Common Stock UNDERWRITING AGREEMENT
Exhibit (h)(2)
2,100,000 Shares
Common Stock
January 23, 2007
Xxxxxx, Xxxxx Xxxxx, Incorporated
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Introductory. Patriot Capital Funding, Inc., a Delaware corporation (the “Company”), proposes
to issue and sell to Xxxxxx, Xxxxx Xxxxx, Incorporated (the “Underwriter”) an aggregate of
2,100,000 shares of its common stock, par value $0.01 per share (the
“Shares”). The 2,100,000
Shares to be sold by the Company are called the “Firm Shares.” In addition, the Company has
granted to the Underwriter an option to purchase up to an additional
315,000 Shares (the “Optional
Shares”), as provided in Section 2. The Firm Shares and, if and to the extent such option is
exercised, the Optional Shares are collectively called the “Offered Shares.”
The Company has prepared and filed with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form N-2 (File No. 333-137856), which contains a form of
prospectus to be used in connection with the public offering and sale of the Offered Shares. The
registration statement, as amended, including the financial statements, exhibits and schedules
thereto, in the form in which it was declared effective by the Commission under the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder (collectively, the
“Securities Act”), including any information contained in a prospectus subsequently filed with the
Commission pursuant to Rule 497 under the Securities Act and deemed to be a part of the
registration statement at the time of effectiveness pursuant to Rule 430C under the Securities Act,
is called the “Registration Statement.” Any registration statement filed by the Company pursuant
to Rule 462(b) under the Securities Act is called the “Rule 462(b) Registration Statement,” and
from and after the date and time of filing of the Rule 462(b) Registration Statement, the term
“Registration Statement” shall include the Rule 462(b) Registration Statement. The prospectus,
dated as of December 15, 2006, included in the Registration Statement at the time it became
effective on December 15, 2006, is hereinafter referred to as the “Base Prospectus.” The
prospectus supplement, dated January 22, 2007, filed with the Commission pursuant to Rule 497
under the Securities Act relating to the Offered Shares is hereinafter referred to as the
“Preliminary Prospectus Supplement” (and together with the Base Prospectus, the “Preliminary
Prospectus”). The Preliminary Prospectus, together with the information set forth in the oral
pricing script attached as Exhibit A (“Pricing Information”) is hereinafter referred to as
the “Disclosure Package.” The prospectus supplement to be filed with the Commission pursuant to
Rule 497 and used by the Underwriter to confirm sales of Offered Shares is hereinafter referred to
as the “Prospectus Supplement” (and together with the Base Prospectus, the “Prospectus”). All
references in this Agreement to the Registration Statement, the Rule 462(b) Registration Statement,
the Preliminary Prospectus or the Prospectus, or any amendments or supplements to any of the
foregoing, shall include
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any copy thereof filed with the Commission pursuant to its Electronic Data Gathering,
Analysis, and Retrieval system (“XXXXX”).
The Company hereby confirms its agreement with the Underwriter as follows:
Section 1. Representations and Warranties of the Company.
The Company hereby represents, warrants and covenants to the Underwriter as follows:
(a) Compliance with Registration Requirements. The Registration Statement and any Rule
462(b) Registration Statement have been declared effective by the Commission under the Securities
Act. The Company has complied with all requests of the Commission for additional or supplemental
information. No stop order suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement is in effect and no proceedings for such purpose have been instituted
or are pending or, to the best knowledge of the Company, are threatened by the Commission.
The Preliminary Prospectus and the Prospectus when filed with the Commission complied or will
comply, as appropriate, in all material respects with the requirements of the Securities Act and,
if filed by electronic transmission pursuant to XXXXX (except as may be permitted by Regulation S-T
under the Securities Act), was, or will be, as appropriate, identical to the copy thereof delivered
to the Underwriter for use in connection with the offer and sale of the Offered Shares. Each of
the Registration Statement, any Rule 462(b) Registration Statement and any post-effective amendment
thereto, at the time it became effective, did not contain and, as amended and supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading; the
Registration Statement, when it became effective, complied in all material respects with the
requirements of the Securities Act. The Prospectus as amended or supplemented, as of its date and
at all subsequent times, did not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The representations and warranties
set forth in the two immediately preceding sentences do not apply to statements in or omissions
from the Registration Statement, any Rule 462(b) Registration Statement, or any post-effective
amendment thereto, the Preliminary Prospectus or the Prospectus, or any amendments or supplements
thereto, made in reliance upon and in conformity with information relating to the Underwriter
furnished to the Company in writing by the Underwriter expressly for use therein, it being
understood and agreed that the only such information furnished by the Underwriter to the Company
consists of the information described in Section 8(b) below. There are no contracts or other
documents required to be described in the Preliminary Prospectus, the Prospectus or to be filed as
exhibits to the Registration Statement which have not been described or filed as required.
(b) Disclosure Package. The Disclosure Package as of the Time of Sale does not include any
untrue statement of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not
misleading. The preceding sentence does not apply to statements in or omissions from the
Disclosure Package based upon and in conformity with information relating to the Underwriter
furnished to the Company in writing by the Underwriter expressly for use therein, it being
understood and agreed that the only such information furnished by the Underwriter to the Company
consists of the information described in Section 8(b) below. The “Time of Sale” shall mean
8:30 A.M.,
Eastern Standard Time, on January 23, 2007.
(c) Offering Materials Furnished to Underwriter. The Company (i) has delivered to the
Underwriter one complete manually signed copy of the Registration Statement and of each consent and
certificate of experts filed as a part thereof, and conformed copies of the Registration Statement
(without
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exhibits) and the Preliminary Prospectus, as amended or supplemented, in such quantities and
at such places as the Underwriter has reasonably requested and (ii) will deliver (as soon as it
becomes available) the Prospectus, as amended or supplemented, in such quantities and at such
places as the Underwriter has reasonably requested.
(d) Distribution of Offering Material By the Company. The Company has not distributed and
will not distribute, prior to the later of (i) the expiration or termination of the option granted
to the Underwriter in Section 2 and (ii) the completion of the Underwriter’s distribution of the
Offered Shares, any offering material in connection with the offering and sale of the Offered
Shares other than the Preliminary Prospectus, the Prospectus or the Registration Statement.
(e) The Underwriting Agreement. This Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company, enforceable against the Company
in accordance with its terms except as the enforcement hereof or thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting
the rights and remedies of creditors or by general equitable principles and except as rights to
indemnity hereunder may be limited by general equitable principles or federal or state securities
laws or public policy underlying such laws.
(f) Authorization of the Offered Shares. The Offered Shares to be purchased by the
Underwriter from the Company have been duly authorized for issuance and sale pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this Agreement, will be validly
issued, fully paid and nonassessable and will be issued in compliance with federal and state
securities laws.
(g) No Applicable Registration or Other Similar Rights. Other than the offering contemplated
by this Agreement, there are no persons with registration or other similar rights to have any
equity or debt securities registered for sale under the Registration Statement or included in the
offering contemplated by this Agreement.
(h) Subsidiaries. The Company does not own, directly or indirectly, any shares of stock or
any other equity or long-term debt securities of any corporation or other entity other than (i)
100% of the equity interests in Patriot Capital Funding LLC I (the “Subsidiary”) and (ii) those
corporations or other entities described in the Disclosure Package and the Prospectus under the
captions “Portfolio Companies” and “Recent Developments” (each a “Portfolio Company” and
collectively, the “Portfolio Companies”). The Company does not control (as such term is defined in
Section 2(a)(9) of the Investment Company Act of 1940, as amended, and the rules and regulations
thereunder (collectively, the “Investment Company Act”)) any of the Portfolio Companies. In
accordance with Article 6 of Regulation S-X under the Securities Act, the Company is not currently
required to consolidate the financial statements of any corporation, association or other entity
with the Company’s financial statements other than the Subsidiary.
(i) Capitalization of Subsidiary. All of the outstanding membership or equity interests of
the Subsidiary have been duly authorized and issued and are fully paid and nonassessable, and all
outstanding membership or equity interests of the Subsidiary are owned by the Company free and
clear of any security interests, claims, liens or encumbrances.
(j) No Prohibition on Subsidiary from Paying Dividends or Making Other Distributions. The
Subsidiary is not currently prohibited, directly or indirectly, from paying any dividends to the
Company or from making any other distribution on its membership or equity interests, except as
described in or contemplated by the Disclosure Package and the Prospectus.
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(k) No Material Adverse Change. Except as otherwise disclosed in the Disclosure Package and
Prospectus, subsequent to the respective dates as of which information is given in the Disclosure
Package and the Prospectus: (i) there has been no material adverse change, or any development that
could reasonably be expected to result in a material adverse change, in the condition, financial or
otherwise, or in the earnings, business, management, operations or prospects, whether or not
arising from transactions in the ordinary course of business, of the Company (any such change is
called a “Material Adverse Change”); (ii) the Company has not incurred any material liability or
obligation, indirect, direct or contingent, not in the ordinary course of business; and (iii) the
Company has not entered into any material transaction or agreement not in the ordinary course of
business.
(l) Independent Accountants. Xxxxx Xxxxxxxx LLP, who have expressed their opinion with
respect to the consolidated financial statements and the related notes thereto filed with the
Commission as a part of the Registration Statement and included in the Disclosure Package and the
Prospectus (the “Financial Statements”), are: (i) independent public or certified public
accountants as required by the Securities Act and the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder (collectively, the “Exchange Act”); (ii) to
the best of the Company’s knowledge, in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X; and (iii) to the best of the
Company’s knowledge, a registered public accounting firm as defined by the Public Company
Accounting Oversight Board (the “PCAOB”) whose registration has not been suspended or revoked and
who has not requested such registration to be withdrawn.
(m) Preparation of the Financial Statements. The Financial Statements present fairly in all
material respects the consolidated financial position of the Company and the Subsidiary, as of and
at the dates indicated and the results of their operations and cash flows for the periods
specified. Such Financial Statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods involved, except as may
be expressly stated in the related notes thereto. No other financial statements or supporting
schedules are required to be included in the Registration Statement.
(n) Company’s Accounting System. The Company makes and keeps accurate books and records and
maintains a system of 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.
(o) Organization and Good Standing of the Company and the Subsidiary.
(i) The Company has been duly organized and is validly existing as a corporation, in good
standing under the laws of the State of Delaware, (A) has the corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the Disclosure Package
and the Prospectus and to enter into and perform its obligations under this Agreement and (B) is
duly qualified as a foreign corporation to transact business and is in good standing in the State
of Connecticut and each other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business, except to the extent
that the failure to be so qualified or be in good standing would not reasonably be expected to
result in a Material Adverse Change.
(ii) The Subsidiary has been duly organized and is validly existing as a limited liability
company, in good standing under the laws of the State of Delaware, (A) has the limited liability
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company power and authority to own, lease and operate its properties and to conduct its
business as described in the Disclosure Package and the Prospectus and (B) is duly qualified as a
foreign limited liability company to transact business and is in good standing in the State of
Connecticut and each other jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business, except to the extent that the
failure to be so qualified or be in good standing would not reasonably be expected to result in a
Material Adverse Change or a material adverse change with respect to the Subsidiary.
(p) Capitalization and Other Capital Stock Matters. The authorized, issued and outstanding
capital stock of the Company and the Shares (including the Offered Shares) conform in all material
respects to the description thereof contained in the Disclosure Package and the Prospectus. All of
the issued and outstanding Shares have been duly authorized and validly issued, are fully paid and
nonassessable and have been issued in compliance with federal and state securities laws. None of
the outstanding Shares have been, and none of the Offered Shares will be, issued in violation of
any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase
securities of the Company arising under the Delaware General Corporation Law (“DGCL”), the
Company’s charter or bylaws or any agreement to which the Company is party. There are no
authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other
rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable
for, any capital stock of the Company other than those described in the Disclosure Package and the
Prospectus. The description of the Company’s stock option plan, and the options or other rights
granted thereunder, set forth in the Disclosure Package and the Prospectus accurately and fairly
presents the information required to be shown with respect to such plan and options. The Company
has no other stock plans or arrangements other than those described in the Disclosure Package and
the Prospectus.
(q) Listing. The Offered Shares have been approved for inclusion on the Nasdaq Global Select
Market, subject only to official notice of issuance. The Shares are registered pursuant to Section
12(b) of the Exchange Act. The Shares are quoted on the Nasdaq Global Select Market, and the
Company has taken no action designed to, or likely to have the effect of, terminating the
registration of the Shares under the Exchange Act or the quotation of the Shares on the Nasdaq
Global Select Market. The Company has not received any notification that (i) the Commission is
contemplating terminating the Company’s registration under the Exchange Act or (ii) the Nasdaq
Global Select Market is contemplating delisting the Shares from the Nasdaq Global Select Market.
(r) Non-Contravention of Company Instruments; No Further Authorizations or Approvals
Required. The Company (i) is not in violation of its charter or by-laws and (ii) is not in default
(or, with the giving of notice or lapse of time, would be in default) (a “Company Default”) under
any indenture, mortgage, loan or credit agreement, note, contract, franchise, lease or other
instrument to which the Company is a party or by which it may be bound, or to which any of the
property or assets of the Company is subject (each, a “Company Instrument”), except, with respect
to clause (ii) to the extent that any such Company Default would not reasonably be expected to
result in a Material Adverse Change. The Company’s execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated hereby and by the Disclosure Package
and the Prospectus and the issuance and sale of the Offered Shares: (i) will not result in any
violation of the provisions of the charter or by-laws of the Company; (ii) will not conflict with
or constitute a breach of, or Company Default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company pursuant to, or require the
consent of any other party to, any Company Instrument; and (iii) will not result in any violation
of any law, administrative regulation or administrative or court decree applicable to the Company,
except with respect to clauses (ii) and (iii), to the extent that any such contravention would not
reasonably be expected to result in a Material Adverse Change. No consent, approval, authorization
or other order of, or registration or filing with, any court or other governmental or
5
regulatory authority or agency is required for the Company’s execution, delivery and
performance of this Agreement and consummation of the transactions contemplated hereby and by the
Disclosure Package and the Prospectus, except (i) registration of the Offered Shares under the
Securities Act, which has been effected, (ii) any necessary qualification under the securities or
blue sky laws of the various jurisdictions in which the Offered Shares are being offered by the
Underwriter and (iii) under the rules and regulations of the NASD in connection with the purchase
and distribution of Offered Shares by the Underwriter.
(s) No Material Actions or Proceedings. Except as otherwise disclosed in the Disclosure
Package and the Prospectus, there are no legal or governmental actions, suits or proceedings
pending or, to the best of the Company’s knowledge, threatened: (i) against or affecting the
Company; (ii) which has as the subject thereof any officer or director of, or property owned or
leased by, the Company; or (iii) relating to environmental or discrimination matters against or
affecting the Company, where in each such case (A) there is a reasonable possibility that such
action, suit or proceeding might be determined adversely to the Company or such officer or director
and (B) any such action, suit or proceeding, if so determined adversely, would reasonably be
expected to result in a Material Adverse Change or adversely affect the consummation of the
transactions contemplated by this Agreement.
(t) Ability to Invest Assets. There are no material restrictions, limitations or regulations
with respect to the ability of the Company to invest its assets as described in the Disclosure
Package and the Prospectus, other than as described therein or as set forth in that certain Amended
and Restated Loan Funding and Servicing Agreement dated as of September 18, 2006 between Patriot
Capital Funding LLC I, as Borrower, Patriot Capital Funding, Inc as Servicer, Fairway Finance
Company, LLC as Conduit Lender and BMO Capital Markets Corp. as Agent.
(u) Intellectual Property Rights. The Company owns or possesses sufficient trademarks, trade
names, patent rights, copyrights, domain names, licenses, approvals, trade secrets and other
similar rights (collectively, “Intellectual Property Rights”) reasonably necessary to conduct its
business as now conducted and as described in the Disclosure Package and the Prospectus, except
where the failure to own or possess such rights would not reasonably be expected to result in a
Material Adverse Change; and the expected expiration of any of such Intellectual Property Rights
would not result in a Material Adverse Change. The Company has not received, and has no reason to
believe that it will receive, any notice of infringement or conflict with asserted Intellectual
Property Rights of others. The Company is not a party to or bound by any options, licenses or
agreements with respect to the Intellectual Property Rights of any other person or entity that are
required to be set forth in the Disclosure Package and the Prospectus and are not described
therein. To the best of the Company’s knowledge, none of the technology employed by the Company
has been obtained or is being used by the Company in violation of any contractual obligation
binding on the Company or, to the Company’s knowledge, any of its officers, directors or employees
in violation of the rights of any persons, except to the extent that any such violation would not
reasonably be expected to result in a Material Adverse Change.
(v) All Necessary Permits. The Company possesses such valid and current certificates,
authorizations or permits issued by the appropriate state or federal regulatory agencies or bodies
necessary to conduct its business, and the Company has not received, and has no reason to believe
that it will receive, any notice of proceedings relating to the revocation or modification of, or
non-compliance with, any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would reasonably be
expected to result in a Material Adverse Change.
(w) Title to Properties. The Company has good and marketable title to all of the real and
personal property and other assets reflected as owned in the Financial Statements, in each case,
except as disclosed in the Disclosure Package and the Prospectus, free and clear of any security
interests,
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mortgages, liens, encumbrances, equities and adverse claims. The real property, improvements,
equipment and personal property held under lease by the Company are held under valid and
enforceable leases, with such exceptions as are not material and do not materially interfere with
the use made or proposed to be made of such real property, improvements, equipment or personal
property by the Company.
(x) Tax Law Compliance. The Company has filed all necessary federal and state income and
franchise tax returns, except to the extent that the failure to file such tax returns and taxes
would not result in a Material Adverse Change. The Company has paid all taxes required to be paid
by it and, if due and payable, any related or similar assessment, fine or penalty levied against
it, except to the extent that the failure to pay such tax returns and taxes would not result in a
Material Adverse Change. The Company has made adequate charges, accruals and reserves in the
Financial Statements in respect of all income tax and franchise taxes for all periods as to which
the tax liability of the Company has not been finally determined. The Company is not aware of any
tax deficiency that has been or might be asserted or threatened against the Company that would
reasonably be expected to result in a Material Adverse Change.
(y) Insurance. The Company maintains insurance policies in such amounts and with such
deductibles and covering such risks as it deems appropriate for its business. The Company has no
reason to believe that it will not be able: (i) to renew its existing insurance coverage as and
when such policies expire; or (ii) to obtain comparable coverage from similar institutions as may
be necessary or appropriate to conduct its business as now conducted and at a cost that would not
reasonably be expected to result in a Material Adverse Change. The Company has not been denied any
insurance coverage for which it has applied.
(z) No Price Stabilization or Manipulation; Compliance with Regulation M. The Company has
not taken, directly or indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Shares or any other “reference
security” (as defined in Rule 100 of Regulation M under the Exchange Act (“Regulation M”)) whether
to facilitate the sale or resale of the Offered Shares or otherwise, and has taken no action which
would directly or indirectly violate Regulation M. The Company acknowledges that the Underwriter
may engage in passive market making transactions in the Offered Shares on the Nasdaq Global Select
Market in accordance with Regulation M.
(aa) Related Party Transactions. There are no business relationships or transactions that
exist between or among the Company, on the one hand, and any director, executive officer,
stockholder or any other person, on the other hand, which are required to be described in the
Disclosure Package and the Prospectus which have not been described as required.
(bb) No Unlawful Contributions or Other Payments. Neither the Company nor, to the best of
the Company’s knowledge, any employee of the Company or any agent on behalf of the Company, has
made any contribution or other payment to any official of, or candidate for, any federal, state or
foreign office in violation of any law or of the character required to be disclosed in the
Registration Statement, the Disclosure Package and the Prospectus.
(cc) Disclosure Controls and Procedures; Deficiencies in or Changes to Internal Control Over
Financial Reporting. The Company has established and maintains disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), which: (i) are designed to ensure that
material information relating to the Company is made known to the Company’s principal executive
officer and its principal financial officer by others within the Company; and (ii) are effective in
all material respects to perform the functions for which they were established. The Company is not
aware of (x) any significant
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deficiencies or material weaknesses in the design or operation of its internal control over
financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) which
are reasonably likely to adversely affect the Company’s ability to record, process, summarize and
report financial information or (y) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company’s internal control over financial
reporting. Since the date of the Financial Statements, there has been no change in the Company’s
internal control over financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting.
(dd) Xxxxxxxx-Xxxxx Act Compliance. The Company has complied in all material respects with
Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act of 2002 (the “Xxxxxxxx-Xxxxx Act”) and has made the
evaluations of the Company’s disclosure controls and procedures required under Rule 13a-15 under
the Exchange Act.
(ee) ERISA Compliance. The Company and any “employee benefit plan” (as defined under the
Employee Retirement Income Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, “ERISA”)) established or maintained by the Company are in
compliance with ERISA. No “reportable event” (as defined under ERISA) has occurred or is
reasonably expected to occur with respect to any “employee benefit plan” established or maintained
by the Company. No “employee benefit plan” established or maintained by the Company if such
“employee benefit plan” were terminated, would have any “amount of unfunded benefit liabilities”
(as defined under ERISA). The Company has not incurred and does not reasonably expect to incur any
liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any
“employee benefit plan” or (ii) Sections 412, 4971, 4975 or 4980B of the Internal Revenue Code of
1986, as amended, and the regulations and published interpretations thereunder (collectively, the
“Code”). Each “employee benefit plan” established or maintained by the Company that is intended to
be qualified under Section 401(a) of the Code is so qualified and nothing has occurred, whether by
action or failure to act, which would cause the loss of such qualification. The Company has not
received any notification of any investigation, examination, audit or review of any type by or with
the Internal Revenue Service or Department of Labor regarding or in connection with any “employee
benefit plan” established or maintained by the Company.
(ff) Brokers. Except as otherwise disclosed in the Disclosure Package and the Prospectus,
there is no broker, finder or other party that is entitled to receive from the Company any
brokerage or finder’s fee or other fee or commission as a result of any transactions contemplated
by this Agreement.
(gg) No Outstanding Loans or Other Extensions of Credit. The Company has not extended or
maintained credit, arranged for the extension of credit, or renewed any extension of credit, in the
form of a personal loan, to or for any director or executive officer of the Company except for such
extensions of credit as are (i) expressly permitted by Section 13(k) of the Exchange Act or (ii)
fully repaid, discharged, forgiven or otherwise no longer outstanding or owing in any way on the
date of this Agreement.
(hh) Compliance with Laws. The Company has not been advised, and has no reason to believe,
that it is not conducting business in material compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business.
(ii) Reports Filed. The Company has timely filed all reports required to be filed pursuant
to the Securities Act, the Investment Company Act and the Exchange Act.
(jj) Exchange Act Compliance. The documents filed by the Company with the Commission
complied in all material respects with the requirements of the Exchange Act, and, at the time of
filing, did not contain an untrue statement of a material fact or omit to state a material fact
required to be stated
8
therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(kk) Election as a Business Development Company. The Company has filed with the Commission
pursuant to Section 54(a) of the Investment Company Act, a Form N-54A Notification of Election to
be subject to Sections 55 through 65 of the Investment Company Act of 1940 filed pursuant to
Section 54(a) of the Investment Company Act (the “Notification of Election”), pursuant to which the
Company has elected to be subject to Sections 55 to 65 of the Investment Company Act. The Company
will not, as of the First Closing Date (as defined below) and any Option Closing Date (as defined
below), have filed with the Commission any notice of withdrawal of the Notification of Election
pursuant to Section 54(c) of the Investment Company Act. The Notification of Election is
effective and no order of suspension or revocation of such election has been issued or proceedings
therefor initiated or, to the best knowledge of the Company, threatened by the Commission.
(ll) Portfolio Companies. The Company has duly authorized, executed and delivered agreements
required to make the investments described in the Disclosure Package and the Prospectus under the
caption “Portfolio Companies” (each a “Portfolio Company Agreement”). Except as otherwise
disclosed in the Disclosure Package and the Prospectus, none of the Portfolio Companies is
currently on non-accrual status.
(mm) Termination of Agreements. Except as disclosed in the Disclosure Package and the
Prospectus, the Company has not sent or received any communication regarding termination of, or
intent not to renew, any of the contracts or agreements referred to or described in, or filed as an
exhibit to, the Registration Statement, and no such termination or non-renewal has been threatened
by the Company or, to the Company’s knowledge, any other party to any such contract or agreement.
(nn) No Affiliations. To the best of the Company’s knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company’s officers, directors or 5% or
greater securityholders, except as set forth in the Disclosure Package and the Prospectus.
(oo) Regulated Investment Company Status. Since August 1, 2005, the Company has been
organized and operated, and is currently organized and operated, in compliance in all material
respects with the requirements to be taxed as a regulated investment company under Subchapter M of
the Code. The Company intends to operate its business in such a manner as to continue to comply
with the requirements for taxation as a regulated investment company under Subchapter M of the
Code.
(pp) Interested Persons. Except as disclosed in the Disclosure Package and the Prospectus,
(i) no person is serving or acting as an officer or director of the Company except in accordance
with the provisions of the Investment Company Act and (ii) no director of the Company is an
“interested person” (as defined in the Investment Company Act) of the Company or an “affiliated
person” (as defined in the Investment Company Act) the Underwriter.
(qq) Operations Comply with Investment Company Act. The operations of the Company are in
compliance in all material respects with the provisions of the Investment Company Act applicable to
“business development companies”. The provisions of the charter and by-laws of the Company and the
investment objective, strategies, policies and restrictions described in the Disclosure Package and
the Prospectus, assuming they are implemented as so described, will comply in all material respects
with the requirements of the Investment Company Act.
(rr) No Transfer Taxes or Other Fees. There are no transfer taxes or other similar fees or
charges under federal law or the laws of any state, or any political subdivision thereof, required
to be paid in
9
connection with the execution and delivery of this Agreement or the issuance and sale by the
Company of the Offered Shares.
(ss) Lock-Up Agreements. Each person listed on Schedule B signed an agreement in the
form attached hereto as Exhibit B (the “Lock-up Agreements”). The Company has provided to
counsel for the Underwriter true, accurate and complete copies of all the Lock-up Agreements.
(tt) Conditions for Use of Form N-2. The Company has satisfied the conditions for the use of
Form N-2, as set forth in the general instructions thereto, with respect to the Registration
Statement.
The Company acknowledges that the Underwriter and, for purposes of the opinions to be
delivered pursuant to Section 5 hereof, counsel to the Company and counsel to the Underwriter, will
rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to
such reliance.
Section 2. Purchase, Sale and Delivery of the Offered Shares.
(a)
The Firm Shares. Upon the terms herein set forth, the Company agrees to issue and sell
to the Underwriter an aggregate of 2,100,000 Firm Shares. On the basis of the representations,
warranties and agreements herein contained, and upon the terms but subject to the conditions herein
set forth, the Underwriter agrees to purchase from the Company 2,100,000 Firm Shares. The purchase
price per Firm Share to be paid by the Underwriter to the Company shall be $13.5255 per share.
(b) The First Closing Date. Delivery of certificates for the Firm Shares to be purchased by
the Underwriter and payment therefor shall be made at the offices of Squire, Xxxxxxx & Xxxxxxx
L.L.P., 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxx 00000 (or such other place as may be agreed
to by the Company and the Underwriter) at 10:30 A.M. Eastern Standard Time, on January 26, 2007,
or such other time and date not later than 1:30 P.M. Eastern Standard Time, on February 9, 2007
as the Underwriter shall designate by notice to the Company (the time and date of such closing are
called the “First Closing Date”). The Company hereby acknowledges that circumstances under which
the Underwriter may provide notice to postpone the First Closing Date as originally scheduled
include, but are in no way limited to, any determination by the Company or the Underwriter to
recirculate to the public copies of an amended or supplemented Prospectus or a delay as
contemplated by the provisions of Section 10.
(c) The Optional Shares; Option Closing Date. In addition, on the basis of the
representations, warranties and agreements herein contained, and upon the terms but subject to the
conditions herein set forth, the Company hereby grants an option to the Underwriter to purchase up
to 315,000 Optional Shares from the Company at the purchase price per share to be paid by the
Underwriter for the Firm Shares as set forth in Section 2(a) above. The option granted hereunder
is for use by the Underwriter solely in covering any over-allotments in connection with the sale
and distribution of the Firm Shares. The option granted hereunder may be exercised at any time and
from time to time in whole or in part upon notice by the Underwriter to the Company, which notice
may be given at any time within thirty (30) days from the date of this Agreement (the “Option
Period”). Such notice shall set forth: (i) the aggregate number of Optional Shares as to which the
Underwriter is exercising the option; (ii) the names and denominations in which the certificates
for the Optional Shares are to be registered; and (iii) the time, date and place at which such
certificates will be delivered (which time and date may be simultaneous with, but not earlier than,
the First Closing Date; and in such case the term “First Closing Date” shall refer to the time and
date of delivery of certificates for the Firm Shares and such Optional Shares). Such time and date
of delivery, if subsequent to the First Closing Date, is called an “Option Closing Date” and shall
be determined by the Underwriter and shall not be earlier than three (3) nor later than five (5)
full business days after delivery of such notice of exercise. The Underwriter may cancel the
option at any time prior to its expiration by giving written notice of such cancellation to the
Company.
10
(d) Public Offering of the Offered Shares. The Underwriter hereby advises the Company
that it intends to offer for sale to the public, initially on the terms set forth in the
Prospectus, their respective portions of the Offered Shares as soon after this Agreement has been
executed and as the Underwriter, in its sole judgment, has determined is advisable and practicable.
(e) Payment for the Offered Shares. Payment for the Offered Shares to be sold by the Company
shall be made at the First Closing Date (and, if applicable, at each Option Closing Date) by wire
transfer of immediately available funds to the order of the Company.
It is understood that the Underwriter has been authorized to accept delivery of and receipt
for, and make payment of the purchase price for, the Firm Shares and any Optional Shares the
Underwriter has agreed to purchase.
(f) Delivery of the Offered Shares. The Company shall deliver, or cause to be delivered, to
the Underwriter certificates for the Firm Shares to be sold by them at the First Closing Date,
against the irrevocable release of a wire transfer of immediately available funds for the amount of
the purchase price therefor. The Company shall also deliver, or cause to be delivered, to the
Underwriter, certificates for the Optional Shares the Underwriter has agreed to purchase from it at
the First Closing Date or the applicable Option Closing Date, as the case may be, against the
irrevocable release of a wire transfer of immediately available funds for the amount of the
purchase price therefor. The certificates for the Offered Shares shall be in definitive form and
registered in such names and denominations as the Underwriter shall have requested at least two (2)
full business days prior to the First Closing Date (or the applicable Option Closing Date, as the
case may be) and shall be made available for inspection on the business day preceding the First
Closing Date (or the applicable Option Closing Date, as the case may be) at a location in New York
City as the Underwriter may designate. Time shall be of the essence, and delivery at the time and
place specified in this Agreement is a further condition to the obligations of the Underwriter.
(g) Delivery of Prospectus to the Underwriter. Not later than 12:00 p.m. on the second
business day following the date the Offered Shares are first released by the Underwriter for sale
to the public, the Company shall deliver or cause to be delivered, copies of the Prospectus in such
quantities and at such places as the Underwriter shall request.
Section 3. Additional Covenants.
A. Covenants of the Company. The Company further covenants and agrees with the Underwriter
as follows:
(a) Underwriter’s Review of Proposed Amendments and Supplements. During the period
beginning on the date hereof and ending on the later of the First Closing Date or such date, as
in the opinion of counsel for the Underwriter, the Prospectus is no longer required by law to be
delivered in connection with sales by an Underwriter or dealer (the “Prospectus Delivery
Period”), prior to amending or supplementing the Registration Statement (including any Rule
462(b) Registration Statement) or the Prospectus, the Company shall furnish to the Underwriter
for review a copy of each such proposed amendment or supplement, and the Company shall not file
any such proposed amendment or supplement without the Underwriter’s consent, which consent shall
not be unreasonably withheld or delayed.
(b) Securities Act Compliance. After the date of this Agreement, the Company shall
promptly advise the Underwriter in writing (i) of the receipt of any comments of, or requests for
additional or supplemental information from, the Commission regarding the Registration Statement,
the Preliminary Prospectus or the Prospectus, or affecting the information contained therein,
(ii) of the time and date of
11
any filing of any post-effective amendment to the Registration Statement or any amendment or
supplement to the Preliminary Prospectus or the Prospectus, (iii) of the time and date that any
post-effective amendment to the Registration Statement becomes effective, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto or of any order preventing or suspending the
use of the Preliminary Prospectus or the Prospectus, or of the suspension of the qualification of
the Offered Shares for offering and sale in any jurisdiction. If the Commission shall enter any
such stop order at any time, the Company will use its best efforts to obtain the lifting of such
order at the earliest possible moment. Additionally, the Company agrees that it shall comply
with the provisions of Rules 430C and 497, as applicable, under the Securities Act and will use
its reasonable efforts to confirm that any filings made by the Company under Rule 497 of the
Securities Act were received in a timely manner by the Commission.
(c) Amendments and Supplements to the Prospectus and Other Securities Act Matters. If,
during the Prospectus Delivery Period, any event shall occur or condition exist as a result of
which it is necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if in the opinion of the Underwriter or counsel for the Underwriter it is
otherwise necessary to amend or supplement the Prospectus to comply with law, the Company agrees
to promptly prepare (subject to Section 3(A)(a) hereof), file with the Commission and furnish at
its own expense to the Underwriter and to dealers, amendments or supplements to the Prospectus so
that the statements in the Prospectus as so amended or supplemented will not, in light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law. Neither the Underwriter’s consent
to, or delivery of, any such amendment or supplement shall constitute a waiver of any of the
Company’s obligations under this Section 3(A)(c).
(d) Amendments or Supplements to the Disclosure Package. If there occurs an event or
development as a result of which the Disclosure Package would include an untrue statement of a
material fact or would omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances then prevailing, not misleading, the Company will promptly
notify the Underwriter so that any use of the Disclosure Package may cease until it is amended or
supplemented (at the sole cost and expense of the Company).
(e) Copies of any Amendments and Supplements to the Prospectus. The Company agrees to
furnish the Underwriter, without charge, during the Prospectus Delivery Period, as many copies of
the Prospectus and any amendments and supplements thereto as the Underwriter may request.
(f) Free Writing Prospectus. The Company agrees that it will not use, distribute or make
any offer relating to the Offered Shares that would constitute (i) a “free writing prospectus” as
defined in Rule 405 under the Securities Act or (ii) an “issuer free writing prospectus” as
defined in Rule 433 under the Securities Act.
(g) Blue Sky Compliance. The Company shall cooperate with the Underwriter and counsel for
the Underwriter to qualify or register the Offered Shares for sale under (or obtain exemptions
from the application of) the state securities or blue sky laws of those jurisdictions designated
by the Underwriter, shall comply with such laws and shall continue such qualifications,
registrations and exemptions in effect so long as required for the distribution of the Offered
Shares; provided, however, the Company shall not be required to qualify as a foreign corporation
or to take any action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified. The Company will advise the Underwriter
promptly of the suspension of the qualification or registration of (or any such exemption
relating to) the Offered Shares for offering, sale or trading in any jurisdiction
12
or any initiation or threat of any proceeding for any such purpose, and in the event of the
issuance of any order suspending such qualification, registration or exemption, the Company shall
use its best efforts to obtain the withdrawal thereof at the earliest possible moment.
(h) Use of Proceeds. The Company shall apply the net proceeds from the sale of the Offered
Shares sold by it in the manner described under the caption “Use of Proceeds” in the Prospectus.
(i) Transfer Agent. For the period of three years from the date of this Agreement, the
Company shall engage and maintain, at its expense, a registrar and transfer agent for the Shares.
(j) Earnings Statement. As soon as practicable, the Company will make generally available
to its security holders and to the Underwriter an earnings statement (which need not be audited)
covering the twelve-month period ending December 31, 2006 that satisfies the provisions of
Section 11(a) of the Securities Act.
(k) Periodic Reporting Obligations. During the Prospectus Delivery Period, the Company
shall file, on a timely basis, with the Commission and the Nasdaq Global Select Market all
reports and documents required to be filed under the Exchange Act.
(l) Listing. The Company will use its best efforts to (i) effect the inclusion of the
Offered Shares on the Nasdaq Global Select Market and (ii) maintain the listing of the Shares on
the Nasdaq Global Market.
(m) Agreement Not to Offer or Sell Additional Shares. During the period commencing on the
date hereof and ending ninety (90) days following the date of the Prospectus (the “Lock-up
Period”), the Company will not, without the prior written consent of the Underwriter (which
consent may be withheld at the sole discretion of the Underwriter), directly or indirectly,
issue, sell, offer, contract or grant any option to sell, pledge, transfer or establish an open
“put equivalent position” within the meaning of Rule 16a-1(h) under the Exchange Act, or
otherwise dispose of or transfer, or announce the offering of, or file any registration statement
under the Securities Act in respect of, any Shares, options or warrants to acquire Shares or
securities exchangeable or exercisable for or convertible into Shares (other than as contemplated
by this Agreement with respect to the Offered Shares). Notwithstanding the foregoing, if (1)
during the last 17 days of the Lock-up Period, the Company issues an earnings release or material
news or a material event relating to the Company occurs, or (2) prior to the expiration of the
Lock-up Period, the Company announces that it will release earnings results or becomes aware that
material news or a material event will occur during the 16-day period beginning on the last day
of the Lock-up Period, the restrictions imposed by this Section (3)(A)(m) shall continue to apply
until the expiration of the 18-day period beginning on the issuance of the earnings release or
the occurrence of the material news or material event, as applicable, unless the Underwriter
waives, in writing, such extension.
The foregoing restrictions in the immediately preceding paragraph shall not apply to (A) the
issuance by the Company of its Shares pursuant to the dividend reinvestment plan or (B) any
options granted pursuant to any stock option plan of the Company referred to in the Prospectus.
(n) Future Reports to the Underwriter. During the period of three (3) years hereafter, but
only to the extent not otherwise available on XXXXX, the Company will furnish to the Underwriter
at 000 Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000, Attention: Investment Banking: (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, stockholders’ equity and cash flows for the year then ended and the opinion thereon of
the Company’s independent
13
public or 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, Current Report on Form 8-K or other report filed by the Company with the Commission, the
NASD or any securities exchange or association; (iii) as soon as available, copies of any report
or communication of the Company mailed generally to holders of its capital stock and (iv) as soon
as practical after the filing thereof, copies of all other documents or reports filed with the
Commission, the NASD or any national securities exchange or association.
(o) No Stabilization or Manipulation; Compliance with Regulation M. The Company will not
take, directly or indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Shares or any other
reference security, whether to facilitate the sale or resale of the Offered Shares or otherwise,
and the Company will, and shall cause each of its respective affiliates to, comply with all
applicable provisions of Regulation M. If the limitations of Rule 102 of Regulation M (“Rule
102”) do not apply with respect to the Offered Shares or any other reference security pursuant to
any exception set forth in Section (d) of Rule 102, then promptly upon notice from the
Underwriter (or, if later, at the time stated in the notice), the Company will, and shall cause
each of its respective affiliates to, comply with Rule 102 as though such exception were not
available but the other provisions of Rule 102 (as interpreted by the Commission) did apply.
(p) Maintain Status as a Business Development Company. The Company, during a period of two
(2) years from the date of the Prospectus, will use its best efforts to maintain its status as a
“business development company” under the Investment Company Act; provided, however, the Company
may change the nature of its business so as to cease to be, or to withdraw its election as, a
business development company with the approval of the board of directors and a vote of
stockholders as required by Section 58 of the Investment Company Act or any successor provision.
(q) Qualification as a Regulated Investment Company. The Company will use its best efforts
to maintain its qualification as a “regulated investment company” under Subchapter M of the Code;
provided however, that at the discretion of the Company’s board of directors, it may elect not to
be so treated.
(r) Compliance with Securities Laws. The Company will comply in all material respects with
all applicable securities and other laws, rules and regulations, including without limitation,
the provisions of the Xxxxxxxx-Xxxxx Act, and use its best efforts to cause the officers and
directors of the Company, in their capacities as such, to comply with such laws, rules and
regulations, including without limitation, the provisions of the Xxxxxxxx-Xxxxx Act, in each
case, so as to permit the completion of the distribution of the Offered Shares as contemplated in
this Agreement and the Prospectus.
B. Waiver by the Underwriter. The Underwriter, may, in its sole discretion, waive in writing
the performance by the Company of any one or more of the foregoing covenants or extend the time for
its performance.
Section 4. Payment of Expenses. The Company agrees to pay all costs, fees and expenses
incurred in connection with the performance of its obligations hereunder and in connection with the
transactions contemplated hereby, including without limitation: (i) all expenses incident to the
issuance and delivery of the Offered Shares (including all printing and engraving costs); (ii) all
fees and expenses of the registrar and transfer agent of the Shares; (iii) all necessary issue,
transfer and other stamp taxes in connection with the issuance and sale of the Offered Shares to
the Underwriter; (iv) all fees and expenses of the Company’s counsel, independent public or
certified public accountants and other advisors; (v) all
14
costs and expenses incurred in connection with the preparation, printing, filing, shipping and
distribution of the Registration Statement (including financial statements, exhibits, schedules,
consents and certificates of experts), the Preliminary Prospectus and the Prospectus, and all
amendments and supplements thereto, and this Agreement; (vi) all filing fees, attorneys’ fees and
expenses incurred by the Company or the Underwriter in connection with qualifying or registering
(or obtaining exemptions from the qualification or registration of) all or any part of the Offered
Shares for offer and sale under the state securities or blue sky laws, and, if requested by the
Underwriter, preparing and printing a “Blue Sky Survey” or memorandum, and any supplements thereto,
advising the Underwriter of such qualifications, registrations, determinations and exemptions;
(vii) the filing fees incident to, and the reasonable fees and expenses of counsel for the
Underwriter in connection with, the NASD’s review and approval of the Underwriter’s participation
in the offering and distribution of the Offered Shares; (viii) the fees and expenses associated
with including the Offered Shares on the Nasdaq Global Select Market; and (ix) all other fees,
costs and expenses referred to in Item 27 of Part C of the Registration Statement. For the
avoidance of doubt, the Company and the Underwriter agree that each party shall be responsible for
its own expenses in connection with the road show. Except as provided in this Section 4, Section
6, Section 8 and Section 9 hereof, the Underwriter shall pay its own expenses, including the fees
and disbursements of its counsel.
Section 5. Conditions of the Obligations of the Underwriter. The obligations of the
Underwriter to purchase and pay for the Offered Shares as provided herein on the First Closing Date
and, with respect to the Optional Shares, each Option Closing Date, shall be subject to the
accuracy of the representations and warranties on the part of the Company set forth in Section 1
hereof as of the date hereof and as of the First Closing Date as though then made and, with respect
to the Optional Shares, as of each Option Closing Date as though then made, to the timely
performance by the Company of its covenants and other obligations hereunder, and to each of the
following additional conditions:
(a) Accountants’ Comfort Letter. On the date hereof, the Underwriter shall have received
from Xxxxx Xxxxxxxx LLP, independent public or certified public accountants for the Company, (i) a
letter dated the date hereof addressed to the Underwriter, in form and substance satisfactory to
the Underwriter, containing statements and information of the type customarily included in
accountant’s “comfort letters” to underwriters, delivered according to Statement of Auditing
Standards No. 72 (or any successor bulletin), with respect to the audited and unaudited financial
statements and certain financial information contained in the Registration Statement, the
Disclosure Package and the Prospectus, and (ii) confirming that they are (A) independent public or
certified public accountants as required by the Securities Act and the Exchange Act and (B) in
compliance with the applicable requirements relating to the qualification of accountants under Rule
2-01 of Regulation S-X.
(b) Compliance with Registration Requirements; No Stop Order; No Objection from NASD. For
the period from and after effectiveness of this Agreement and prior to the First Closing Date and,
with respect to the Optional Shares, each Option Closing Date:
(i) the Company shall have filed the Prospectus with the Commission in the manner and
within the time period required by Rule 497 under the Securities Act;
(ii) no stop order suspending the effectiveness of the Registration Statement, any Rule
462(b) Registration Statement, or any post-effective amendment to the Registration
Statement, shall be in effect and no proceedings for such purpose shall have been instituted
or, to the best of the Company’s knowledge, threatened by the Commission;
(iii) the NASD shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements; and
15
(iv) no Prospectus, amendment to the Registration Statement or amendment or supplement
to the Prospectus shall have been filed to which the Underwriter has reasonably objected in
writing.
(c) No Material Adverse Change. For the period from and after the date of this Agreement and
prior to the First Closing Date and, with respect to the Optional Shares, each Option Closing Date
in the judgment of the Underwriter there shall not have occurred any Material Adverse Change.
(d) Corporate Proceedings. All corporate proceedings and other legal matters in connection
with this Agreement, the form of Registration Statement and the Prospectus, and the registration,
authorization, issue, sale and delivery of the Shares, shall have been reasonably satisfactory to
counsel to the Underwriter, and such counsel shall have been furnished with such papers and
information as they may reasonably have requested to enable them to pass upon the matters referred
to in this Section.
(e) Opinion of Counsel for the Company. On each of the First Closing Date and each Option
Closing Date, the Underwriter shall have received the opinion of Xxxxxxxxxx Xxxxxx & Xxxxxxx, LLP,
counsel for the Company, dated as of such Closing Date, the form of which is attached as
Exhibit C.
(f) Opinion of Counsel for the Underwriter. On each of the First Closing Date and each
Option Closing Date, the Underwriter shall have received the opinion of Squire, Xxxxxxx & Xxxxxxx
L.L.P., counsel for the Underwriter, in form and substance satisfactory to the Underwriter, dated
as of such Closing Date.
(g) Officers’ Certificate of the Company. On each of the First Closing Date and each Option
Closing Date, the Underwriter shall have received a written certificate executed by the Chief
Executive Officer of the Company and the Chief Financial Officer of the Company, dated as of such
Closing Date, to the effect set forth in subsection (b)(ii) of this Section 5, and further to the
effect that:
(i) they have reviewed the Registration Statement, the Prospectus and the Disclosure
Package;
(ii) the Financial Statements and other financial information included in the
Registration Statement, the Disclosure Package and the Prospectus fairly present in all
material respects the consolidated financial conditions, results of operations and cash
flows of the Company and the Subsidiary as of, and for the periods presented in the
Registration Statement;
(iii) for the period from and after the date of this Agreement and prior to such
Closing Date, there has not occurred any Material Adverse Change;
(iv) the representations, warranties and covenants of the Company set forth in Section
1 of this Agreement are true and correct with the same force and effect as though expressly
made on and as of such Closing Date; and
(v) the Company has complied with all the agreements hereunder and satisfied all the
conditions on its part to be performed or satisfied hereunder at or prior to such Closing
Date.
(h) Bring-down Comfort Letter. On each of the First Closing Date and each Option Closing
Date, the Underwriter shall have received from Xxxxx Xxxxxxxx LLP, independent public or certified
public accountants for the Company, a letter dated such date, in form and substance satisfactory to
the Underwriter, to the effect that they reaffirm the statements made in the letter furnished by
them pursuant to subsection (a) of this Section 5, except that the specified date referred to
therein for the carrying out of
16
procedures shall be no more than three (3) business days prior to the First Closing Date or
the applicable Option Closing Date, as the case may be.
(i) Lock-Up Agreements. On or prior to the date hereof, the Underwriter shall have received
the Lock-up Agreements referred to in Section 1(ss).
(j) Nasdaq Listing Approval. The Offered Shares shall have been approved for quotation on
the Nasdaq Global Select Market, subject only to notice of issuance at or prior to the First
Closing Date or the applicable Option Closing Date, as the case may be.
(k) Compliance with Prospectus Delivery Requirements. The Company shall have complied with
the provisions of Sections 2(g) and 3(A)(e) hereof with respect to the furnishing of Prospectuses.
(l) Additional Documents. On or before each of the First Closing Date and each Option
Closing Date, the Underwriter and counsel for the Underwriter shall have received such information,
documents, certificates and opinions as they may reasonably require for the purposes of enabling
them to pass upon the issuance and sale of the Offered Shares as contemplated herein, or in order
to evidence the accuracy of any of the representations and warranties, or the satisfaction of any
of the conditions or agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when and as required to be
satisfied, this Agreement may be terminated by the Underwriter by notice to the Company at any time
on or prior to the First Closing Date and, with respect to the Optional Shares, at any time prior
to the applicable Option Closing Date, which termination shall be without liability on the part of
any party to any other party, except that Section 4, Section 6, Section 8 and Section 9 shall at
all times be effective and shall survive such termination.
Section 6. Reimbursement of Underwriter’s Expenses. If this Agreement is terminated by the
Underwriter pursuant to Section 5, Section 7 or Section 11, or if the sale to the Underwriter of
the Offered Shares on the First Closing Date is not consummated because of any refusal, inability
or failure on the part of the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the Underwriter upon demand for all out-of-pocket
expenses that shall have been reasonably incurred by the Underwriter in connection with the
proposed purchase and the offering and sale of the Offered Shares, including but not limited to
fees and disbursements of counsel, printing expenses, travel expenses, postage, facsimile and
telephone charges.
Section 7. Effectiveness of this Agreement. This Agreement shall not become effective until
the execution of this Agreement by the parties hereto.
Section 8. Indemnification.
(a) Indemnification of the Underwriter by the Company. The Company agrees to indemnify,
defend and hold harmless the Underwriter, its officers and employees, and each person, if any, who
controls the Underwriter within the meaning of the Securities Act and the Exchange Act against any
loss, claim, damage, liability or expense, as incurred, to which the Underwriter or such
controlling person may become subject, under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation (including in settlement of any litigation), insofar as such
loss, claim, damage, liability or expense (or actions in respect thereof as contemplated below)
arises out of or is based: (i) upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or any amendment thereto, including any information
deemed to be a part thereof pursuant to Rule 430C or Rule 497 under the Securities Act, or the
omission or alleged omission therefrom of a material fact
17
required to be stated therein or necessary to make the statements therein not misleading; or
(ii) upon any untrue statement or alleged untrue statement of a material fact contained in the
Disclosure Package or the Prospectus (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; or (iii) any untrue
statement or alleged untrue statement made by the Company in Section 1 hereof; and to reimburse the
Underwriter and each such controlling person for any and all expenses (including, subject to the
provisions of Section 8(d), the fees and disbursements of counsel chosen by the Underwriter) as
such expenses are reasonably incurred by the Underwriter or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, further, that the foregoing indemnity agreement shall not
apply to any loss, claim, damage, liability or expense to the extent, but only to the extent,
arising out of or based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written information furnished to the
Company by the Underwriter expressly for use in the Registration Statement, the Disclosure Package
or the Prospectus (or any amendment or supplement thereto), it being understood and agreed that the
only such information furnished by the Underwriter to the Company consists of the information
described in subsection (b) below. The indemnity agreement set forth in this Section 8(a) shall be
in addition to any liabilities that the Company may otherwise have.
(b) Indemnification by the Underwriter. The Underwriter agrees to indemnify, defend and hold
harmless the Company, its directors and each of the Company’s officers who signed the Registration
Statement, against any loss, claim, damage, liability or expense, as incurred, to which the Company
or any such director or officer may become subject, under the Securities Act, the Exchange Act, or
other federal or state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written consent of the
Underwriter), insofar as such loss, claim, damage, liability or expense (or actions in respect
thereof as contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, the Disclosure Package or the
Prospectus (or any amendment or supplement thereto), or arises out of or is based upon the omission
or alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged omission was made in
the Registration Statement, the Disclosure Package or the Prospectus (or any amendment or
supplement thereto), in reliance upon and in conformity with written information furnished to the
Company by the Underwriter expressly for use therein; and to reimburse the Company or any such
director or officer or controlling person for any legal and other expense reasonably incurred by
the Company or any such director or officer or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage, liability, expense or
action. The Company hereby acknowledges that the only information that the Underwriter has
furnished to the Company expressly for use in the Registration Statement, the Disclosure Package or
the Prospectus (or any amendment or supplement thereto) are the statements set forth in
the first paragraph, the third paragraph, the last sentence of the fifth paragraph, the eleventh
paragraph, the twelfth paragraph, the thirteenth paragraph, the seventeenth
paragraph, the eighteenth paragraph, and the nineteenth paragraph under
the caption “Underwriting” in the Prospectus. The indemnity agreement set forth in this Section
8(b) shall be in addition to any liabilities that the Underwriter may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after receipt by an
indemnified party under this Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 8, notify the indemnifying party in writing of the commencement thereof, but the
omission to so notify the indemnifying party will not relieve it from any liability which it may
have to any indemnified party for
18
contribution or otherwise under the indemnity agreement contained in this Section 8 or to the
extent it is not prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or intends to seek indemnity
from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the
extent that it shall elect, by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that a conflict may arise between the positions of the
indemnifying party and the indemnified party in conducting the defense of any such action or that
there may be legal defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of such indemnifying
party’s election so to assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party under this Section 8
for any legal or other expenses subsequently incurred by such indemnified party in connection with
the defense thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one separate counsel (together
with local counsel), approved by the indemnifying party, representing the indemnified parties who
are parties to such action) or (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 shall not be liable for any
settlement of any proceeding effected without its written consent, but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel as contemplated by Section 8(c) hereof, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its written consent if: (i)
such settlement is entered into more than thirty (30) days after receipt by such indemnifying party
of the aforesaid request; and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party, unless such
settlement, compromise or consent includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such action, suit or proceeding.
(e) Notwithstanding any other provision of this Section 8, no party shall be entitled to
indemnification under this Agreement in violation of Section 17(i) of the Investment Company Act.
Section 9. Contribution. If the indemnification provided for in Section 8 is for any reason
held to be unavailable to or otherwise insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages, liabilities or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified
party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to
therein: (i) in such proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the
19
Underwriter, on the other hand, from the offering of the Offered Shares pursuant to this
Agreement; or (ii) if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company, on the one hand, and the Underwriter,
on the other hand, in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the Underwriter, on the other
hand, in connection with the offering of the Offered Shares pursuant to this Agreement shall be
deemed to be in the same respective proportions as the total net proceeds from the offering of the
Offered Shares pursuant to this Agreement (before deducting expenses) received by the Company, and
the total underwriting discount received by the Underwriter, in each case as set forth on the front
cover page of the Prospectus bear to the aggregate initial public offering price of the Offered
Shares as set forth on such cover. The relative fault of the Company, on the one hand, and the
Underwriter, on the other hand, shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company, on the one hand, or the
Underwriter on the other hand, and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the limitations set forth in
Section 8(c), any legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth in Section 8(c) with
respect to notice of commencement of any action shall apply if a claim for contribution is to be
made under this Section 9; provided, however, that no additional notice shall be required with
respect to any action for which notice has been given under Section 8(c) for purposes of
indemnification.
The Company and the Underwriter agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred to in this Section
9.
Notwithstanding the provisions of this Section 9, the Underwriter shall not be required to
contribute any amount in excess of the underwriting commissions received by it in connection with
the Offered Shares underwritten by it and distributed to the public. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 9, each officer and employee of the Underwriter and each person, if
any, who controls the Underwriter within the meaning of the Securities Act or the Exchange Act
shall have the same rights to contribution as the Underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement, and each person, if any, who
controls the Company with the meaning of the Securities Act or the Exchange Act shall have the same
rights to contribution as the Company.
Notwithstanding any other provision of this Section 9, no party shall be entitled to
contribution under this Agreement in violation of Section 17(i) of the Investment Company Act.
Section 10. Reserved.
Section 11. Termination of this Agreement. Prior to the First Closing Date, this Agreement
may be terminated by the Underwriter by notice given to the Company if at any time: (i) trading or
quotation in any of the Company’s securities shall have been suspended or limited by the Commission
or by the Nasdaq Global Select Market, or trading in securities generally on either the Nasdaq
Global Select Market or the New York Stock Exchange shall have been suspended or limited, or
minimum or maximum
20
prices shall have been generally established on any of such stock exchanges by the Commission
or the NASD; (ii) a general banking moratorium shall have been declared by any federal or New York
authorities; (iii) there shall have occurred any outbreak or escalation of national or
international hostilities or any crisis or calamity, or any change in the United States or
international financial markets, or any substantial change or development involving a prospective
substantial change in United States’ or international political, financial or economic conditions,
as in the judgment of the Underwriter is material and adverse and makes it impracticable to market
the Offered Shares in the manner and on the terms described in the Prospectus or to enforce
contracts for the sale of securities; (iv) in the judgment of the Underwriter there shall have
occurred any Material Adverse Change; (v) in the judgment of the Underwriter there shall have
occurred a material event which affects (A) the disclosure in the Prospectus or (B) the ability of
the Underwriter to market and sell the Offered Shares on the terms set forth in the Preliminary
Prospectus or the Prospectus; or (vi) the Company shall have sustained a loss by strike, fire,
flood, earthquake, accident or other calamity of such character as in the judgment of the
Underwriter may interfere materially with the conduct of the business and operations of the Company
regardless of whether or not such loss shall have been insured. Any termination pursuant to this
Section 11 shall be without liability on the part of: (a) the Company to the Underwriter, except
that the Company shall be obligated to reimburse the expenses of the Underwriter pursuant to
Sections 4 and 6 hereof; (b) the Underwriter to the Company; or (c) of any party hereto to any
other party except that the provisions of Section 8 and Section 9 shall at all times be effective
and shall survive such termination; provided that, notwithstanding the foregoing, in connection
with a termination of this Agreement pursuant to clause (v) above, no party will be relieved of any
liability in connection with any breach of its representations, warranties or covenants in this
Agreement.
Section 12. Representations and Indemnities to Survive Delivery. The respective indemnities,
agreements, representations, warranties and other statements of the Company or its officers and the
Underwriter set forth in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Underwriter or the Company or any of
its or their partners, officers or directors or any controlling person, as the case may be, and
will survive delivery of and payment for the Offered Shares sold hereunder and any termination of
this Agreement.
Section 13. Notices. All communications hereunder shall be in writing and shall be mailed,
hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Underwriter:
Xxxxxx, Xxxxx Xxxxx, Incorporated
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx
with a copy to:
Squire, Xxxxxxx & Xxxxxxx L.L.P.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
21
If to the Company:
Patriot Capital Funding, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxxxx
with a copy to:
Xxxxxxxxxx Xxxxxx & Xxxxxxx, LLP
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
0000 Xxxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Any party hereto may change the address for receipt of communications by giving written notice to
the others.
Section 14. Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto and to the benefit of the employees, officers and directors and controlling persons
referred to in Section 8 and Section 9, and in each case their respective successors, and no other
person will have any right or obligation hereunder. The term “successors” shall not include any
purchaser of the Offered Shares as such from the Underwriter merely by reason of such purchase.
Section 15. 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.
Section 16. Governing Law Provisions. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made and to be performed
in such state. Any legal suit, action or proceeding arising out of or based upon this Agreement or
the transactions contemplated hereby (“Related Proceedings”) may be instituted in the federal
courts of the United States of America located in the Borough of Manhattan in the City of New York
or the courts of the State of New York in each case located in the Borough of Manhattan in the City
of New York (collectively, the “Specified Courts”), and each party irrevocably submits to the
exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a
judgment of any such court (a “Related Judgment”), as to which such jurisdiction is non-exclusive)
of such courts in any such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party’s address set forth above shall be effective service of process for
any suit, action or other proceeding brought in any such court. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any suit, action or other proceeding
in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim
in any such court that any such suit, action or other proceeding brought in any such court has been
brought in an inconvenient forum.
Section 17. No Fiduciary Relationship. The Company acknowledges and agrees that the
relationship between itself and the Underwriter is an arm’s-length commercial relationship that
creates no fiduciary duty on the part of the Underwriter and each party expressly disclaims any
fiduciary relationship.
22
Section 18. General Provisions. 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. This
Agreement may be executed in two or more counterparts, each one of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same instrument. This
Agreement may not be amended or modified unless in writing by all of the parties hereto, and no
condition herein (express or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. The Section headings herein are for the convenience of the parties
only and shall not affect the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated business person who was
adequately represented by counsel during negotiations regarding the provisions hereof, including,
without limitation, the indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties hereto further
acknowledges that the provisions of Sections 8 and 9 hereto fairly allocate the risks in light of
the ability of the parties to investigate the Company, its affairs and its business in order to
assure that adequate disclosure has been made in the Registration Statement, the Preliminary
Prospectus and the Prospectus (and any amendments and supplements thereto), as required by the
Securities Act.
[Remainder of page intentionally left blank.]
23
If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to the Company the enclosed copies hereof, whereupon this instrument, along with all
counterparts hereof, shall become a binding agreement among the Underwriter and the Company in
accordance with its terms.
Very truly yours, PATRIOT CAPITAL FUNDING, INC. |
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By: | ||||
Name: | ||||
Title: |
The foregoing Agreement is hereby confirmed and accepted by the Underwriter as of the date
first above written.
XXXXXX, XXXXX XXXXX, INCORPORATED |
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By: | ||||
Name: | ||||
Title: | ||||