1,265,000 Shares
AMERITRANS CAPITAL CORPORATION
Common Stock
(Par Value $.0001 Per Share)
UNDERWRITING AGREEMENT
_____________, 1999
First Colonial Securities Group, Inc.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, Inc.
As Representatives of the several Underwriters
named on Schedule I hereto
c/o First Colonial Securities Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
1. Introductory. Ameritrans Capital Corporation, a Delaware corporation
(the "Company"), proposes to sell, pursuant to the terms of this Agreement, to
the several underwriters named on Schedule I hereto (the "Underwriters," or
each, an "Underwriter," which term shall also include any underwriter
substituted as hereinafter provided in Section 12), an aggregate of 1,100,000
shares of the Company's common stock, par value $.0001 per share (the "Common
Stock"). The 1,100,000 shares so proposed to be sold are hereinafter referred to
as the "Firm Shares." The Company also proposes to sell to the Underwriters,
upon the terms and conditions set forth in Section 3 hereof, up to an additional
165,000 shares of Common Stock (the "Option Shares"). The Firm Shares and the
Option Shares are hereinafter referred to collectively as the "Shares." First
Colonial Securities Group, Inc. and ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, Inc. are
acting as representatives of the several Underwriters and in such capacity are
hereinafter referred to collectively as the "Representatives." Capitalized terms
used in this Agreement without definition have the meanings specified in the
Prospectus (as hereinafter defined).
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement on Form N-2 (File No. 333-______)
with respect to the Shares has been prepared in conformity in all material
respects with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations (the "Securities Act Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, and the Investment Company Act of 1940, as amended (the "Investment
Company Act" and, together with the Securities Act, the "Acts"), and the rules
and regulations thereunder (the "Investment Company Act Rules and Regulations"
and, together with the Securities Act Rules and Regulations, the "Rules and
Regulations"); such registration statement has been filed with the Commission
under the Securities Act and has been declared effective by the Commission under
the Securities Act and no post-effective amendment to such registration
statement has been filed as of the date of this Agreement; one or more
amendments to such registration statement, including in each case an amended
preliminary prospectus, copies of which amendments have heretofore been
delivered to you, have been so prepared and filed. The term "Registration
Statement" means such registration statement, as amended, at the time it was
declared effective by the Commission and shall be deemed to include all
information omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below. If it is contemplated, at the time this Agreement
is executed, that a post-effective amendment to the registration statement will
be filed and must be declared effective before the offering of the Shares may
commence the term "Registration Statement" as used in this Agreement means the
registration statement as amended by said post effective amendment. The term
"Registration Statement" as used in this Agreement shall also include any
registration statement relating to the Shares that is filed and declared
effective pursuant to Rule 462(b) under the Securities Act. The term
"Prospectus" as used in this Agreement means the prospectus as first filed
pursuant to Rule 497(b), (c) or (h) under the Securities Act, except that if any
revised prospectus shall be provided to the Underwriters by the Company in
conformity with this Agreement for use in connection with the offering of the
Shares which differs from the Prospectus on file at the Commission at the time
the Registration Statement becomes effective (whether or not such revised
prospectus is required to be filed by the Company pursuant to Rule 497(b), (c)
or (h) under the Securities Act), the term "Prospectus" shall refer to such
revised prospectus from and after the time it is first provided to the
Underwriters for such use. The term "Preliminary Prospectus" as used in this
Agreement means the prospectus subject to completion in the form included in the
Registration Statement at the time of the initial filing of the Registration
Statement with the Commission, and as such prospectus shall have been amended
from time to time prior to the date of the Prospectus and any prospectus filed
by the Company with the consent of the Representatives pursuant to Rule 497(a)
under the Securities Act. No document has been or will be prepared or
distributed in reliance on Rule 434 under the Securities Act. For purposes of
the following representations and warranties, to the extent reference is made to
the Prospectus and at the relevant time the Prospectus is not yet in existence,
such reference shall be deemed to be to the most recent Preliminary Prospectus.
(b) Neither the Commission nor any state regulatory authority
has issued or, to the Company's knowledge, threatened to issue any order
preventing or suspending the use of any Preliminary Prospectus, and, at its date
of issue, each Preliminary Prospectus conformed in all material respects with
the requirements of the Acts and did not include 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, in light of the circumstances under
which they were made, not misleading; and, when the Registration Statement
became effective and at all times subsequent thereto up to and including the
Closing Dates (as defined in Section 3 hereof) the Registration Statement and
the Prospectus at the time the Registration Statement became effective (unless
the term "Prospectus"
2
refers to a prospectus which has been provided to the Underwriters by the
Company for use in connection with the offering of the Shares which differs from
the Prospectus on file at the Commission at the time the Registration Statement
became effective, in which case at the time it is first provided to the
Underwriters for such use) and at the Closing Dates, conformed or will conform,
as the case may be, in all material respects to the requirements of the Acts and
the Registration Statement and the Prospectus at such times did not or will not,
as the case may be, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the foregoing representations,
warranties and agreements shall not apply to information contained in or omitted
from any Preliminary Prospectus or the Registration Statement or the Prospectus
or any amendment thereto in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of any Underwriter,
directly or through the Representatives, specifically for use in the preparation
thereof; there is no franchise, lease, contract, agreement or other document
required to be described in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement which is not described or
filed therein as required and the exhibits that have been filed are complete and
correct copies of the documents of which they purport to be copies; and all
descriptions of any such franchises, leases, contracts, agreements or other
documents contained in the Registration Statement are accurate and complete
descriptions of such documents in all material respects and fairly present the
information required to be shown with respect thereto by Form N-2 under the
Acts.
(c) The Company and each of Elk Associates Funding Corporation
("Elk") and Elk Capital Corporation (together, the "Subsidiaries") have been
duly organized and are validly existing and in good standing as corporations
under the laws of their respective jurisdictions of organization, and have the
corporate power and authority to own or lease their properties and to conduct
their respective businesses as described in the Prospectus; the Company and each
of the Subsidiaries are in possession of and operating in compliance in all
material respects with all franchises, grants, registrations, qualifications,
authorizations, licenses, permits, easements, consents, certificates and orders
required for the conduct of their respective businesses as now being conducted
and as described in the Registration Statement and the Prospectus, or for the
ownership, leasing and operation of their respective properties, all of which
are valid and in full force and effect and no such franchise, grant,
registration, consent, certificate or order contains a materially burdensome
restriction not adequately disclosed in the Registration Statement or the
Prospectus; and the Company and each of the Subsidiaries are duly qualified to
do business and are in good standing as foreign corporations in all
jurisdictions where their respective ownership or leasing of properties or the
conduct of their respective businesses requires such qualification and in which
the failure to so qualify would have a Material Adverse Effect (as defined in
subsection 2(i)).
(d) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, (i) neither the
Company nor any of the Subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any other transactions not in
the ordinary course of business, (ii) there has not been any material adverse
change or development involving a material prospective change in the condition
(financial or otherwise),
3
properties, business, management, prospects, net worth, capital stock,
investment objectives, investment policies or results of operations of the
Company and the Subsidiaries taken as a whole, or any change in the capital
stock, or material change in the short-term or long-term debt, of the Company
and the Subsidiaries taken as a whole and (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company or the
Subsidiaries on any class of their respective capital stock.
(e) The pro forma combined financial statements of the Company
and the historical financial statements of Elk (including, in each case, the
notes thereto) set forth in the Prospectus and elsewhere in the Registration
Statement fairly present, on the basis stated in the Registration Statement, the
pro forma combined or historical financial position, as the case may be, of the
Company and the results of operations and changes in financial position of the
Company at the respective dates or for the respective periods therein specified.
Such statements and related notes and schedules have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein). The
selected financial and statistical data set forth in the Prospectus under the
caption "Summary Consolidated Financial Data" fairly present, on the basis
stated in the Prospectus, the information set forth therein and have been
compiled on a basis consistent with that of the audited financial statements
included in the registration statement and have been prepared in conformity with
the requirements of the Securities Act and the Securities Act Rules and
Regulations. The unaudited pro forma financial information included in the
Registration Statement and the Prospectus present fairly the information shown
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements, have been properly
compiled on the pro forma bases described therein, and, in the opinion of the
Company, the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions or
circumstances referred to therein.
(f) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, who have expressed an opinion on
the audited financial statements and related schedules included in the
Registration Statement and the Prospectus are independent certified public
accountants as required by the Securities Act and the Securities Act Rules and
Regulations.
(g) The Company's capital stock conforms to the description
thereof in the Prospectus and has been duly authorized and validly issued and is
fully paid and nonassessable and has been issued in compliance with all federal
and state securities laws and was not issued in violation of or subject to any
preemptive rights or similar rights to subscribe for or purchase securities.
Except as disclosed in or contemplated by the Prospectus and the financial
statements of the Company and related notes thereto included in the Prospectus,
neither the Company nor the Subsidiaries has outstanding any options or warrants
to purchase, or any preemptive rights or other rights to subscribe for or to
purchase any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of their respective capital stock or any
such options, rights, convertible securities or obligations. The description of
the Company's stock option and other stock plans or arrangements, and the
options or other rights granted thereunder, as set forth in the Prospectus,
accurately and fairly
4
presents in all material respects the information required to be shown with
respect to such plans, arrangements, options and rights. All shares of capital
stock of each Subsidiary are owned, directly or indirectly, by the Company free
and clear of any liens, encumbrances, equities or claims.
(h) The Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued, fully paid and nonassessable, free of any preemptive or similar
rights and will conform to the description thereof in the Prospectus, and good
and marketable title to the Shares will pass to the Underwriters on the Closing
Dates free and clear of any lien, encumbrance, security interest, claim or
restriction whatsoever except for (a) those restrictions imposed under the
Company's credit agreements filed as exhibits to the Registration Statement and
(b) those restrictions imposed generally under the Investment Company Act, the
Investment Company Act Rules and Regulations, the Small Business Investment Act
of 1958, as amended (the "1958 Act") and the Regulations of the Small Business
Administration ("SBA").
(i) There are no legal or governmental proceedings pending to
which the Company or any of the Subsidiaries or any of their affiliated persons,
as defined under the Investment Company Act, is a party or of which any property
of the Company or any Subsidiary or any of their affiliated persons is subject,
which, if determined adversely to the Company or any Subsidiary or any of their
affiliated persons, might individually or in the aggregate (i) prevent or
materially and adversely affect the transactions contemplated by this Agreement,
(ii) suspend the effectiveness of the Registration Statement, (iii) prevent or
suspend the use of the Preliminary Prospectus in any jurisdiction or (iv) result
in a Material Adverse Effect (as defined below); and to the Company's knowledge
no such proceedings are threatened or contemplated against the Company or any
Subsidiary or any of their affiliated persons by governmental authorities or
others. Except as disclosed in the Prospectus, the Company is not a party nor
subject to the provisions of any material injunction, judgment, decree or order
of any court, regulatory body or other governmental agency or body. "Material
Adverse Effect" means, when used in connection with the Company and the
Subsidiaries, any development, change or effect that could reasonably be
expected to have a material adverse effect on the condition (financial or
otherwise), properties, business, management, prospects, net worth or results of
operations of the Company and the Subsidiaries taken as a whole.
(j) Neither the Company nor any of the Subsidiaries is in
violation of its respective charter, by-laws or other organizational documents
or in default in the performance of any note or other evidence of indebtedness
or any indenture, mortgage, deed of trust, note agreement or other contract,
lease or other instrument to which it is a party or by which it is bound, or to
which any of its property or assets is subject other than defaults which would
not, individually or in the aggregate, result in a Material Adverse Effect and,
as of the Closing Dates, no condition or event shall have occurred which, with
notice or a lapse of time or both, would constitute a default under such
instruments or agreements or result in the imposition of any penalty or
acceleration of any indebtedness other than such defaults, penalties or
acceleration which would not, individually or in the aggregate, result in a
Material Adverse Effect.
5
(k) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated herein will not result in
a breach or violation of any of the terms or provisions of or constitute a
default under any note or other evidence of indebtedness or any indenture,
mortgage, deed of trust, note agreement or other contract, lease or instrument
to which the Company or any of the Subsidiaries is a party or by which any of
them or any of their properties is or may be bound, the certificate of
incorporation, by-laws or other organizational documents of the Company or any
of the Subsidiaries, or any law, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of the
Subsidiaries or any of their properties and will not result in the creation of
any lien, charge or encumbrance upon the assets of the Company or the
Subsidiaries.
(l) Other than those obtained prior to the date hereof, no
consent, approval, authorization or order of any court or governmental agency or
body is required for the consummation by the Company of the transactions
contemplated by this Agreement, except such as may be required by the SBA, the
National Association of Securities Dealers, Inc. (the "NASD") or the securities
or "Blue Sky" laws of any jurisdiction in connection with the purchase and
distribution of the Shares by the Underwriters.
(m) The Company and Elk have each duly elected to be treated
by the Commission under the Investment Company Act as a business development
company and all required action has been taken by the Company and Elk under
Section 54 of the Investment Company Act to qualify the Company and Elk as
business development companies and under the Acts to make the public offering
and consummate the sale of the Shares as provided in this Agreement.
(n) Elk is licensed as a Small Business Investment Company
("SBIC") by the SBA under the 1958 Act, and Elk is operating in full compliance
with the 1958 Act and all SBA Regulations applicable to SBICs.
(o) The Company intends to direct the investment of the
proceeds of the Offering (as defined in the Prospectus) in such a manner as to
comply with the requirements of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), and, immediately after the Closing Date, the
Company and Elk will each be eligible to qualify as regulated investment
companies under Subchapter M of the Code.
(p) The Company has the full corporate power and authority to
enter into this Agreement and to perform its obligations hereunder (including to
issue, sell and deliver the Shares), and this Agreement has been duly and
validly authorized, executed and delivered by the Company.
(q) The Company and the Subsidiaries are in compliance with,
and conduct their respective businesses in conformity with, all applicable
federal, state, local and foreign laws, rules and regulations of any court or
governmental agency or body except non-compliance which would not result in a
Material Adverse Effect; to the knowledge of the Company, other than as set
forth in the Registration Statement and the Prospectus, no prospective change in
any of such federal, state, local
6
or foreign laws, rules or regulations has been adopted which, when made
effective, would have a Material Adverse Effect.
(r) The Company and the Subsidiaries have filed all necessary
federal, state, local and foreign income, payroll, franchise and other tax
returns and have paid all taxes shown as due thereon or with respect to any of
their properties, and there is no tax deficiency that has been, or to the
knowledge of the Company is likely to be, asserted against the Company or any of
the Subsidiaries or any of their respective properties or assets that would have
a Material Adverse Effect.
(s) No person or entity has the right to require registration
of shares of Common Stock or other securities of the Company because of the
filing or effectiveness of the Registration Statement or otherwise.
(t) Neither the Company nor the Subsidiaries nor any of their
respective officers, directors or any of their affiliated 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, or which caused or
resulted in, or which might in the future reasonably be expected to cause or
result in, stabilization or manipulation of the price of any security of the
Company.
(u) The Company and the Subsidiaries own or possess all
patents, trademarks, trademark registrations, service marks, service ▇▇▇▇
registrations, tradenames, copyrights, licenses, inventions, trade secrets and
rights described in the Prospectus as being owned by them or any of them or
necessary for the conduct of their respective businesses, and the Company is not
aware of any claim to the contrary or any challenge by any other person to the
rights of the Company and the Subsidiaries with respect to the foregoing. The
Company's and the Subsidiaries' businesses as now conducted and as proposed to
be conducted do not and will not infringe or conflict with in any material
respect any patents, trademarks, service marks, tradenames, copyrights, trade
secrets, licenses or any other intellectual property or franchise right of any
person. No claim has been made against the Company or any Subsidiary alleging
the infringement by the Company or any Subsidiary of any patent, trademark,
servicemark, tradename, copyright, trade secret, license in or other
intellectual property right or franchise right of any person.
(v) The Company and the Subsidiaries have performed all
material obligations required to be performed by them under all contracts
required by Item 24 of Form N-2 under the Securities Act to be filed as exhibits
to the Registration Statement, and neither the Company, any of the Subsidiaries
nor any other party to such contract is in default under or in breach of any
such obligations except such as would not result in a Material Adverse Effect.
Neither the Company nor any of the Subsidiaries has received any notice of such
default or breach.
(w) Neither the Company or any of the Subsidiaries is involved
in any labor dispute which would result in the Material Adverse Effect nor, to
the Company's knowledge, is any such dispute threatened. Neither the Company nor
any of the Subsidiaries is aware that (i) any executive, key employee or
significant group of employees of the Company or any of the Subsidiaries plans
to
7
terminate employment with the Company or any of the Subsidiaries or (ii) any
such executive or key employee is subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or similar agreement that would be
violated by the present or proposed business activities of the Company or the
Subsidiaries. Neither the Company nor any Subsidiary has or expects to have any
liability for any prohibited transaction or funding deficiency or any complete
or partial withdrawal liability with respect to any pension, profit sharing or
other plan which is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to which the Company or any Subsidiary makes or ever
has made a contribution and in which any employee of the Company or any
Subsidiary is or has ever been a participant. With respect to such plans, the
Company and each Subsidiary are in compliance in all material respects with all
applicable provisions of ERISA.
(x) The Company has obtained the written agreement described
in Section 8(j) of this Agreement from each of its officers, directors and
holders of Common Stock listed on Schedule II hereto.
(y) The Company and the Subsidiaries have, and the Company and
the Subsidiaries as of the Closing Dates will have, good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned or proposed to be owned by them, in each case free and clear of
all liens, charges, encumbrances and defects except as disclosed in the
Prospectus or such as would not have a Material Adverse Effect, and any real
property and buildings held under lease by the Company and the Subsidiaries or
proposed to be held after giving effect to the transactions described in the
Prospectus are, or will be as of the Closing Dates, held by them under valid,
subsisting and enforceable leases with such exceptions as would not have a
Material Adverse Effect, in each case except as described in or contemplated by
the Prospectus.
(z) The Company and the Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are customary in the businesses in which they are engaged or propose
to engage after giving effect to the transactions described in the Prospectus;
and neither the Company nor any Subsidiary has any reason to believe that it
will not be able to renew such insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue their business at a cost that would not have a Material Adverse
Effect.
(aa) Other than as contemplated by this Agreement or as
disclosed in the Prospectus, there is no broker, finder or other party that is
entitled to receive from the Company or the Subsidiaries any brokerage or
finders' fee or other fee or commission as a result of any of the transactions
contemplated by this Agreement.
(bb) Neither the Company or any of the Subsidiaries, nor any
director, officer, agent or employee acting on behalf of the Company or the
Subsidiaries has (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity,
(ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds, (iii) violated or is in
violation of any provision of the Foreign Corrupt
8
Practices Act of 1977 or (iv) made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment.
(cc) 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.
(dd) To the Company's knowledge, neither the Company, any of
the Subsidiaries nor any employee or agent of the Company or any of the
Subsidiaries has made any payment of funds of the Company or any of the
Subsidiaries or received or retained any funds in violation of any law, rule or
regulation, which payment, receipt or retention of funds is of a character
required to be disclosed in the Prospectus.
(ee) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters in connection with
this Agreement or the transactions contemplated hereby shall be deemed to be a
representation and warranty by the Company as to the matters covered thereby.
(ff) To the Company's knowledge, all hardware and software
products used by the Company in the administration and the business operations
of the Company will be able to accurately process date data (including, but not
limited to calculating, comparing and sequencing) from, into and between the
twentieth century (through 1999), the year 2000 and the twenty-first century,
including leap year calculations, when used in accordance with the product
documentation accompanying such hardware and software products.
3. Purchase by, and Sale and Delivery to, the Underwriters; Closing
Dates.
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to sell to the several Underwriters the Firm
Shares and the Underwriters agree, severally and not jointly, to purchase the
Firm Shares from the Company, the number of Firm Shares to be purchased by each
Underwriter being set opposite its name on Schedule I, subject to adjustment in
accordance with Section 12 hereof.
(b) The purchase price per share to be paid by the
Underwriters to the Company will be $________ per share (the "Purchase Price")
which represents the offering price set forth in the Prospectus less an
underwriting discount of 8.75%.
9
(c) The Company will deliver the Firm Shares to the
Representatives for the respective accounts of the several Underwriters [(in the
form of definitive certificates) issued in such names and in such denominations]
as the Representatives may direct by notice in writing to the Company given at
or prior to 12:00 noon, New York City time, on the second full business day
preceding the Closing Date or, if no such direction is received, in the names of
the respective Underwriters or in such other names as First Colonial may
designate (solely for the purpose of administrative convenience) and in such
denominations as First Colonial may determine, against payment of the aggregate
Purchase Price therefor by federal funds wire transfer (same day funds) to an
account or accounts previously designated in writing by the Company, all at the
offices of ______________ ______________________________________________. The
time and date of the delivery and closing shall be at 10:00 a.m., New York City
time, on ________________, 1999, in accordance with Rule 15c6-1 of the Exchange
Act. [The Company will bear the one-day cost of funds of First Colonial in
providing the aggregate Purchase Price in same day funds, rather than next day
funds.] The time and date of such payment and delivery are herein referred to as
the "Closing Date." The Closing Date and the location of delivery of, and the
form of payment for, the Firm Shares may be varied by agreement between the
Company and First Colonial. The Closing Date may be postponed pursuant to the
provisions of Section 12.
(d) The Company shall make the certificates for the Firm
Shares available to the Representatives for examination on behalf of the
Underwriters not later than 10:00 a.m., New York City time, on the business day
preceding the Closing Date at the offices of _______________________________
______________________________________.
(e) It is understood that First Colonial, may (but shall not
be obligated to) make payment to the Company on behalf of any Underwriter or
Underwriters, for the Shares to be purchased by such Underwriter or
Underwriters. Any such payment by First Colonial or ▇▇▇▇▇▇▇▇ shall not relieve
such Underwriter or Underwriters from any of its or their other obligations
hereunder.
(f) The several Underwriters propose to make a public offering
of the Firm Shares (other than to residents of or in any jurisdiction in which
qualification of the Firm Shares is required and has not become effective) at
the public offering price and upon the other terms set forth in the Prospectus
as soon after the effectiveness of the Registration Statement as in their
judgment is advisable. The Representatives shall promptly advise the Company of
the making of the public offering.
(g) For the purpose of covering any over-allotments in
connection with the distribution and sale of the Firm Shares as contemplated by
the Prospectus, the Company hereby grants to the Underwriters an option to
purchase, severally and not jointly, up to the aggregate number of shares of
Option Shares. The price per share to be paid for the Option Shares shall be the
Purchase Price. The option granted hereby may be exercised as to all or any part
of the Option Shares at any time, but only once, not more than 30 days
subsequent to the effective date of this Agreement. No Option Shares shall be
sold and delivered unless the Firm Shares previously have been, or
10
simultaneously are, sold and delivered. The right to purchase the Option Shares
or any portion thereof may be surrendered and terminated at any time prior to
exercise upon notice by the Underwriters to the Company. The option granted
hereby may be exercised by the Underwriters by giving written notice from First
Colonial to the Company setting forth the number of Option Shares to be
purchased by them and the date and time for delivery of and payment for the
Option Shares. Each date and time for delivery of and payment for the Option
Shares (which may be the Closing Date, but not earlier) is herein called the
"Option Closing Date" and shall in no event be earlier than two business days
nor later than five business days after written notice is given. The Option
Closing Date and the Closing Date are herein collectively called the "Closing
Dates." All purchases of Option Shares from the Company shall be made on a pro
rata basis. Option Shares shall be purchased for the account of each Underwriter
in the same proportion as the number of Firm Shares set forth opposite such
Underwriter's name on Schedule I hereto bears to the total number of Firm Shares
(subject to adjustment by the Underwriters to eliminate odd lots). Upon exercise
of the option by the Underwriters, the Company agrees to sell to the
Underwriters the number of Option Shares set forth in the written notice of
exercise and the Underwriters agree, severally and not jointly and subject to
the terms and conditions herein set forth, to purchase the number of such shares
determined as aforesaid. The Company will deliver the Option Shares to the
Underwriters (in the form of definitive certificates, issued in such names and
in such denominations as the Representatives may direct by notice in writing to
the Company given at or prior to 12:00 noon, New York City time, on the second
full business day preceding the Option Closing Date or, if no such direction is
received, in the names of the respective Underwriters or in such other names as
First Colonial may designate (solely for the purpose of administrative
convenience) and in such denominations as First Colonial may determine, against
payment of the aggregate Purchase Price therefor by certified or official bank
check or checks in New York Clearing House funds (next day funds), payable to
the order of the Company all at the offices of ____________________________. The
Company shall make the certificates for the Option Shares available to the
Underwriters for examination not later than 10:00 a.m., New York City time, on
the business day preceding the Option Closing Date at the offices of
_____________________________________________. The Option Closing Date and the
location of delivery of, and the form of payment for, the Option Shares may be
varied by agreement between the Company and First Colonial. The Option Closing
Date may be postponed pursuant to the provisions of Section 12.
4. Covenants and Agreements of the Company. The Company covenants and
agrees with the several Underwriters that:
(a) The Company will (i) if the Company and the
Representatives have determined not to proceed pursuant to Rule 430A, use its
best efforts to cause the Registration Statement to become effective, (ii) if
the Company and the Representatives have determined to proceed pursuant to Rule
430A, use its best efforts to comply with the provisions of and make all
requisite filings with the Commission pursuant to Rule 430A and Rule 497 of the
Securities Act Rules and Regulations and (iii) if the Company and the
Representatives have determined to deliver Prospectuses pursuant to Rule 434 of
the Securities Act Rules and Regulations, to use its best efforts to comply with
all the applicable provisions thereof. The Company will advise the
Representatives promptly as to the time
11
at which the Registration Statement becomes effective, will advise the
Representatives promptly of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the institution
of any proceedings for such purposes, and will use its best efforts to prevent
the issuance of any such stop order, and to obtain as soon as possible the
lifting thereof, if issued. The Company will advise the Representatives promptly
of the receipt of any comments of the Commission or any request by the
Commission for any amendment of or supplement to the Registration Statement or
the Prospectus or for additional information and will not at any time file any
amendment to the Registration Statement or supplement to the Prospectus which
shall not previously have been submitted to the Representatives a reasonable
time prior to the proposed filing thereof or to which the Representatives shall
reasonably object in writing or which is not in compliance with the Acts. The
Company will advise the Representatives promptly of receipt by the Company or
any representative or attorney of the Company of any other communication from
the Commission relating to (i) the Company, if received during the time a
Prospectus relating to the Shares is required to be delivered under the
Securities Act, or (ii) the Registration Statement, any Preliminary Prospectus,
the Prospectus or the transactions contemplated by this Agreement.
(b) The Company will promptly prepare and file with the
Commission any amendments or supplements to the Registration Statement or the
Prospectus which in the judgment of the Company or in the reasonable opinion of
the Representatives may be necessary to enable the several Underwriters to
continue the distribution of the Shares and will use its best efforts to cause
the same to become effective as promptly as possible.
(c) If at any time after the effective date of the
Registration Statement when a prospectus relating to the Shares is required to
be delivered under the Securities Act any event relating to or affecting the
Company or any of the Subsidiaries occurs as a result of which the Prospectus or
any other prospectus as then in effect 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,
not misleading, or if it is necessary at any time to amend the Prospectus to
comply with the Acts, the Company will promptly notify the Representatives
thereof and will prepare an amended or supplemented prospectus which will
correct such statement or omission.
(d) The Company will deliver to the Representatives, at or
before the Closing Dates, copies of the Registration Statement as originally
filed with the Commission, and all amendments thereto including all financial
statements and exhibits thereto, and will deliver to the Representatives such
number of copies of the Registration Statement, including such financial
statements but without exhibits, and all amendments thereto, as the
Representatives may reasonably request. The Company will deliver or mail to or
upon the order of the Representatives, from time to time until the effective
date of the Registration Statement, as many copies of the Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver or mail
to or upon the order of the Representatives on the date of the public offering,
and thereafter from time to time during the period when delivery of a prospectus
relating to the Shares is required under the
12
Securities Act, as many copies of the Prospectus, in final form or as thereafter
amended or supplemented as the Representatives may reasonably request.
(e) The Company will make generally available to its
shareholders not later than 45 days after the end of the period covered thereby,
an earnings statement of the Company (which need not be audited) that shall
comply with Section 11(a) of the Act and cover a period of at least 12
consecutive months beginning not later than the first day of the Company's
fiscal quarter next following the Effective Date.
(f) The Company will furnish to its shareholders annual
reports containing financial statements audited by independent certified public
accountants and with quarterly summary financial information in reasonable
detail which may be unaudited. During the period of five years from the date
hereof, the Company will deliver to the Representatives and, upon request, to
each of the other Underwriters, as soon as they are available, copies of each
annual report of the Company and each other report furnished by the Company to
its shareholders and will deliver to the Representatives, (i) as soon as they
are available, copies of any other reports (financial or other) which the
Company shall publish or otherwise make available to its shareholders as such,
(ii) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange or the Nasdaq National Market and (iii) from time to time such other
information concerning the Company as the Representatives may reasonably
request. So long as the Company has active subsidiaries, such financial
statements will be on a consolidated basis to the extent the accounts of the
Company and the Subsidiaries are consolidated in reports furnished to its
shareholders generally. Separate financial statements shall be furnished for
Subsidiaries whose accounts are not consolidated but which at the time are
significant subsidiaries as defined in the Securities Act Rules and Regulations.
(g) The Company will use its best efforts to cause the Shares
to be duly appropriate for quotation on the Nasdaq National Market prior to the
Closing Date.
(h) The Company will maintain a transfer agent and registrar
for its Common Stock.
(i) The Company will not, without the prior written consent of
First Colonial, offer, sell, assign, transfer, encumber, contract to sell, grant
an option to purchase or otherwise dispose of any shares of Common Stock or
securities convertible into or exercisable or exchangeable for Common Stock
(including, without limitation, Common Stock of the Company which may be deemed
to be beneficially owned by the Company in accordance with the Securities Act
Rules and Regulations) during the 180 days following the date of the Prospectus
first filed pursuant to Rule 497(b), (c) or (h), other than (i) the Company's
sale of Shares hereunder and the Company's issuance of Common Stock upon the
exercise of stock options which are outstanding on the Closing Date or described
in the Prospectus and (ii) the Company's issuance of stock options which are
described in the Prospectus.
13
(j) The Company will apply the net proceeds from the sale of
the Shares as set forth in the description under the caption "Use of Proceeds"
in the Prospectus.
(k) The Company will supply the Representatives with copies of
all written 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 and the Nasdaq National Market.
(l) Prior to the Closing Dates, the Company will furnish to
the Representatives, as soon as they have been prepared, copies of any unaudited
interim consolidated financial statements of the Company and its subsidiaries
for any periods subsequent to the periods covered by the financial statements
appearing in the Registration Statement and the Prospectus.
(m) Prior to the Closing Dates, unless required under the Acts
or the Rules and Regulations, the Company will issue no press release or other
communications directly or indirectly and hold no press conference with respect
to the Company or any of its subsidiaries, the financial condition, results of
operation, business, prospects, assets or liabilities of any of them, or the
offering of the Shares, without the prior written consent of the
Representatives, which shall not be unreasonably withheld. For a period of 12
months following the Closing Date, the Company will use its best efforts to
provide to the Representatives copies of each press release or other public
communications with respect to the financial condition, results of operations,
business, prospects, assets or liabilities of the Company at least 24 hours
prior to the public issuance thereof or such longer advance period as may
reasonably be practicable.
(n) During the period of five years hereafter, the Company
will furnish to the Representatives, and upon request of the Representatives, to
each of the Underwriters, (i) as soon as practicable after the end of each
fiscal year, copies of the annual report of the Company containing the balance
sheet of the Company as of the close of such fiscal year and statements of
income, shareholders' equity and cash flows for the year then ended and the
opinion thereon of the Company's independent certified public accountants, (ii)
as soon as practicable after the filing thereof, copies of each proxy statement,
Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Report on Form 8-K or
other report filed by the Company with the Commission, or the Nasdaq National
Market or any national securities exchange, (iii) as soon as available, copies
of any report or communication of the Company mailed generally to holders of its
Common Stock and (iv) all public reports and all reports and financial
statements furnished by the Company to the Commission pursuant to the Investment
Company Act and the Investment Company Act Rules and Regulations thereunder.
(o) The Company agrees to retain First Colonial as a financial
advisor for the Company for a period of two (2) years from and after the date of
the Prospectus, at a fee of $3,000 per month, plus out-of-pocket expenses; such
fee, aggregating $72,000, shall be due and payable in full at the closing of the
Shares.
14
5. Payment of Expenses
(a) The Company will pay or cause to be paid (directly or by
reimbursement) all costs, fees and expenses incurred in connection with and
expenses incident to the performance of the obligations of the Company under
this Agreement, as follows: (i) all expenses and taxes incident to the issuance
and delivery of the Shares to the Representatives, (ii) all expenses incident to
the registration of the Shares under the Securities Act, (iii) the costs of
preparing stock certificates (including printing and engraving costs), (iv) all
fees and expenses of the registrar and transfer agent of the Shares, (v) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Shares to the Underwriters, (vi) all fees and expenses of the
Company's counsel and the Company's independent certified public accountants,
(vii) all costs and expenses incurred in connection with the preparation,
printing, filing, shipping and distribution of the Registration Statement, each
Preliminary Prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein, the Master
Agreement Among Underwriters between the Representatives and the Underwriters,
if any, the Master Selected Dealer Agreement, if any, the Blue Sky memoranda and
this Agreement, (viii) all filing fees, reasonable attorneys' fees and expenses
incurred by the Company or the Underwriters in connection with exemptions from
qualifying or registering (or obtaining qualification or registration of) all or
any part of the Shares for offer and sale and determination of its eligibility
for investment under the Blue Sky or other securities laws of such jurisdictions
as the Representatives may designate, (ix) all fees and expenses paid or
incurred in connection with filings made with the NASD, (x) all fees and
expenses paid or incurred in connection with the listing of the Shares on the
Nasdaq National Market and (xi) all other costs, fees and expenses incurred by
the Company incident to the performance of the Company's obligations hereunder
which are not otherwise specifically provided for in this Section.
(b) In addition to the foregoing, the Company agrees to pay to
the Underwriters at the closing a non-accountable expense allowance in the
amount of 2.75% of the gross dollar amount of the offering to the public
(including the Over-Allotment Option, if exercised), out of which a forty-five
thousand ($45,000) dollar advance payment has been made. The Underwriters shall
pay their own costs and expenses, including the costs and expenses of their
counsel, any transfer taxes on the Shares which they may sell, and the expenses
of advertising any offering of the Shares made by the Underwriters.
6. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter, its officers, directors, employees, advisors and attorneys and each
person, if any, who controls each Underwriter within the meaning of the Act,
against any and all loss, liability, claim, damage and expense whatsoever,
including, but not limited to, any and all reasonable expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever or in connection with any
investigation or inquiry of, or action or proceeding that may be brought
against, the respective indemnified parties, arising out of or based upon any
breach of the
15
Company's representations and warranties made in this Agreement and any untrue
statements or alleged untrue statements of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, any
application or other document (in this Section 6 collectively called
"application") executed by the Company and based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify all or any part of the Shares under the securities laws thereof or filed
with the SEC or the NASD, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the foregoing indemnity:
(x) shall not apply to statements in or omissions
from any Preliminary Prospectus, the Registration Statement or the Prospectus,
or in any application or in any communication to the SEC, as the case may be,
made in reliance upon and in conformity with information supplied to the Company
in writing by or on behalf of any Underwriter through the Representatives
concerning such Underwriters (unless expressly for use therein); and
(y) with respect to any Preliminary Prospectus,
shall not inure to the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages, liabilities or expenses purchased the Shares
if, at or prior to the written confirmation of the sale of such Shares, a copy
of an amended Preliminary Prospectus or the Prospectus (or the Prospectus as
amended or supplemented) was delivered to such Underwriter but was not sent, or
delivered to such person and the untrue statement or omission of a material fact
contained in such Preliminary Prospectus was corrected in the amended
Preliminary Prospectus or Prospectus (or the Prospectus as amended or
supplemented).
This indemnity agreement will be in addition to any liability the Company may
otherwise have.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, each of the directors of the Company,
each of the officers of the Company who shall have signed the Registration
Statement, and each other person, if any, who controls the Company within the
meaning of the Act to the same extent as the foregoing indemnities from the
Company to the several Underwriters as set forth in Section 8(a) hereof, but
only with respect to any loss, liability, claim, damage or expense resulting
from statements or omissions, or alleged statements or omissions, if any, made
in any Preliminary Prospectus, the Registration Statement or the Prospectus, or
in any application or in any communication to the SEC, as the case may be, made
in reliance upon and in conformity with information supplied to the Company in
writing by or on behalf of any Underwriter through the Representatives
concerning such Underwriter expressly for use therein. This indemnity agreement
will be in addition to any liability which such Underwriter may otherwise have.
(c) If any action, inquiry, investigation or proceeding is
brought against any person in respect of which indemnity may be sought pursuant
to any of the two preceding paragraphs, such person (hereinafter called the
"indemnified party") shall, promptly after notification of, or receipt of
service of process for, such action, inquiry, investigation or proceeding,
notify in writing the party or parties against whom indemnification is to be
sought (hereinafter called the "indemnifying party")
16
of the institution of such action, inquiry, investigation or proceeding and the
indemnifying party, upon the request of the indemnified party, shall assume the
defense of such action, inquiry, investigation or proceeding, including the
employment of counsel (reasonably satisfactory to such indemnified party) and
payment of reasonable expenses. No indemnification provided for in this Section
6 shall be available to any indemnified party who shall fail to give such notice
if the indemnifying party does not otherwise have knowledge of such action,
inquiry, investigation or proceeding, to the extent that such indemnifying party
has been materially prejudiced by the failure to give such notice, but the
omission to so notify the indemnifying party shall not relieve the indemnifying
party otherwise than under this Section 6. Such indemnified party or controlling
person 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 unless the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense
of such action. If such indemnified party or parties shall have been advised by
counsel that there may be a conflict between the positions of the indemnifying
party or parties and of the indemnified party or parties or that there may be
legal defenses available to such indemnified party or parties different from or
in addition to those available to the indemnifying party or parties, the
indemnified party or parties shall be entitled to select counsel (such counsel,
"Separate Counsel") to conduct the defense to the extent determined by such
counsel to be necessary to protect the interests of the indemnified party or
parties and the reasonable fees and expenses of such Separate Counsel shall be
borne by the indemnifying party.
(d) If the indemnification provided for in this Section 6 is
unavailable to, or insufficient to hold harmless an indemnified party under
Sections 6(a) or (b) hereof in respect of any losses, liabilities, claims,
damages or expenses (or actions, inquiries, investigations or proceedings in
respect thereof) referred to therein, except by reason of the provisos set forth
in Section 6(a) hereof or the failure to give notice as required in Section 6(c)
hereof (provided that the indemnifying party does not have knowledge of the
action, inquiry, investigation or proceeding and to the extent such party has
been materially prejudiced by the failure to give such notice), then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, liabilities, claims, damages or
expenses (or actions, inquiries, investigations or proceedings in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, liabilities, claims or reasonable expenses (or
actions, inquiries, investigations or proceedings in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bears to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
17
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 6(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to above in this Section 6(d). The amount paid
or payable by an indemnified party as a result of the losses, liabilities,
claims, damages or reasonable expenses (or actions, inquiries, investigations or
proceedings in respect thereof) referred to above in 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 any such action
or claim. Notwithstanding the provisions of this Section 6(d), (i) the
provisions of the Agreement Among Underwriters shall govern contribution among
Underwriters, (ii) no Underwriter (except as provided in the Agreement Among
Underwriters) shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter, and (iii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 6(d) to
contribute are several in proportion to their individual underwriting
obligations and not joint.
7. Survival of Indemnities, Representations, Warranties, etc. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as set forth in
this Agreement or made by them respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of any Underwriter,
the Company or any of its officers or directors or any controlling person, and
shall survive delivery of and payment for the Shares.
8. Conditions of Underwriters' Obligations. The respective obligations
of the several Underwriters hereunder shall be subject to the accuracy, at and
(except as otherwise stated herein) as of the date hereof and at and as of the
Closing Dates, of the representations and warranties made herein by the Company,
to compliance at and as of the Closing Dates by the Company with its covenants
and agreements herein contained and other provisions hereof to be satisfied at
or prior to the Closing Dates, and to the following additional conditions:
(a) The Registration Statement shall have become effective and
no stop order suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or, to the knowledge of
the Company or the Representatives, shall be threatened by the Commission, and
any request for additional information on the part of the Commission (to be
included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to the reasonable satisfaction of the Representatives.
Any filings of the Prospectus, or any supplement thereto, required pursuant to
Rule 497 or Rule 434 of the Securities Act Rules and Regulations, shall
18
have been made in the manner and within the time period required by Rule 497 and
Rule 434 of the Securities Act Rules and Regulations, as the case may be.
(b) There shall not have occurred any Material Adverse Effect
or any change in the investment objectives, investment policies, capital stock,
short-term or long-term debt of the Company and the Subsidiaries taken as a
whole, such that (i) the Registration Statement or the Prospectus, or any
amendment or supplement thereto, contains an untrue statement of fact which, in
the opinion of the Representatives, is material, or omits to state a fact which,
in the opinion of the Representatives, is required to be stated therein or is
necessary to make the statements therein not misleading in any material respect
or (ii) it is inadvisable in the sole judgment of the Representatives to proceed
with the public offering or purchase the Shares as contemplated hereby.
(c) No legal or governmental action, suit or proceeding
affecting the Company which is material and adverse to the Company or which
affects or may affect the Company's ability to perform its obligations under
this Agreement shall have been instituted or threatened and there shall have
occurred no material adverse development in any existing such action, suit or
proceeding.
(d) At the time of execution of this Agreement, the
Representatives shall have received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, independent
certified public accountants, a "cold comfort" letter, dated the date hereof, in
form and substance satisfactory to the Underwriters.
(e) The Representatives shall have received from ▇▇▇▇▇▇ &
Kliegman LLP, independent certified public accountants, letters, dated the
Closing Dates, to the effect that such accountants reaffirm, as of the Closing
Dates, and as though made on the Closing Dates, the statements made in the
letter furnished by such accountants pursuant to paragraph (d) of this Section
6.
(f) The Representatives shall have received from Stursburg &
▇▇▇▇▇, counsel for the Company, an opinion, dated the Closing Dates, addressed
to the Underwriters (and stating that it may be relied upon by counsel to the
Underwriters) to the effect that:
(i) The Company and each of the Subsidiaries has been
duly incorporated and are validly existing and in good standing as
corporations under the laws of their respective jurisdictions of
incorporation and have the corporate power and authority to own or
lease their properties and to conduct their respective businesses as
described in the Prospectus. The Company and each of the Subsidiaries
are duly qualified to do business and are in good standing as foreign
corporations in all jurisdictions where their respective ownership or
leasing of properties or the conduct of their respective businesses
requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect.
19
(ii) The Company has full corporate power and
authority to enter into this Agreement and to issue, sell and deliver
to the Underwriters the Shares to be issued and sold hereunder.
(iii) The Company has the corporate power and
authority to enter into the Underwriting Agreement, and the
Underwriting Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms, except as such
enforceablility may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or similar laws
affecting creditors' rights generally and to equitable principles
(including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing), regardless of whether
considered in a proceeding in equity or at law, and except insofar as
rights to indemnity or contribution may be limited by applicable
securities laws.
(iv) The Company has authorized and outstanding
capital stock as set forth under the caption "Capitalization" in the
Prospectus; the authorized shares of the Company's Common Stock have
been duly authorized; the outstanding shares of the Company's Common
Stock have been duly authorized and validly issued and are fully paid
and nonassessable; all of the Shares conform to the description thereof
contained in the Prospectus; the certificates for the Shares are in due
and proper form; the Shares have been duly authorized and will be
validly issued, fully paid and nonassessable when issued and paid for
as contemplated by this Agreement; and no preemptive rights of
stockholders exist with respect to any of the Shares or the issue or
sale thereof. The holders of Shares are not and will not be subject to
personal liability solely by reason of being such holders. The
description of the Shares contained in the Registration Statement and
the Prospectus conforms to the rights set forth in the instruments or
certificates defining the same and is in conformity with the
requirements of the Acts and the Rules and Regulations.
(v) there are no outstanding securities of the
Company or the Subsidiaries convertible or exchangeable into or
evidencing the right to purchase or subscribe for any shares of capital
stock of the Company or the Subsidiaries and except as disclosed in the
Prospectus, there are no outstanding or authorized options, warrants or
rights of any character obligating the Company or the Subsidiaries to
issue any shares of its capital stock or any securities convertible or
exchangeable into or evidencing the right to purchase or subscribe for
any shares of such stock; and there is no holder of any securities of
the Company or the Subsidiaries or any other person who has the right,
contractual or otherwise, to cause the Company to sell or otherwise
issue to them, or to permit them to underwrite the sale of, any of the
Shares or the right to have any Common Stock or other securities of the
Company included in the Registration Statement or the right, as a
result of the filing of the Registration Statement, to require
registration under the Securities Act of any Common Stock or other
securities of the Company.
20
(vi) The Registration Statement and all
post-effective amendments thereto, if any, have become effective under
the Securities Act; any and all filings, if any, required by Rules 497,
434 and 430A of the Securities Act Rules and Regulations have been
made; and, to the knowledge of such counsel, no stop order proceedings
with respect thereto have been instituted or are pending or threatened
under the Securities Act; any required filing of the Prospectus and any
supplement thereto pursuant to Rule 497 of the Securities Act Rules and
Regulations has been made in the manner and within the time period
required by Rule 497.
(vii) The Registration Statement and the Prospectus,
and each amendment or supplement thereto, comply as to form in all
material respects with the requirements of the Acts and the applicable
rules and regulations thereunder (except that such counsel need express
no opinion as to the financial statements and related schedules or
financial and statistical data included therein).
(viii) In connection with the Registration Statement,
such counsel has participated in discussions and conferences with
certain of the officers and representatives of the Company,
representatives of the Underwriters, counsel to the Underwriters, and
the independent accountants for the Company at which the contents of
the Registration Statement and the Prospectus were discussed. While
such counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements made in the Registration
Statement and the Prospectus, nothing has come to such counsel's
attention which lead them to believe that either the Registration
Statement or the Prospectus, or any amendment or supplement thereto, as
of their respective effective or issue dates, or as of the date hereof,
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading. The descriptions in the Registration
Statement and Prospectus of statutes and legal and governmental
proceedings are accurate and fairly present the information required to
be shown. There are no legal proceedings pending or, to such counsel's
knowledge, threatened against the Company which are required to be
disclosed in the Registration Statement and Prospectus, except as
described therein. Such counsel expresses no opinion as to the
financial statements or other financial or statistical data contained
in the Registration Statement or the Prospectus.
(ix) Such counsel has read all contracts and other
documents specifically enumerated in the Registration Statement and the
Prospectus, and such contracts and other documents are fairly
summarized or described therein, fairly present the information
required to be shown; conform in all material respects to the
descriptions thereof contained therein, and are filed as exhibits
thereto, if required, and to such counsel's knowledge, there are no
contracts or documents required to be so summarized or disclosed or so
filed which have not been so summarized or disclosed or so filed.
(x) Such counsel knows of no material legal or
governmental proceedings pending or threatened against the Company or
any of the Subsidiaries.
21
(xi) The execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions
herein contemplated, and the compliance with the terms of this
Agreement do not and will not conflict with or result in a breach of
any of the terms or provisions of or violate or constitute a default
under the Certificate of Incorporation or Bylaws or other constituent
documents of the Company or the Subsidiaries or, (i) any indenture,
mortgage or other agreement or instrument to which the Company or any
of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries or any material portion of its properties is bound, or
(ii) to such counsel's knowledge, after due inquiry, any judgment,
order or decree of any government, governmental instrumentality or
court having jurisdiction over the Company or any of the Subsidiaries
or any material portion of its properties, or (iii) any existing
statute, rule or regulation applicable to the Company or the
Subsidiaries, where, with respect to clauses (i), (ii) and (iii) of
this paragraph, such violation or default could reasonably be expected
to have a Material Adverse Effect on the general affairs, properties,
condition (financial or otherwise), results of operations,
stockholders' equity, business or prospects of the Company and the
Subsidiaries taken as a whole.
(xii) No authorization, approval, consent or license
of any governmental or regulatory body, domestic or foreign, except as
may be required by the SBA, the NASD or as required under the
securities (blue sky) laws of the various jurisdictions, is required in
connection with the (i) authorization, issuance, transfer, sale or
delivery of the Shares to be sold by the Company; (ii) execution,
delivery and performance of this Agreement by the Company or (iii)
taking of any action contemplated in this Agreement or in the
Registration Statement or the Prospectus, or, if so required, all such
authorizations, approvals, consents and licenses have been obtained and
are in full force and effect.
(xiii) The Company has duly elected to be treated
under the Investment Company Act as a business development company and
all required action has been taken by the Company under the Acts to
make the public offering and consummate the sale of the Shares as
provided in this Agreement; the provisions of the corporate charter and
by-laws of the Company and the Subsidiaries and the investment policies
and restrictions described in the Prospectus comply with the
requirements of the Investment Company Act.
(xiv) The Shares are duly approved, subject to
official notice of issuance, for quotation on the Nasdaq National
Market and a registration statement has been filed pursuant to Section
12 of the Exchange Act for the Shares and has been declared effective.
(xv) To such counsel's knowledge, except as
described in the Prospectus, neither the company nor any of the Subsidiaries
owns any interest in any corporation, partnership, joint venture, trust or other
business entity.
In rendering such opinions, such counsel may set forth that as to
certain matters of fact, where appropriate, such counsel is relying on one or
more certificates of public officials, governmental
22
agencies or officers of the Company. In addition, as to matters of law, counsel
for the Company may rely as to matters involving the application of laws other
than the laws of the United States (except for laws dealing with matters within
the jurisdiction of the laws of New York, the laws of Delaware and jurisdictions
in which they are admitted, to the extent such counsel deems proper and to the
extent specified in such opinion, if at all, upon an opinion or opinions (in
form and substance satisfactory to the Underwriters' counsel) of other counsel
reasonably acceptable to the Underwriters' counsel, familiar with the applicable
laws.
Unless the context clearly indicates otherwise, the term "Company" as
used in this Section 6(f) shall include the Subsidiaries.
(g) The Representatives shall have received from Klehr,
Harrison, ▇▇▇▇▇▇, Branzburg & ▇▇▇▇▇▇, LLP, counsel for the Underwriters, their
opinion or opinions dated the Closing Date with respect to the incorporation of
the Company, the validity of the Shares, the Registration Statement and the
Prospectus and such other related matters as they may reasonably request, and
the Company shall have furnished to such counsel such documents as they may
request for the purpose of enabling them to pass upon such matters. In addition
to the matters set forth above, such opinion shall also include a statement to
the effect that nothing has come to the attention of such counsel that leads
them to believe that (i) the Registration Statement, or any amendment thereto
(except as to the financial statements and related schedules or financial data
included therein, with respect to which such counsel need express no belief), as
of the time it became effective under the Securities Act, as of the Closing Date
or the Option Closing Date, as applicable, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (ii) the Prospectus, or any supplement thereto, on the date it
was filed pursuant to the Securities Act Rules and Regulations and as of the
Closing Date or the Option Closing Date, as applicable, contained or contains,
an untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements, in the light of the
circumstances under which they are made, not misleading (except that such
counsel need express no belief as to financial statements and related schedules
or financial data included therein). With respect to such statement, Klehr,
Harrison, ▇▇▇▇▇▇, Branzburg & ▇▇▇▇▇▇, LLP may state that their belief is based
upon the procedures set forth therein, but is without independent check and
verification. In rendering such opinion, such counsel may rely upon certificates
of any officer of the Company or public officials as to matters of fact; and may
rely as to matters of law, to the extent necessary, upon the opinion or opinions
of Stursburg & ▇▇▇▇▇.
(h) The Representatives shall have received a certificate,
dated the Closing Dates, of the chief executive officer or the President and the
chief financial or accounting officer of the Company to the effect that:
(i) No stop order suspending the effectiveness of the
Registration Statement has been issued, and, to the best of the
knowledge of the signers, no proceedings for that purpose have been
instituted or are pending or contemplated under the Securities Act;
23
(ii) Neither any Preliminary Prospectus, as of its
date, nor the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, as of the respective times when the
Registration Statement became effective and at all times subsequent
thereto up to the delivery of such certificate, included any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(iii) The representations and warranties of the
company in this Agreement are true and correct at and as of the Closing
Dates, and the Company has complied with all the agreements and
performed or satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Dates; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
(i) neither the Company nor any of the Subsidiaries has incurred any
material liabilities or obligations, direct or contingent, or entered
into any other transactions not in the ordinary course of business,
(ii) there has not been any material adverse change in the condition
(financial or otherwise), properties, business, management, prospects,
net worth, capital stock, investment objectives, investment policies or
results of operations of the Company and the Subsidiaries taken as a
whole, or any change in the capital stock, or material change in the
short-term or long-term debt, of the Company and the Subsidiaries taken
as a whole and (iii) there has been no dividend or distribution of any
kind declared, paid or made by the Company or the Subsidiaries on any
class of their respective capital stock.
(i) The Company shall have furnished to the Representatives
such additional certificates as the Representatives may have reasonably
requested as to the accuracy, at and as of the Closing Dates, of the
representations and warranties made herein by it and as to compliance at and as
of the Closing Dates by it with its covenants and agreements herein contained
and other provisions hereof to be satisfied at or prior to the Closing Dates,
and as to satisfaction of the other conditions to the obligations of the
Underwriters hereunder.
(j) The Representatives shall have received the written
agreements of the officers, directors and holders of Common Stock listed on
Schedule II that each will not, except as stated therein, offer, sell, assign,
transfer, encumber, contract to sell, grant an option to purchase or otherwise
dispose of any shares of Common Stock (including, without limitation, Common
Stock of the Company which may be deemed to be beneficially owned by such
persons in accordance with the Securities Act Rules and Regulations) during the
period of time specified in Schedule II following the date of the Prospectus
first filed pursuant to Rule 497(b), (c) or (h), without the prior written
consent of First Colonial.
All opinions, certificates, letters and other documents will
be in compliance with the provisions hereunder only if they are reasonably
satisfactory in form and substance to the Representatives and their counsel. The
Company will furnish to the Representatives conformed copies
24
of such opinions, certificates, letters and other documents as the
Representatives shall reasonably request. if any of the conditions hereinabove
provided for in this Section shall not have been satisfied when and as required
by this Agreement, this Agreement may be terminated by the Representatives by
notifying the Company of such termination in writing at or prior to the Closing
Dates, but First Colonial shall be entitled to waive any of such conditions on
behalf of the Underwriters.
9. Effective Date. This Agreement shall become effective immediately as
to Sections 5, 6, 7, 9, 10, 11, 13, 14, 15, 16 and 17 and, as to all other
provisions, at 11:00 a.m. New York City time on the first full business day
following the effectiveness of the Registration Statement or at such earlier
time after the Registration Statement becomes effective as the Representatives
may determine on and by notice to the Company or by release of any of the Shares
for sale to the public. For the purposes of this Section 9, the Shares shall be
deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Shares or upon written notice from the
Representatives (i) advising Underwriters that the Shares are released for
public offering or (ii) offering the Shares for sale to securities dealers,
whichever may occur first.
10. Termination. This Agreement (except for the provisions of Section
5) may be terminated by the Company at any time before it becomes effective in
accordance with Section 9 by notice to the Representatives and may be terminated
by the Representatives at any time before it becomes effective in accordance
with Section 9 by notice to the Company. In the event of any termination of this
Agreement under this or any other provision of this Agreement, there shall be no
liability of any party to this Agreement to any other party, other than as
provided in Sections 5, 6 and 11 and other than as provided in Section 12 as to
the liability of defaulting Underwriters.
This Agreement may be terminated after it becomes effective by
the Representatives by notice to the Company (i) if at or prior to the Closing
Date or, as relates to the Option Shares only, prior to any Option Closing Date
trading in securities generally or on the Nasdaq National Market shall have been
suspended or minimum prices shall have been established on such market, or a
banking moratorium shall have been declared by New York or United States
authorities, (ii) if at or prior to the Closing Date or any Option Closing Date
there shall have been (A) a major outbreak or significant escalation of
hostilities between the United States and any foreign power or any other
insurrection or armed conflict involving the United States or (B) any change in
financial markets or any calamity or crisis which, in the sole judgment of the
Representatives, makes it impractical or inadvisable to offer or sell the Firm
Shares or Option Shares, as applicable, on the terms contemplated by the
Prospectus, (iii) if there shall be any litigation or proceeding, pending or
threatened to which the Company is a party, which in the reasonable judgment of
the Representatives, makes it impracticable to offer or deliver the Firm Shares
or Option Shares, as applicable, on the terms contemplated by the Prospectus or
(iv) if there shall have occurred any of the events specified in the immediately
preceding clauses (i) - (iii) together with any other such event that makes it,
in the judgment of the Representatives, impracticable to offer or deliver the
Firm Shares or Option Shares, as applicable, on the terms contemplated by the
Prospectus.
25
11. Reimbursement of Underwriters. Notwithstanding any other provisions
hereof, if this Agreement shall not become effective by reason of any election
of the Company pursuant to Section 10 or shall be terminated by the
Representatives under Section 8 or Section 10, the Company will bear and pay the
expenses specified in Section 5(a) hereof and, in addition to its obligations
pursuant to Section 8 hereof, the Company will reimburse the reasonable
out-of-pocket expenses of the several Underwriters (including reasonable fees
and disbursements of counsel for the Underwriters) incurred in connection with
this Agreement and the proposed purchase of the Shares to a maximum of $75,000,
and promptly upon demand the Company will pay such amounts to you as
Representatives.
12. Substitution of Underwriters. If any Underwriter or Underwriters
shall default in its or their obligations to purchase Shares hereunder and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10% of the total number of Shares
underwritten, the other Underwriters shall be obligated severally, in proportion
to their respective commitments hereunder, to purchase the Shares which such
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters shall so default and the aggregate number of Shares
with respect to which such default or defaults occur is more than 10% of the
total number of Shares underwritten and arrangements satisfactory to the
Representatives and the Company for the purchase of such Shares by other persons
are not made within 48 hours after such default, this Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are
required hereby or agree to take up all or part of the Shares of a defaulting
Underwriter or Underwriters as provided in this Section 12, (i) the Company
shall have the right to postpone the Closing Dates for a period of not more than
five full business days in order that the Company may effect whatever changes
may thereby be made necessary in the Registration Statement or the Prospectus,
or in any other documents or arrangements, and the Company agrees promptly to
file any amendments to the Registration Statement or supplements to the
Prospectus which may thereby be made necessary, and (ii) the respective numbers
of Shares to be purchased by the remaining Underwriters or substituted
Underwriters shall be taken as the basis of their underwriting obligation for
all purposes of this Agreement. Nothing herein contained shall relieve any
defaulting Underwriter of its liability to the Company or the other Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 12 shall be without liability on the part of
any non-defaulting Underwriter or the Company, except for expenses to be paid or
reimbursed pursuant to Section 5 and except for the provisions of Section 6.
13. Notices. All communications hereunder shall be in writing and, if
sent to the Underwriters shall be mailed, delivered or telecopied and confirmed
to the Representatives c/o First Colonial Securities Group, Inc., ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (telecopier no.: (▇▇▇) ▇▇▇-▇▇▇▇),
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Director of Investment Banking, with a copy to
Klehr, Harrison, ▇▇▇▇▇▇, Branzburg & ▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (telecopier no. (▇▇▇) ▇▇▇-▇▇▇▇), Attention: ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esquire, except that notices given to an Underwriter pursuant to
Section 6 hereof shall be sent to such Underwriter at the address furnished by
the Representatives or, if sent to the Company, shall be mailed, delivered or
telecopied
26
and confirmed at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (telecopier
no.: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire, with a copy to
Stursburg & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(telecopier no.: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esquire.
14. Successors. This Agreement shall inure to the benefit of and be
binding upon the several Underwriters, the Company and their respective
successors and legal representatives. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable right, remedy
or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person; except that the representations, warranties,
covenants, agreements and indemnities of the Company contained in this Agreement
shall also be for the benefit of the person or persons, if any, who control any
Underwriter or Underwriters within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, including its officers, directors,
employees, advisors and attorneys and the indemnities of the several
Underwriters shall also be for the benefit of each director of the Company, each
of its officers who has signed the Registration Statement and the person or
persons, if any, who control the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act.
15. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
16. Authority of the Representatives. In connection with this
Agreement, the Representatives will act for and on behalf of the several
Underwriters, and hereby represent that they are authorized so to act, and any
action taken under this Agreement by the Representatives, will be binding on all
the Underwriters.
17. Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
18. General. 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.
In this Agreement, the masculine, feminine and neuter genders
and the singular and the plural include one another. The section headings in
this Agreement are for the convenience of the parties only and will not affect
the construction or interpretation of this Agreement. This Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a writing signed by the Company and the Representatives.
27
19. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
between us.
Very truly yours,
AMERITRANS CAPITAL CORPORATION
By:____________________________
Name:
Title:
Accepted and delivered as of the date first above written:
FIRST COLONIAL SECURITIES GROUP, INC.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
Acting on their own behalf
and as Representatives of the several
Underwriters referred to in the
foregoing Agreement.
By: First Colonial Securities Group, Inc.
By:_______________________
Name:
Title:
28
SCHEDULE I
Number of Number of
Firm Shares to Option Shares to
Name be Purchased be Purchased
---- ------------ ------------
First Colonial Securities Group, Inc.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, Inc.
-----------------------------
------------- --------------
Total................................
SCHEDULE II
Party to Lock-up Agreement Period