EXHIBIT 1. UNDERWRITING AGREEMENT
UNDERWRITING AGREEMENT
This Underwriting Agreement is made by and between Alanar Real Estate
Investment Trust Series 1 Corporation, an Indiana corporation (the "Company")
and Alanar Incorporated, a Georgia corporation (the "Underwriter").
The Underwriter will use its best efforts to sell, for the account of the
Company, a minimum of 500,000 shares of the Company, and a maximum of 2.5
million shares at a price of $10.00 per share.
Therefore, the Company and the Underwriter agree as follows:
ARTICLE 1
DEFINITIONS
1.01. Definitions. For purposes of this Underwriting Agreement,
(a) "Company" means Alanar Real Estate Investment Trust Series 1
Corporation, an Indiana corporation.
(b) "Commission" means the United States Securities and Exchange
Commission.
(c) "Effective Date" means the date as of which the registration statement
for the Company's initial public offering of shares is declared effective
by the Commission.
(d) "Escrow Account" means the account established by the Company with the
Escrow Agent.
(e) "Escrow Agent" means Fifth Third Bank.
(f) "Escrow Agreement" means the escrow agreement between the Escrow Agent
and the Company attached as Attachment "A" to this Underwriting Agreement.
(g) "Initial Closing" means a transaction to occur between the Company and
the Underwriter as soon as practicable after the Underwriter has received
Subscription Agreements for a dollar amount equal to or exceeding the
minimum offering set out in the prospectus for the offering.
(h) "Offering Period" means the period of time commencing on the Effective
Date and ending on the earlier of two years after the Effective Date or the
date the maximum offering set out in the prospectus has been sold.
(i) "Securities Act" means the Securities Act of 1933, as amended.
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(j) "Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "Subscription Agreement" means the subscription agreement included in
the prospectus.
(l) "Underwriter" means Alanar Incorporated, a Georgia corporation.
(m) "Underwriting Agreement" means this underwriting agreement.
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY
2.01. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with the Underwriter that:
(a) The Company has prepared and filed with the Commission a registration
statement (File No. 333-111422) on Form S-11 and may prepare and file one
or more amendments to such registration statement covering the registration
of the shares under the Securities Act of 1933, and proposes to file, prior
to the effective date of such registration statement, an amendment to such
registration statement, including a final prospectus.
(b) When the registration statement shall become effective and at all times
subsequent to such date up to and including the termination of the Offering
Period, and, when any post effective amendment of the registration
statement shall become effective, the registration statement (and any post
effective amendment of it) will fully comply with the applicable provisions
of the Securities Act and the rules adopted pursuant to such act, and the
registration statement will not contain any untrue statement of a material
fact and will not omit to state any material fact required to be stated in
such registration statement or necessary in order to make the statement in
such registration statement not misleading, and when the registration
statement shall become effective and at all times subsequent to such date
up to and including the termination of the Offering Period, the prospectus
(and the prospectus as amended or supplemented, if the Company shall have
filed with the Commission any amendment of the registration statement or
supplement to the prospectus) will fully comply with the provisions of the
Securities Act and the rules adopted pursuant to such act and will not
contain any untrue statement of a material fact and will not omit to state
any material fact required to be stated in such documents or necessary in
order to make the statements in such documents, in the light of the
circumstances under which they were made, not misleading; except that the
foregoing does not apply to statements or omissions in the registration
statement or the prospectus, or any amendment or supplement to such
documents, based upon written information furnished to the Company by the
Underwriter specifically for use in such documents.
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of Indiana and has
full power and authority to
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own its properties and conduct its business as described in the prospectus
and as being conducted.
(d) The shares have been duly authorized, and when issued and delivered as
contemplated by this Underwriting Agreement, will have been validly issued
and will be fully paid and nonassessable, and conform to the description of
such shares contained in the prospectus. Any certificates used to evidence
the shares will be in due and proper form. No further approval or authority
of the shareholders or the board of directors of the Company will be
required for the issuance and sale of the shares as contemplated in this
Underwriting Agreement.
(e) This Underwriting Agreement and the Escrow Agreement have each been
duly authorized, executed and delivered by the Company and each of this
Underwriting Agreement and the Escrow Agreement constitutes a legal, valid
and binding obligation of the Company enforceable in accordance with its
terms and is in all respects in full compliance with all applicable
provisions of the Securities Act.
(f) The execution and delivery of this Underwriting Agreement and the
Escrow Agreement and the performance by the Company under this Underwriting
Agreement will not conflict with, result in a breach or violation of or
constitute a default under any agreement or instrument to which the Company
is a party or the articles or by-laws of the Company or any law, order,
rule, regulation, decree or injunction of any jurisdiction, court or
governmental agency or body, and no consent, approval, authorization or
order of, or filing with, any court or governmental agency or body is
required for the performance by the Company of this Underwriting Agreement
or the Escrow Agreement or the consummation by the Company of the
transactions contemplated by this Underwriting Agreement or such other
agreements, except such as may be required under the Securities Act, or
state securities laws.
(g) The prospectus and the preliminary prospectus as originally filed or as
amended and supplemented, if the Company shall have filed with the
Commission any amendment of such prospectus or supplement to such
prospectus, will fully comply with the applicable provisions of the
Securities Act and the rules adopted pursuant to such Act and will not
contain any untrue statement of a material fact and will not omit to state
any material fact required to be stated in such prospectus or necessary in
order to make the statements in such prospectus, in light of the
circumstances under which they were made, not misleading.
(h) The Company has not given any information or made any representation in
connection with the offering of the shares, written or oral, other than as
contained in the prospectus or preliminary prospectus.
ARTICLE 3
OFFERING AND SALE OF THE SHARES
3.01. Offering and Sale of the Shares. The Company appoints the Underwriter
as its
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exclusive agent to effect sales of the shares for the account of the Company at
the offering price of $10.00 per share and upon the other terms and conditions
set out in this Underwriting Agreement and in the prospectus, and the
Underwriter agrees to use its best efforts as such agent to sell the shares
during the term of the Offering Period upon the terms and conditions in this
Underwriting Agreement and in the prospectus.
3.02. Contingent Deferred Sales Commissions. As follows, the Company shall
pay the Underwriter contingent deferred sales commissions of 15% of the gross
proceeds of the offering of shares contemplated by this Underwriting Agreement:
(a) Commencing with the Initial Closing, the Company shall pay the
Underwriter a sales commission of 5% of the gross proceeds of each share
sold in the offering.
(b) In the case of each share sold in the offering, on the first and second
anniversaries of the initial commission payment set out in Section 3.02(a)
of this Underwriting Agreement, the Company shall pay the Underwriter an
additional 5% of the gross proceeds of the sale of such share.
(c) Notwithstanding the provisions of Section 3.02(b) of these Bylaws, if a
purchaser of a share in the offering redeems such share, the redemption
value of such share shall be reduced by the amount of any unpaid contingent
deferred commissions to be paid on such share. Upon such redemption, such
unpaid contingent deferred sales commissions shall be paid by the Company
to the Underwriter.
3.03. Termination. The offering will terminate and all amounts paid by
applicants to purchase shares will be promptly returned to them with interest as
provided in the prospectus and the Escrow Agreement:
(a) If subscriptions for at least 500,000 shares have not been received
within the Offering Period;
(b) At any time by agreement of the Company and the Underwriter; or
(c) This Underwriting Agreement shall be terminated as provided by its
terms.
3.04. Compliance with Escrow Agreement. The Underwriter acknowledges that
it is a party to the Escrow Agreement. The Underwriter will promptly upon
receipt deliver all cash and checks received by the Underwriter from applicants
to purchase shares to the Escrow Agent. Such cash or checks will be accompanied
by one executed copy of the Subscription Agreement. All such cash or checks and
executed copies of Subscription Agreement are to be deposited by the Escrow
Agent, pursuant to the Escrow Agreement, in the Escrow Account. All checks
received by the Company from applicants to purchase shall be made payable to
"Fifth Third Bank, as Escrow Agent for Alanar Real Estate Investment Trust
Series 1 Corporation." The Underwriter will promptly deliver to the Company one
photocopy of each Subscription Agreement deposited in the Escrow Account.
Promptly after receipt of a Subscription Agreement and the funds for such
Subscription Agreement by the Escrow Agent and delivery of a copy of the
Subscription Agreement, the Company will mail an
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interim receipt, in the form attached as Attachment "A" to the Escrow Agreement,
to each such applicant to purchase for the amount deposited in the Escrow
Account on behalf of such applicant to purchase. Any entity selected by the
Underwriter to process orders for shares on behalf of applicants to purchase may
deliver cash or checks and Subscription Agreements received from such applicants
directly to the Escrow Agent and deliver a photocopy of Subscription
Applications so received directly to the Company.
The Underwriter shall have the right to refuse to forward to the Escrow
Agent any Subscription Agreement, and in such event the Underwriter shall
promptly remit all funds received by it to the person on whose behalf such funds
were submitted to it.
ARTICLE 4
INITIAL CLOSING
4.01. Initial Closing. The Initial Closing shall include the following:
(a) Satisfaction of the conditions set out in Section 7.01 of this
Underwriting Agreement;
(b) Payment for the shares to the Company by release of funds from the
Escrow Account and delivery to the Company of properly completed and
executed Subscription Agreements to each purchaser;
(c) Payment of interest earned on amounts held in the Escrow Account to
respective purchasers as set out in the Escrow Agreement; and
(d) Payment by the Company to the Underwriter, out of the funds held in the
Escrow Account, of the commissions set out in Section 3.02(a) of this
Underwriting Agreement for each share sold.
ARTICLE 5
COVENANTS AND AGREEMENTS OF THE COMPANY
5.04. Covenants of the Company. The Company covenants and agrees with the
Underwriter that:
(a) The Company will use its best efforts to cause the registration
statement as filed and any subsequent amendments to such registration
statement to become effective as promptly as possible and will notify the
Underwriter immediately and confirm in writing of the following:
(i) When the registration statement and any amendment to such
registration statement shall have become effective or any supplement
to the prospectus or any amended prospectus shall have been filed;
(ii) Of any request by the Commission for any amendment to the
registration
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statement or any amendment or supplement to the prospectus or for
additional information; and
(iii) Of the issuance by the Commission of any stop order suspending
the effectiveness of the registration statement or of the institution
of any proceedings for that purpose, or of the institution or
threatening by the Commission of any investigation or other proceeding
that might result in the suspension of the use of the prospectus, or
of the suspension of the qualification of the shares for offering or
sale in any jurisdiction, or of the institution or threatening of any
proceedings for any such purpose or for the purpose of preventing the
use of or noticing a deficiency in the prospectus, any amended
prospectus or any supplement to the prospectus. The Company will not
file any post-effective amendment to the registration statement or
supplement or amendment to the preliminary prospectus or the
prospectus or, prior to the completion of the offering of the shares,
make any supplement to the prospectus, unless the Underwriter shall
have been advised of such amendment or supplement and shall not have
reasonably disapproved such amendment or supplement.
(b) If, prior to the termination of the Offering Period, or at any time
after such date, when a prospectus relating to the shares is required to be
delivered under the Securities Act any event occurs as a result of which
the preliminary prospectus or the prospectus as then amended or
supplemented would, in the Underwriter's judgment with the concurrence of
its counsel, include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements in such document,
in light of the circumstances under which they were made, not misleading,
or if it is necessary at any time to amend the preliminary prospectus or
the prospectus to comply with the Securities Act, the Company promptly will
prepare and file with the Commission an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance and, at the Company's expense, will prepare and furnish as many
copies of any such amendment or supplement as the Underwriter may
reasonably request.
(c) Not later than sixteen months from the date of this Underwriting
Agreement, the Company will make generally available to its shareholders an
earnings statement covering a period of at least twelve months beginning
after the effective date of the registration statement which will satisfy
the provisions of Section ll(a) of the Securities Act.
(d) The Company will furnish to the Underwriter copies of the registration
statement, each related preliminary prospectus, the prospectus and all
amendments and supplements to such documents, in each case as soon as
available and in such quantities as the Underwriter reasonably requests.
(e) The Company will use its best efforts to arrange for the qualification
of the shares under the laws of such jurisdictions as the Underwriter
designates and will continue such qualifications in effect so long as
required for the offering of the shares as contemplated in this
Underwriting Agreement.
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(f) During the period of five years from the date of this Underwriting
Agreement, the Company will furnish to the Underwriter, as soon as
practicable after the end of each fiscal year, a copy of its annual report
to security holders for such fiscal year, and during such period the
Company will also furnish the Underwriter with the following:
(i) As soon as available, a copy of each report or definite proxy
statement of the Company filed with the Commission under the
Securities Exchange Act or mailed to security holders; and
(ii) From time to time such other information concerning the Company
as the Underwriter may reasonably request.
(g) The Company will apply the net proceeds from the sale of the shares to
be sold by it under this Underwriting Agreement for the purposes set out in
the prospectus.
ARTICLE 6
EXPENSES
6.01. Expenses. Whether or not the transactions contemplated in this
Underwriting Agreement are consummated, the Company will pay all costs and
expenses incident to the performance of its obligations under this Underwriting
Agreement, including, but not necessarily limited to, all costs and expenses
incurred in connection with:
(a) The issuance, sale and delivery of the shares being offered by this
Underwriting Agreement (including all transfer and other taxes on such
shares);
(b) The preparation, filing, printing, and delivery of the registration
statement (including all exhibits to it and documents incorporated into it
by reference), the preliminary prospectus, the prospectus and any
amendments of the preliminary prospectus and the prospectus and supplements
to the prospectus, this Underwriting Agreement and related selling and
other documents in connection with the offering;
(c) The filing fees and expenses (including any legal fees and expenses)
incurred in connection with the qualification of the shares under state
securities laws and filing fees in connection with the review of the terms
of the public offering of the shares by the National Association of
Securities Dealers, Inc. ("NASD");
(d) The fees, disbursements and expenses of the accountants and counsel for
the Company;
(e) All fees and expenses regarding the Escrow Agreement and Escrow Agent
fees. It is understood that, except as provided in this Section 6.01, the
Underwriter will pay all of its costs and expenses, including travel,
telephone, advertising and legal fees and expenses relating to the offering
of the shares.
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ARTICLE 7
CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS
7.01. Condition's of the Underwriter's Obligations. The Underwriter's
obligations to use its best efforts to sell the shares as provided in this
Underwriting Agreement and the release of funds from the Escrow Account on the
date of the Initial Closing shall be subject to the accuracy of the
representations and warranties of the Company as of the date of this
Underwriting Agreement and at the date of the Initial Closing, to the accuracy
of the statements of the officers of the Company made pursuant to the provisions
of this Underwriting Agreement, to the performance by the Company, of its
respective obligations under this Underwriting Agreement and to the following
additional conditions:
(a) No stop order suspending the effectiveness of the registration
statement shall have been issued and no proceedings for that purpose shall
have been instituted, or, to the knowledge of the Company, shall be
contemplated, by the Commission;
(b) The Underwriter shall not have advised the Company that the
registration statement or prospectus, or any amendment or supplement to
such documents, contains an untrue statement of fact or omits to state a
fact which, the Underwriter has concluded, after conferring with its
counsel, is in either case material and in the case of an omission is
required to be stated in such documents or is necessary to make the
statements in such documents not misleading;
(c) The Underwriter shall have received an opinion of counsel for the
Company, effective the date of the Initial Closing, to the effect that:
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the state of Indiana
and the Company has full corporate power and authority to own its
property and conduct its business as described in the prospectus;
(ii) The shares delivered on the Closing Date have been duly
authorized and validly issued and are fully paid and nonassessable and
conform to the description of such shares contained in the prospectus,
the certificates used to evidence the shares are in due and proper
form and all actions of the Company in connection with the offer and
sale of the shares have been effected in compliance with applicable
law;
(iii) This Underwriting Agreement has been duly authorized, executed
and delivered by the Company, and (assuming due authorization,
execution and delivery by the Underwriter) constitutes a legal, valid
and binding agreement of the Company, enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws affecting
enforcement of creditors rights generally and to equitable principles
that may restrict the availability of remedies, except as rights to
indemnity under this Underwriting Agreement may be limited under the
Securities Act;
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(iv) The Custodian Agreement and the Escrow Agreement have each been
duly authorized, executed and delivered by the Company and (assuming
due authorization, execution and delivery by the other parties to such
agreements) constitute the legal, valid and binding agreements of the
Company enforceable in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, reorganization and moratorium
laws and other laws affecting enforcement of creditors' rights
generally and to equitable principles that may restrict the
availability of remedies, and each such agreement is in all respects
in full compliance with all applicable provisions of the Securities
Act;
(v) All required action has been taken by the Company under the
Securities Act and the Securities Exchange Act to make the public
offering and consummate the sale of the shares pursuant to this
Underwriting Agreement; the issue and sale by the Company of the
shares and the execution and delivery of this Underwriting Agreement,
the Custodian Agreement and the Escrow Agreement by the Company and
the performance by the Company of its obligations under this
Underwriting Agreement and the Custodian and the Escrow Agreement will
not conflict with, result in a breach of, or constitute a default
under any agreement or instrument known to such counsel to which the
Company is a party or any applicable law, order, rule, regulation,
decree or injunction of any jurisdiction, court or governmental agency
or body or the corporate charter or by-laws of the Company; and no
consent, approval, authorization or order of, or filing with, any
court or governmental agency or body is required in connection with
the issuance or sale of the shares by the Company or for the
performance by the Company of this Underwriting Agreement or the
consummation by the Company of the transactions contemplated in this
Underwriting Agreement and the Escrow Agreement or by such Agreements,
except such as have been obtained under the Securities Act, and/or the
Securities Exchange Act and such as may be required under state
securities laws in connection with the offering of the shares as
contemplated in this Underwriting Agreement;
(vi) The Escrow Agreement, having been duly authorized, executed and
delivered by its other parties and (assuming due authorization,
execution and delivery by the other parties to such Escrow Agreement)
constitutes a legal, valid and binding agreement, enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws
affecting enforcement of creditors' rights generally and to equitable
principles that may restrict the availability of remedies; and the
execution and delivery of this Underwriting Agreement and the Escrow
Agreement and the performance by the Company of its obligations under
this Underwriting Agreement and the Escrow Agreement will not conflict
with, result in a breach of, or constitute a default under any
agreement or instrument known to such counsel to which it is a party
or any applicable law, order, rule, regulation, decree or injunction
of any jurisdiction, court or governmental agency or body or the
corporate charter or by-laws of the Company;
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(vii) The registration statement and the prospectus (except as to the
financial information contained in such prospectus, as to which such
counsel need express no opinion) complied as to form in all material
respects with the requirements of the Securities Act and the rules and
regulations of the Commission adopted under such act;
(viii) The terms of the escrow established pursuant to the Escrow
Agreement comply in all material respects with the requirements of
Rule 106-9 under the Securities Exchange Act;
(ix) The registration statement has become effective under the
Securities Act, and, to the best of the knowledge of such counsel, no
stop order suspending the effectiveness of the registration statement
has been issued and no proceedings for such purposes have been
instituted or are pending or contemplated under the Securities Act;
and
(x) In the course of such counsel's review and discussion of the
contents of the registration statement and prospectus with certain
officers and employees of the Company and its independent accountants,
no facts have come to such counsel's attention which would lead such
counsel to believe that either the registration statement as of its
effective date or the prospectus (except as to the financial
information contained in such registration statement or prospectus, as
to which such counsel need express no opinion), as of its date or
thereafter, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated in such
registration statement or prospectus or necessary to make the
statements in such registration or prospectus not misleading.
(d) In rendering the opinion contemplated by Section 7.01(c) of this
Underwriting Agreement, counsel for the Company may rely as to matters
involving the application of laws other than the laws of the jurisdictions
in which such counsel is admitted, to the extent such counsel deems proper
and to the extent specified in such opinion, upon an opinion or opinions of
other counsel, satisfactory to the Underwriter. The opinion of counsel for
the Company shall also state that the opinion of any other counsel on whom
such counsel is relying is in form and substance satisfactory to such
counsel and that, in such counsel's opinion, the Underwriter and they are
justified in relying on such opinion.
(e) The Underwriter shall have received from its counsel, such opinion or
opinions, dated such date of the Initial Closing, with respect to matters
relating to the offering of the shares as it may reasonably request, and
the Company shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such
matters.
(f) The Underwriter shall have received a certificate of the chief
executive officer and a principal financial or accounting officer of the
Company dated as of the Initial Closing to the effect that:
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(i) The representations and warranties in this Underwriting Agreement
of the Company are true and correct as of the date of the Initial
Closing with the same force and effect as if made on that date;
(ii) The Company has performed all of its obligations under this
Underwriting Agreement to be performed at or prior to the date of the
Initial Closing; and
(iii) Since the effective date of the registration statement, there
has not occurred any event required to be set out in an amended or
supplemented prospectus which has not been so set out, and any such
amendment or supplement does not include any untrue statement of a
material fact or omit to state any material fact required to be stated
in such amendment or supplement or necessary to make the statements in
such document not misleading.
(g) At the time of the signing of this Underwriting Agreement and at the
date of the Initial Closing, the Underwriter shall have received a letter
of Xxxx & Associates CPA's LLC, dated the date of this Underwriting
Agreement or the date of the Initial Closing, confirming that they are
independent certified public accountants with respect to the Company within
the meaning of the Securities Act and the rules adopted pursuant to such
act and stating in effect that:
(i) In their opinion the balance sheet included in the prospectus
complies as to form in all material respects with the applicable
accounting requirements of the Securities Act and the rules adopted
pursuant to such act;
(ii) On the basis of a reading of the latest available interim
financial statements of the Company, inquiries of officials of the
Company responsible for financial and accounting matters and other
specified procedures, nothing came to their attention that caused them
to believe that at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more than
five days prior to the date of the Initial Closing, there was any
change in the capital stock or stockholders equity of the Company as
compared with amounts shown on the balance sheet included in the
prospectus, except for such changes as are contemplated by the
prospectus and as are described in such letter; and
(iii) They have confirmed such procedures with respect to certain
information contained in the prospectus as were previously agreed upon
by the Underwriter and them.
(h) The Company shall have furnished to you such additional certificates,
if any, with respect to the representations and warranties of the Company
contained in this Underwriting Agreement as the Underwriter shall
reasonably have requested.
(i) Since the respective dates as of which information is given in the
prospectus, there shall not have been any change, or any development
involving a prospective
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change, in the condition (financial or otherwise) of the Company or in any
pending action, suit, proceeding or investigation involving the Company
whether or not arising from transactions in the ordinary course of
business, that, in the Underwriter's reasonable judgment, is material and
renders it impractical or inadvisable to proceed with the completion of the
sale of and payment for the shares on the date of the Initial Closing.
(j) No notice of disapproval shall have been issued or proceedings for that
purpose shall have been instituted by the Commission, the NASD, or any
state securities authority with respect to the distribution arrangements
relating to the offering of the shares.
(k) The Company will furnish the Underwriter with such conformed copies of
such opinions, certificates, letters and documents as it reasonably
requests.
ARTICLE 8
INDEMNIFICATION AND CONTRIBUTION
8.01. Indemnification and Contribution. The following indemnification and
contribution provisions shall apply to this Underwriting Agreement:
(a) The Company will indemnify and hold harmless the Underwriter and each
person, if any, who controls the Underwriter within the meaning of the
Securities Act against any losses, claims, damages or liabilities, joint or
several, to which the Underwriter or such controlling person may become
subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect losses, claims,
damages or liabilities) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the
registration statement, the prospectus, or any amendment or supplement to
such registration statement or prospectus, or any preliminary prospectus,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated in such document or necessary
to make the statements in such document not misleading; and will reimburse
the Underwriter and each such controlling person for any legal or other
expenses reasonably incurred by the Underwriter or such controlling person
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any of such documents in
reliance upon and in conformity with written information furnished to the
Company by the Underwriter specifically for use therein; and provided
further, that the indemnity agreement contained in this Section 8.01(a)
with respect to any preliminary prospectus shall not inure to the benefit
of the Underwriter (or of any person controlling the Underwriter) on
account of any such losses, claims, damages, or liabilities (or actions in
respect of such losses, claims or damages), arising from the sale of any of
the shares to any person if the Underwriter shall have failed to send or
give to such person with or prior to the delivery to the Underwriter by
such person of a Subscription Agreement, a copy of the prospectus or the
prospectus as amended or supplemented, if any amendments or supplements to
the prospectus shall have been furnished at or prior to the time of receipt
by the Underwriter
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of such person's subscription agreement, to the extent that any such loss,
claim, damage or liability results from an untrue statement or an omission
which was corrected in the prospectus or the prospectus as amended or
supplemented. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
(b) The Underwriter will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the registration
statement and each person, if any, who controls the Company within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities to which the Company or any such director, officer or
controlling person may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect of such losses, claims or damages) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement, the prospectus, or any
amendment or supplement to the registration statement or prospectus, or any
preliminary prospectus or arise out of or are based upon the omission or
alleged omission to state in such registration statement, prospectus or
preliminary prospectus a material fact required to be stated in such
documents or necessary to make the statements in such documents 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 reliance upon and in conformity with written
information furnished to the Company by the Underwriter specifically for
use in such documents; and will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending any such
loss, claim, damage, liability or action. This indemnity agreement will be
in addition to any liability which the Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 8.01
of notice of the commencement of any action, such indemnified party will,
if a claim in respect of such action is to be made against the indemnifying
party under this Section 8.01, notify the indemnifying party of the
commencement of such action; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section 8.01. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement of such action, the indemnifying
party will be entitled to participate in such action and, to the extent
that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense of such action, with counsel satisfactory
to such indemnified party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party under
this Section 8.01 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. An indemnifying party against whom
indemnity may be sought shall not be liable to indemnify an indemnified
party under this Section 8.01 if any settlement of any such action is
effected without such indemnifying party's consent.
(d) If the indemnification provided for in Section 8.01(a), 8.01(b) or
8.01(c) of this
13
Underwriting Agreement is for any reason, other than as specified in such
sections, unavailable and the Company or the Underwriter has been required
to pay damages as a result of a determination by a court that the
registration statement, any preliminary prospectus or the prospectus, or
any amendment or supplement to such document contains an untrue statement
of a material fact or omits to state a material fact required to be stated
in such document or necessary to make the statements in such document not
misleading, then the Company shall contribute to the damages paid by the
Underwriter, and the Underwriter shall contribute to the damages paid by
the Company, but in each case only to the extent that such damages arise
out of or are based upon such untrue statement or omission:
(i) In such proportion as is appropriate to reflect the relative
benefits by the Company on the one hand and the Underwriter on the
other from the offering of the shares; or
(ii) If the allocation provided by Section 8.01(d) of the Underwriting
Agreement above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred
to in Section 8.01(d) of this Underwriting Agreement above but also
the relative fault of the Company, on the one hand and the Underwriter
on the other in connection with the statements or omissions which
resulted in such damages 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 shall be deemed to be in the
same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total
commissions received by the Underwriter, in each case as set forth in
the table on the cover page of the prospectus.
(e) The relative fault of the Company on the one hand and the Underwriter
on the other shall be determined by reference to, among other things,
whether the untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Company on the hand or
by the Underwriter on the other, and the parties relevant intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriter agree that it
would not be just and equitable if their respective obligations to
contribute pursuant to this Section 8.01(e) were to be determined by pro
rata allocation of the aggregate damages or by any other method of
allocation which does not take account of the equitable considerations
referred to in the first sentence of this Section 8.01(e). For purposes of
this Section 8.01(e), the term "damages" shall include any legal or other
expenses reasonably incurred by the Company or the Underwriter in
connection with investigating or defending against any action or claim
which is the subject of the contribution provisions of this Section
8.01(e). Notwithstanding the provisions of this Section 8.01(e), the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the shares distributed to the
public were offered to the public exceeds the amount of any damages which
you have otherwise been required to pay by reason of such untrue statement
or omission. No person guilty of
14
fraudulent misrepresentation (within the meaning of Section ll(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.01. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties and other statements of
Company and its officers set out in or made pursuant to this Underwriting
Agreement will remain in full force and effect, regardless of any investigation,
or statement as to the results thereof, made by or on behalf of the Underwriter,
the Company or any of its officers, directors or controlling persons, and will
survive payment to the Company for the shares. If this Underwriting Agreement is
terminated pursuant to Section 9 of this Underwriting Agreement or if for any
reason the sale of the shares is not consummated, the Company shall remain
responsible for the expenses to be paid or reimbursed by it pursuant to Sections
7 and 8 of this Underwriting Agreement and to the Underwriter pursuant to
Section 8 shall remain in effect.
9.02. Notices. All communications to be made pursuant to this Underwriting
Agreement will be in writing and, if sent to the Underwriter, will be mailed,
delivered, or telegraphed and confirmed to the Underwriter at 000 Xxxxx Xxxx
Xxxxxx, Xxxxxxxx, XX 00000; if sent to the Company, will be mailed, delivered,
or telegraphed and confirmed to it at 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxx
00000, Attention: Xxxxxx X. Xxxxxx, Xx., President.
9.03. Successors. This Underwriting Agreement will inure to the benefit and
be binding upon the parties to this Underwriting Agreement and their respective
successors and the officers, directors and controlling persons referred to in
Section 8.01 of this Underwriting Agreement and no other person will have any
right or obligation under this Underwriting Agreement.
9.04. Governing Law. This Underwriting Agreement shall be governed by, and
construed in accordance with, the laws of the State of Indiana, without regard
to conflicts of law principles.
9.05. Counterparts. This Underwriting Agreement may be executed in
counterparts, all of which, taken together, shall constitute a single agreement.
15
Alanar Real Estate Investment Trust
Series 1 Corporation
By:
-----------------------------------------
Xxxxxx X. Xxxxxx, Xx.
President
Date:
---------------------------------------
Alanar Incorporated
By:
-----------------------------------------
Xxxxxx X. Xxxxxx, Xx.
Chief Executive
16
Attachment A
ESCROW AGREEMENT
TO: Fifth Third Bank
as Escrow Agent
---------------------------
---------------------------
The following property is to be deposited in escrow with you as Escrow
Agent: All proceeds of the application to purchase (together with an executed
copy of the subscription agreement of each applicant to purchase) the shares of
Alanar Real Estate Investment Trust Series 1 Corporation, an Indiana corporation
(the "Company") received by Alanar Incorporated (the "Underwriter"), as
underwriter for the Company. The Company shall itself or through its agents
deliver to all such applicants to purchase interim receipts for the amount of
their funds deposited in the escrow such interim receipts to be substantially in
the form attached as Exhibit "A" to this Escrow Agreement.
As Escrow Agent, you are directed to hold, deal with and dispose of the
aforesaid property and any other property at any time held by you under this
Escrow Agreement in the following manner subject, however, to the terms and
conditions set out as follows:
If such irrevocable subscriptions of the aggregate value of $5,000,000
(500,000 Shares) have been received on or before the second anniversary of the
commencement of the public offering of the shares, as evidenced by an affidavit
(the "Affidavit") of the Company, all such applicants to purchase (including
executed copies of subscription agreements) deposited in the escrow (excluding
income earned on such funds while on deposit, which shall be returned to
purchasers) shall be paid over and delivered to the Company upon the written
request of:
(1) The Company; and
(2) The Underwriter for the Company.
If the Affidavit has not been delivered to you on or before 5:00 P.M.,
Indianapolis Time, on the second anniversary of commencement of the public
offering of the Shares, all funds deposited in the escrow shall be promptly
remitted by you to the person on whose behalf such funds were deposited, as
appears by the copies of the Subscription Agreements delivered to you, in the
amounts shown thereon, and without deductions of any kind or character. In the
event that the Company shall conclude that any applications to purchase
deposited in the escrow are invalid or shall reject any applications to purchase
so deposited, you shall, upon written instructions from the Company listing such
invalid or rejected applications to purchase remit such applications to purchase
in the manner provided in the preceding sentence. In addition, you shall, upon
the written request, if any, of the Company and the Underwriter, remit all funds
deposited in the escrow in the manner provided in the first sentence of this
paragraph. In any event, if any funds remain in the escrow (excluding income
earned on such funds while on deposit) after more than two years from
commencement of the public offering of the Shares (unless the Company and the
Underwriter, shall
17
have first delivered to you written notice of the extension of such two year
period by a specified number of days, then upon expiration of such extended
period) you shall remit such funds in the manner provided in the first sentence
of this paragraph. In the event any funds are returned to the applicants to
purchase, the income earned on such funds pursuant to the third succeeding
paragraph while such funds are on deposit shall be paid to the applicants to
purchase.
At the request of the Company, you agree to act as paying agent in paying
to applicants to purchase interest earned on their applications to purchase
while in the escrow. For the services as paying agent, if any, you shall be paid
a reasonable fee by the Company.
Prior to delivery to it as described above, the Company shall have neither
title to nor interest in the funds in escrow, and such funds shall under no
circumstances be subject to the liabilities or indebtedness of the Company.
You shall invest all funds in the escrow in shorter securities of or
guaranteed by the United States Government or bank certificates of deposit,
according to the instructions of the Company. The Escrow Agent shall not be
obliged to inquire as to the form, manner of execution or validity of any
document deposited pursuant to the provisions of this Escrow Agreement, nor
shall the Escrow Agent be obliged to inquire as to the identity, authority or
rights of the persons executing the same. The Escrow Agent shall be liable under
this escrow agreement only for its failure to exercise due care in the
performance of its duties expressly set out in this Escrow Agreement. In case of
conflicting demands upon it, the Escrow Agent may withhold performance of this
escrow agreement until such time as said conflicting demands shall have been
withdrawn or the rights of the respective parties shall have been settled by
court adjudication, arbitration, joint order or otherwise.
Any notice which the Escrow Agent is required or desires to give under this
Escrow Agreement to any of the undersigned shall be in writing and may be given
by mailing the same to the address of the undersigned (or to such other address
as said undersigned may have theretofore substituted therefore by written
notification to the: Escrow Agent), by registered or first class mail, postage
prepaid. For all purposes of this Escrow Agreement any notice so mailed shall be
as effectual as though served upon the person of the undersigned to whom it was
mailed at the time it is deposited in the United States mail by the Escrow Agent
whether or not such undersigned thereafter actually receives such notice.
Notices to the Escrow Agent shall be in writing and shall not be deemed to be
given until actually received by the Escrow Agent. Whenever, under the terms
hereof, the time for giving a notice or performing an act falls upon a Saturday,
Sunday or bank holiday, such time shall be extended to the Escrow Agent's next
business day.
The Escrow Agent's duties and responsibilities shall be limited to those
expressly set forth in this Escrow Agreement, and the Escrow Agent shall not be
subject to, nor obliged to recognize, any other agreement between, or direction
or instruction of, any or all of the parties hereto even though reference
thereto may be made herein; provided, that with the Escrow Agent's written
consent, this escrow agreement may be amended at any time or times by an
instrument in writing by all the then parties in interest.
If any property subject to this Escrow Agreement is at any time attached,
garnished or levied
18
upon, under any court order, or in case the payment, assignment, transfer,
conveyance or delivery of any such property shall be stayed or enjoined by any
court order, or in case any order, judgment or decree shall be made or entered
by any court affecting such property, or any part of such property, then in any
of such events, the Escrow Agent is authorized, in its sole discretion, to rely
upon and comply with any such order, writ, judgment or decree, which it is
advised by legal counsel of its own choosing is binding upon it, and if it
complies with any such order, writ, judgment or decree, it shall not be liable
to any of the parties to this Escrow Agreement or to any other person, firm or
corporation by reason of such compliance, even though such order, writ, judgment
or decree may be subsequently reversed, modified, annulled, set aside or
vacated. This Escrow Agreement shall be construed, enforced, and administered in
accordance with the laws of the State of Indiana.
The Escrow Agent may resign by giving thirty days' written notice by
registered or first class mail sent to the undersigned at their respective
addresses set out in this Escrow Agreement; and after such time, subject to the
provisions of the preceding paragraphs of this Escrow Agreement, shall deliver
all remaining deposits in the escrow to a successor escrow agent acceptable to
all parties to this Escrow Agreement which acceptance shall be evidenced by the
joint written and signed order of the undersigned. If no such order is received
by the Escrow Agent within thirty days after mailing such notice, it is
unconditionally and irrevocably authorized and empowered to send any and all
items deposited pursuant to this Escrow Agreement by registered mail to the
respective depositors of such items.
The Escrow Agent is not required separately to record on its books the
name, address and amount of each application to purchase as received, but shall
keep documents necessary to evidence the name and address of each: applicant to
purchase and the aggregate amount of his application to purchase.
Reasonable fees in the amount not to exceed $ __________ and expenses of
the Escrow Agent, including judgments, attorneys' fees and other liabilities,
which the Escrow Agent may incur or sustain by reason of the escrow, shall be
paid by the Company.
Dated at Sullivan, Indiana, _____________, 2004
Parties to the Escrow
Alanar Incorporated
By _______________________
Accepted this ____________day of _________________, 2004.
By _______________________
Authorized Officer
19
INTERIM RECEIPT
ALANAR REAL ESTATE INVESTMENT TRUST SERIES 1 CORPORATION
This Interim Receipt evidences the receipt of $ __________ from the
applicant named below in payment of a subscription for ____________ shares of
Alanar Real Estate Investment Trust Series 1 Corporation, an Indiana corporation
as described in the prospectus for the initial public offering for such shares.
Such amount shall be promptly delivered the Escrow Agent, Fifth Third Bank. If
subscriptions for 500,000 shares have not been within two years of the
commencement of the initial public offering of the shares, these funds shall be
returned to you by the Escrow Agent, with interest as set out in the Escrow
Agreement.
Dated: ____________ ,20_____
ALANAR REAL ESTATE INVESTMENT TRUST SERIES 1 CORPORATION.
By:
----------------------------------------
-------------------------------------------
Name of Applicant to Purchase
-------------------------------------------
-------------------------------------------
Address of Applicant to Purchase
20
