance of ▇▇▇▇▇▇▇▇▇▇▇'▇
services under the Agreement; provided, however, such indemnity agreement shall
not apply to any such loss, claim, damage, liability, or cost incurred by any
Indemnified Person to the extent it is found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from the gross negligence or willful misconduct or bad
faith of such Indemnified Person. The Company also agrees that no
Indemnified Person shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to the Company for or in connection with the any
advice or services provided by any Indemnified Persons in connection with the
Agreement, the transactions contemplated by the Agreement, or any Indemnified
Persons’ actions or inactions in connection with any such advice, services, or
transactions except for any such liability for losses, claims, damages,
liabilities, or costs found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted primarily and
directly from such Indemnified Person’s gross negligence or willful misconduct
or bad faith in connection with such advice, actions, inactions, or
services.
These
Indemnification Provisions shall be in addition to any liability that the
Company may otherwise have to any Indemnified Person and shall extend to the
following: ▇▇▇▇▇▇▇▇▇▇▇, its affiliated entities, directors, officers, employees,
agents, legal counsel and controlling persons of ▇▇▇▇▇▇▇▇▇▇▇ within the meaning
of the federal securities laws, and the respective successors, assigns, heirs,
beneficiaries, and legal representatives of each of the foregoing indemnified
persons or entities. All references to ▇▇▇▇▇▇▇▇▇▇▇ or Indemnified
Persons in these Indemnification Provisions shall be understood to include any
and all of the foregoing indemnified persons or entities.
If any
action, proceeding, or investigation is commenced, as to which an Indemnified
Person proposes to demand such indemnification, it will notify the Company with
reasonable promptness; provided, however, that any failure by an Indemnified
Person to notify the Company will not relieve the Company from its obligations
hereunder except if and only to the extent that the Company’s defense of such
action, proceeding or investigation is actually prejudiced by the Indemnified
Person’s failure so to notify the Company. ▇▇▇▇▇▇▇▇▇▇▇ will have the
right to retain counsel of its own choice to represent it; however, such firm
shall be acceptable to the Company, which acceptance shall not be unreasonably
withheld, and unless the Company assumes ▇▇▇▇▇▇▇▇▇▇▇'▇ defense as provided
below, the Company will pay the reasonable fees and expenses of such counsel,
and such counsel shall to the fullest extent consistent with its professional
responsibilities cooperate with the Company and any counsel designated by
it. The Company will be entitled to participate at its own expense in
the defense, or if it so elects, to assume and control the defense of any
action, proceeding, or investigation, but if the Company elects to assume the
defense, such defense shall be conducted by counsel reasonably acceptable to
▇▇▇▇▇▇▇▇▇▇▇. Any Indemnified Person may retain additional counsel of
its own choice to represent it but shall bear the fees and expenses of such
counsel unless the Company shall have specifically authorized the retaining of
such counsel. The Company will not be liable for any settlement of
any claim against an Indemnified Person made without its written
consent.
In order
to provide for just and equitable contribution, if a claim for indemnification
pursuant to these Indemnification Provisions is made but it is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal)
that such indemnification may not be enforced in such case, even though the
express provisions hereof provide for indemnification in such case, then the
Company, on the one hand, and any Indemnified Person, on the other hand, shall
contribute to the losses, claims, damages, liabilities, or costs to which the
Indemnified Persons may be subject in accordance with the relative benefits
received by the Company, on the one hand, and ▇▇▇▇▇▇▇▇▇▇▇, on the other hand,
and also the relative fault of the Company, on the one hand, and ▇▇▇▇▇▇▇▇▇▇▇, on
the other hand, in connection with the statements, acts or omissions that
resulted in such losses, claims, damages, liabilities, or costs, and the
relevant equitable considerations shall also be considered. No person
found liable for a fraudulent misrepresentation shall be entitled to
contribution from any person who is not also found liable for such
misrepresentation. Notwithstanding the foregoing, ▇▇▇▇▇▇▇▇▇▇▇ shall
not be obligated to contribute any amount hereunder that exceeds the amount of
fees received by ▇▇▇▇▇▇▇▇▇▇▇ pursuant to the Agreement.
The
liability of the Company under the indemnification provisions set forth in this
Exhibit A shall be
limited to $25,000.
Neither
termination nor completion of the engagement of ▇▇▇▇▇▇▇▇▇▇▇ or any Indemnified
Person under the Agreement shall affect the provisions of these Indemnification
Provisions, which shall then remain operative and in full force and effect for
one year.
If any
provision contained in this Exhibit A is held by a court
of competent jurisdiction or other authority to be invalid, void, unenforceable,
or against its regulatory policy, the remainder of the provisions contained in
this Exhibit A shall
remain in full force and effect and shall in no way be affected, impaired, or
invalidated. These Indemnification Provisions may not be amended or
modified in any way, except by subsequent agreement executed in
writing.