EXHIBIT 1.1
XXXXXX INVESTMENT CORPORATION
$1,500,000 SENIOR SUBORDINATED ADJUSTABLE RATE NOTES (MINIMUM)
$6,000,000 SENIOR SUBORDINATED ADJUSTABLE RATE NOTES (MAXIMUM)
AGENCY AGREEMENT
Minneapolis, Minnesota
__________, 2002
Xxxxxxxxx & Company LLC
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Ladies and Gentlemen:
1. Introduction. Xxxxxx Investment Corporation, a Minnesota corporation
(the "Company"), proposes to issue and sell a minimum of $1,500,000 and a
maximum of $6,000,000 aggregate principal amount of its Senior Subordinated
Adjustable Rate Notes as described in the Registration Statement referred to
below (the "Notes"). The Notes will be issued pursuant to an Indenture (the
"Indenture"), of even date herewith, between the Company and U.S. Bank National
Association, as Trustee (the "Trustee").
The Company hereby confirms its agreement with you, Xxxxxxxxx & Company
LLC, as managing agent (the "Managing Agent") to offer and sell the Notes on a
"reasonable efforts" basis upon the terms and conditions herein.
The Company hereby agrees with the Managing Agent as follows:
2. Representations and Warranties of the Company.
(a) The Company represents and warrants to, and agrees with,
the Managing Agent that:
(i) A registration statement on Form S-2
(Registration No. 333-__________), including a form of prospectus, relating to
the Notes has been prepared by the Company in conformity with the requirements
of the Securities Act of 1933, as amended, and the rules and regulations of the
Securities and Exchange Commission ("Commission") promulgated
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thereunder (collectively, the "Act;" all references herein to specific rules and
regulations are to rules and regulations promulgated by the Commission under the
Act) has been filed with the Commission and has been declared effective under
the Act and is not proposed to be amended. For purposes of this Agreement,
"Effective Time" means (A) if the Company has advised the Managing Agent that it
does not propose to amend such registration statement, the date and time as of
which such registration statement, or the most recent post-effective amendment
thereto (if any) filed prior to the execution and delivery of this Agreement,
was declared effective by the Commission, or (B) if the Company has advised the
Managing Agent that it proposes to file an amendment or post-effective amendment
to such registration statement, the date and time as of which such registration
statement, as amended by such amendment or post-effective amendment, as the case
may be, is declared effective by the Commission. "Effective Date" means the date
of the Effective Time. Such registration statement, as amended at the Effective
Time, including all information (if any) deemed to be a part of such
registration statement as of the Effective Time pursuant to Rule 430A(b), is
hereinafter referred to as the "Registration Statement," and the form of
prospectus relating to the Notes, as first filed with the Commission pursuant to
and in accordance with Rule 424(b) or (if no such filing is required) as
included in the Registration Statement, is hereinafter referred to as the
"Prospectus."
(ii) The Commission has not issued any order
preventing or suspending the use of the Prospectus. If the Effective Time is
prior to the execution and delivery of this Agreement: (A) on the Effective
Date, the Registration Statement conformed in all respects to the requirements
of the Act and did not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and (B) on the date of this Agreement,
the Registration Statement conforms, and at the time of filing of the Prospectus
pursuant to Rule 424(b), the Registration Statement and the Prospectus will
conform, in all respects to the requirements of the Act, and neither of such
documents includes, or will include, any untrue statement of a material fact or
omits, or will omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. If the Effective Time
is subsequent to the execution and delivery of this Agreement: on the Effective
Date, the Registration Statement and the Prospectus will conform in all respects
to the requirements of the Act, and neither of such documents will include any
untrue statement of a material fact or will omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading. The two preceding sentences do not apply to statements in or
omissions from the Registration Statement or Prospectus in reliance upon and in
conformity with written information furnished to the Company by the Managing
Agent specifically for use therein.
(iii) The Company and its subsidiaries, Four Seasons
Realty of Minnesota, Inc.; Four Seasons Realty of Wisconsin, Inc.; Four Seasons
Realty of Michigan, Inc.; Four Seasons Properties of Tennessee, LLC; Four
Seasons Properties of Georgia, LLC; FSP Development of Texas, LLC; and
Laurentian Development Corporation, which constitute all of its subsidiaries
(each a "Subsidiary" and, collectively, the "Subsidiaries"), and the joint
ventures of which the Company is a member, Lantana Development, LLC; The
Preserve, LLC; and Lakeridge Community Center, LLC (each a "Joint Venture" and,
collectively, the "Joint Ventures"), have been duly incorporated and are validly
existing as corporations in good standing under the laws of their respective
states of incorporation, with full power and authority, corporate and otherwise,
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to own their properties and conduct their business as described in the
Prospectus. The Company, the Subsidiaries and the Joint Ventures are duly
qualified as foreign corporations to transact business and are in good standing
in each jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property, the conduct of business or otherwise,
other than jurisdictions in which the failure to so qualify, considering all
such cases in the aggregate, would not have a material adverse effect on the
Company, the Subsidiaries and Joint Ventures, taken as a whole. No proceeding
has been instituted in any such jurisdiction, revoking, limiting or curtailing,
or seeking to revoke, limit or curtail, such power and authority or
qualification.
(iv) All of the shares of capital stock of the
Subsidiaries have been duly and validly authorized and issued, are fully paid
and nonassessable and are owned by the Company, free and clear of any security
interest, lien or restriction except for the security interest of Diversified
Business Credit, Inc. The Company has no subsidiaries (other than the
Subsidiaries) and owns no securities of any other entity (other than the Joint
Ventures) and none of the Subsidiaries has any subsidiary or owns any securities
of any other entity.
(v) The authorized and issued indebtedness of the
Company and of the Subsidiaries is correctly set forth in the Prospectus, as of
the dates indicated. The capitalization of the Company as of the date indicated
is as set forth under the caption "Capitalization" in the Prospectus. The issued
and outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and nonassessable. The
indebtedness of the Company and of the Subsidiaries has been duly authorized.
None of the outstanding shares of capital stock of the Company was issued in
violation of preemptive rights of any shareholder of the Company.
(vi) This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws or equitable principles
affecting the enforcement of creditors' rights generally and except as rights to
indemnity hereunder may be limited by applicable securities laws, including the
Act and the rules and regulations thereunder.
(vii) The Indenture has been duly and validly
authorized, executed and delivered by the Company and constitutes the valid and
binding obligation of the Company enforceable in accordance with its terms
except as enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws or equitable principles
affecting enforcement of creditors' rights generally. The Indenture is not
required to be qualified under the Trust Indenture Act of 1939, as amended. The
Notes have been duly and validly authorized by the Company and, when executed by
the Company and authenticated by the Trustee in accordance with the provisions
of the Indenture and delivered and paid for pursuant to this Agreement, the
Notes will have been duly and validly executed and issued by the Company and
will constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture.
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(viii) The Notes and the Indenture conform in all
material respects to the descriptions thereof contained in the Prospectus. The
global certificate for the Notes to be issued in book-entry form hereunder and
the certificates for any Notes to be certificated are in due and proper form.
(ix) There are no contracts or other documents
required to be described in the Prospectus or to be filed as exhibits to the
Registration Statement which have not been described or filed as required.
Contracts and documents so described in the Prospectus are in full force and
effect on the date hereof. All descriptions of such contracts and documents in
the Prospectus are correct in all material respects. Neither the Company nor the
Subsidiaries nor the Joint Ventures nor, to the best knowledge of the Company,
any other party, is in breach of or default under any of such contracts.
(x) Neither the issue and sale of the Notes, the
performance of this Agreement or the Indenture, nor the consummation of the
transactions contemplated herein and therein will conflict with or constitute a
breach of, or default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any
Subsidiary pursuant to any contract, indenture, mortgage, loan agreement, note,
lease or other instrument or agreement to which the Company or any Subsidiary is
a party or by which any of them may be bound, or to which any of the property or
assets of any of them is subject, nor will such action result in any violation
of the provisions of the charter or bylaws of the Company or any Subsidiary or
any applicable law or regulation or administrative or court decree except those
as to which the Company has obtained a waiver. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency, other governmental body or any self-regulatory agency is required for
the execution and delivery of this Agreement or the Indenture or the
consummation of the transactions contemplated herein or therein or in the
Prospectus, except such as will be or have been obtained under the Act and
except as may be required under applicable blue sky laws or the rules and
regulations of the National Association of Securities Dealers, Inc. ("NASD") in
connection with the purchase and distribution of the Notes by the Managing
Agent.
(xi) The accountants who have expressed their
opinions with respect to certain of the financial statements and schedules
included or incorporated by reference in the Registration Statement are
independent accountants as required by the Act.
(xii) The consolidated financial statements of the
Company, together with the notes thereto, included in the Registration Statement
present fairly the consolidated financial position of the Company as of the
respective dates of such financial statements, and the consolidated results of
operations, stockholders' equity and cash flows of the Company for the
respective periods covered thereby. Such financial statements have been prepared
in conformity with generally accepted accounting principles consistently applied
throughout the periods involved. The selected financial data set forth in the
Prospectus present fairly the information set forth therein and have been
compiled on a basis consistent with that of the audited consolidated financial
statements included in the Registration Statement.
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(xiii) Neither the Company nor any Subsidiary is in
violation of its articles of incorporation or bylaws or in default under any
administrative or court decree, or in default with respect to any material
provision of any lease, loan agreement, franchise, license, permit or other
contractual obligation to which it is a party or by which it may be bound, or to
which any of the property or assets of the Company or any Subsidiary is subject.
There does not exist any state of facts which constitutes an event of default as
defined in such documents or which, with notice or lapse of time or both, would
constitute such an event of default.
(xiv) There is no action, suit or proceeding before
or by any court or governmental agency or body, domestic or foreign, now pending
or, to the best knowledge of the Company, threatened, against or affecting the
Company, any Subsidiary or any Joint Venture.
(xv) There are no holders of securities of the
Company having rights to registration thereof or preemptive rights with respect
to the Notes or the shares of capital stock of the Company, except as disclosed
in the Prospectus. The Notes will be issued free and clear of all liens,
encumbrances, claims, security interests, restrictions on transfer and other
defects of title.
(xvi) The Company and the Subsidiaries have good and
marketable title to all the properties and assets reflected as owned by the
Company and the Subsidiaries in the financial statements hereinabove described
(or elsewhere in the Prospectus), subject to no lien, mortgage, pledge, charge
or encumbrance of any kind except those, if any, reflected in such financial
statements (or elsewhere in the Prospectus). The Company and the Subsidiaries
hold their leased properties under valid and binding leases which are in full
force and effect. Neither the Company nor any Subsidiary has any notice of any
claim adverse to the rights of the Company or any Subsidiary under any such
leases or affecting or questioning the rights of the Company or any Subsidiary
to the continued possession of the leased premises.
(xvii) The Company has not taken and will not take,
directly or indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any of the Notes.
(xviii) Subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus, and
except as otherwise stated in the Prospectus, (A) neither the Company nor any
Subsidiary has incurred any material liabilities or obligations, direct or
contingent, nor entered into any material transactions not in the ordinary
course of business, (B) there has not been any material adverse change in the
condition, financial or otherwise, results of operations, earnings, business
affairs or business prospects nor any material change in the capital stock,
short-term debt or long-term debt of the Company or any Subsidiary, (C) there
has not been any material transaction entered into by the Company or any
Subsidiary and (D) except as described in the Prospectus, there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
(xix) The Company and the Subsidiaries maintain
insurance, which is in full force and effect, of the types and in the amounts
adequate for their businesses and similar in type and amount to the insurance
coverage maintained by similar companies and businesses.
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(xx) The Company and the Subsidiaries own and possess
all right, title and interest in and to, or have duly licensed from third
parties, all trademarks, copyrights, inventions, know-how (including trade
secrets and other unpatented or unpatentable proprietary or confidential
information, systems or procedures) and other proprietary rights ("Trade
Rights") presently employed by any of them in connection with the business now
operated by them. Neither the Company nor any Subsidiary has received any notice
of infringement, misappropriation or conflict from any third party as to such
Trade Rights which has not been resolved or disposed of, and neither the Company
nor any Subsidiary has infringed, misappropriated or otherwise conflicted with
material Trade Rights of any third parties.
(xxi) The Company and the Subsidiaries own, possess
or have obtained all material governmental licenses, permits, certificates,
consents, orders, approvals and other authorizations necessary to own or lease,
as the case may be, and to operate their properties and to carry on their
respective business as presently conducted and as contemplated by the
Prospectus, and neither the Company nor any Subsidiary has received any notice
of proceedings relating to the revocation or modification of any such licenses,
permits, certificates, consents, orders, approvals or authorizations. The
business of the Company and the Subsidiaries is not being conducted in violation
of any applicable federal, state, local or foreign law, ordinance, regulation,
judgment, decree, injunction or order or requirement of any court or other
governmental entity. No such company and no officer, director, shareholder or
agent of such company has been authorized to receive or make, and is not
receiving or making, any bribe, kickback, or other illegal payment with respect
to the business conducted by such company.
(xxii) No labor dispute with the employees of the
Company or any Subsidiary exists or, to the best knowledge of the Company, is
imminent which might reasonably be expected to materially adversely affect the
condition, financial or otherwise, results of operations, earnings, business
affairs or business prospects of the Company or any Subsidiary. To the best
knowledge of the Company, after due inquiry, no members of senior management
presently intend to leave the Company or any Subsidiary.
(xxiii) All United States Federal income tax returns
required by law to be filed by or on behalf of the Company and the Subsidiaries
have been filed and all taxes shown by such returns or otherwise assessed which
are due and payable as of or prior to the date hereof have been paid, except
assessments against which appeals have been or will be promptly taken and as to
which adequate reserves have been provided. All other tax returns that are
required to have been filed by or on behalf of the Company and the Subsidiaries
pursuant to applicable foreign, state, local or other law have been filed, and
the Company and the Subsidiaries have paid all taxes due as of or prior to the
date hereof pursuant to such returns or pursuant to any assessment received by
them, except for such taxes, if any, as are being contested in good faith and as
to which adequate reserves have been provided. The charges, accruals and
reserves on the books of the Company and the Subsidiaries in respect of any
income and corporation tax liability (or for any payments to be made in respect
of any tax sharing agreements or arrangements) for any years not finally
determined are adequate to meet any assessments or reassessments for additional
income tax for any years not finally determined.
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(xxiv) Neither the Company nor any Subsidiary is an
"investment company" within the meaning of such term as defined in the
Investment Company Act of 1940, as amended.
(xxv) No broker, finder, consultant or other person
or entity is entitled to any brokerage, finder's or other fee or commission in
connection with the issuance and sale of the Notes, except as may be provided to
the Managing Agent by the express terms of this Agreement.
(xxvi) The Company has not sold any securities in
violation of Section 5(a) of the Act or any state securities laws.
(xxvii) The conditions for use of a registration
statement on Form S-2 set forth in the General Instructions to Form S-2 have
been satisfied with respect to the Company and the Registration Statement.
(b) Any certificate signed by any officer of the Company and
delivered to the Managing Agent or to counsel for the Managing Agent pursuant to
this Agreement shall be deemed a representation and warranty by the Company to
the Managing Agent as to the matters covered thereby.
3. Offer and Sale of Notes.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company appoints the Managing Agent as the exclusive Managing Agent
to offer and sell the Notes for the period referred to in paragraph 3(c) hereof,
and the Managing Agent accepts such appointment and agrees to use reasonable
efforts to sell such Notes for the Company. It is expressly intended that the
offer and sale of the Notes shall be on a "reasonable efforts, minimum/maximum"
basis, without a firm commitment by the Managing Agent to purchase any of the
Notes. All sales of the Notes conducted by the Managing Agent shall be solely
for the account and at the risk of the Company, and in no event shall the Agent
have any obligations under the Notes.
(b) The Managing Agent shall offer and sell the Notes for the
Company upon the terms and conditions set forth in the Prospectus, as the same
may be amended or supplemented from time to time. The purchase price payable for
each and all Notes purchased pursuant to this Agreement shall be par plus
accrued interest. Upon the closing of the sale of any of the Notes, the Managing
Agent shall receive an amount equal to six percent (6%) of the aggregate
principal amount of the Notes sold.
(c) The Managing Agent shall also receive an annual fee equal
to 0.5% of the outstanding principal balance of the Notes ("Remarketing Fee").
The Remarketing Fee will be payable by the Company to the Managing Agent
quarterly on January 1, April 1, July 1, October 1 commencing on October 1, 2002
based on the outstanding principal balance of the Notes on each such payment
date. Provided that if the Company's net income, calculated in accordance with
generally accepted accounting principles and before shareholder tax-related
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distributions, for any fiscal year is less than $500,000, then the Remarketing
Fee will increase to 1.0% per annum and will remain 1.0% per annum until the
Company's net income, calculated in accordance with the foregoing, exceeds
$500,000 on a fiscal year-end basis. Further provided, that in the event the
Company has been required to repurchase in excess of $1.0 million of principal
amount of the Notes from the Managing Agent pursuant to Paragraph 3(d), the
Company will not be required to pay any Remarketing Fee to the Managing Agent.
The principal balance of any Notes purchased by the Company on the open market
or upon the death of a Note holder as provided in the Indenture shall not be
included in determining whether the $1.0 million limit has been reached.
(d) Following the one-year anniversary of the first Closing,
as defined in paragraph 4(b) hereof, the Managing Agent shall have the right to
require the Company to repurchase annually up to $500,000 aggregate principal
amount of the Notes tendered by the Managing Agent to the Company. The Company
shall pay the Managing Agent an amount equal to the outstanding principal amount
of the Notes so tendered plus interest accrued but unpaid as of the date of
repurchase by the Company. The Managing Agent's rights pursuant to this
paragraph shall be noncumulative. The aggregate principal amount of any Notes
purchased by the Notes on the open market will be credited towards the Company's
annual repurchase obligations under this paragraph.
(e) The Managing Agent's appointment as selling agent for the
Notes shall be exclusive and not subject to termination by the Company for a
period of six months after the Effective Time. The Managing Agent shall have the
option, exercisable by notice to the Company prior to the expiration of such six
month period, to extend its appointment as Managing Agent for an additional
forty-five days. Upon the expiration of the foregoing period, including (if
applicable) such additional forty-five day period, this Agreement shall remain
in effect, unless the Company thereafter terminates the appointment of the
Managing Agent, which it may do at any time after such expiration, upon written
notice given to the Managing Agent as provided herein.
(f) The Managing Agent may use the services of other brokers
or dealers, which are members in good standing of the NASD, to offer and sell
the Notes. The Managing Agent may enter into agreements with any such brokers or
dealers to act as its sub-agents ("Sub-Agents") for the sale of the Notes and
shall be solely responsible for the payment of any portion of the Managing
Agent's compensation hereunder to such brokers or dealers.
4. Payment and Delivery. On the basis of the representations,
warranties and agreements, but subject to the terms and conditions, set forth in
this Agreement, payment of the purchase price for, and delivery of, the Notes
sold as contemplated hereunder shall be made as follows:
(a) The Managing Agent shall promptly confirm to the Company
the principal amount of the Notes which have been "sold" within the meaning of
paragraph 4(d).
(b) Delivery of the Notes against payment therefore shall be
made before 2:00 p.m., local Minneapolis, Minnesota time at a mutually agreed
upon location, (i) no later than the fifteenth day of each month during the term
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of this Agreement, or (ii) on such earlier date or dates as shall be agreed upon
by the Managing Agent and the Company, as to Notes "sold" as defined in
paragraph 4(d).
Such events being herein called "Closing(s)" and such times
and dates being herein called the "Closing Date(s)." The Notes delivered on each
Closing Date shall be registered in such names and such denominations as the
Managing Agent may request in writing. Such certificates may be deposited with
the Depository Trust Company ("DTC") or a custodian for DTC and registered in
the name of DTC or its nominee. Delivery of any certificated Notes to be the
respective purchasers shall be made by the Managing Agent. Pending each Closing,
all checks and other funds received in subscription for the Notes shall be held
in an escrow account ("Escrow Account") with M&I Xxxxxxxx Xxxxxx National Bank
("Escrow Agent") pursuant to the Escrow Agreement, the form of which is attached
as Exhibit 4.5 to the Registration Statement. All payments of, from or an
account of such funds, shall be made pursuant to the Escrow Agreement. All
subscriptions are subject to the reasonable approval of the Company. If the
Minimum Offering has not been subscribed for on or before __________, all sums
so held shall be returned to subscribers along with interest earned on the
amount deposited in the Escrow Account.
(c) On each Closing Date, the Escrow Agent shall remit to the
Company the purchase price for the Notes, as determined in accordance with
paragraph 3(b) hereof, which the Managing Agent has confirmed to the Company and
which have been sold in accordance with the terms and provisions of this
Agreement. Such purchase price may be remitted to the Company net of the
commissions referred to in paragraph 3(b) and the expenses for which the Company
is responsible under this Agreement.
(d) Notes shall be deemed to have been sold on the date
payment in good funds is received in the Escrow Account for such Notes. No
Closing will be held unless the minimum principal amount of Notes, $1,500,000,
is sold. Each Note will be dated as of the first Closing Date. As provided in
the Indenture, interest will accrue on each Note from the first Closing Date, or
with respect to Notes sold after an interest payment date, the most recent
interest payment date.
In the event the Managing Agent holds Notes in its name or is
the beneficial owner of Notes on the record date for the payment of such
interest (resulting from the purchase of Notes for its own account or
otherwise), which Notes have not been resold, it shall be entitled to receive
such interest, subject to its right to direct the Trustee to pay over such
interest, in whole or in part, to a subsequent purchaser.
5. Certain Agreements of the Company. The Company covenants and agrees
that:
(a) The Company will use its best efforts to cause the
Registration Statement, if the Effective Time is subsequent to the execution and
delivery of this Agreement, and any amendment thereof, to become effective. If
the Effective Time is prior to the execution and delivery of this Agreement, the
Company will file the Prospectus with the Commission pursuant to and in
accordance with subparagraph (1) (or, if applicable and if consented to by the
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Managing Agent, subparagraph (4)) of Rule 424(b) not later than the earlier of
(A) the second business day following the execution and delivery of this
Agreement or (B) the fifth business day after the Effective Date. The Company
will advise the Managing Agent promptly of any such filing pursuant to Rule
424(b).
(b) The Company will advise the Managing Agent promptly of:
(i) any proposal to amend or supplement the Registration Statement or the
Prospectus and will not effect such amendment or supplementation without the
Managing Agent's consent; (ii) the effectiveness of the Registration Statement
(if the Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment or supplementation of the Registration Statement
or the Prospectus; (iii) the institution by the Commission of any stop order in
respect of the Registration Statement or of any notification or other
communication relating to the institution of any stop order proceedings in
respect of the Registration Statement (and the Company will use its best efforts
to prevent the issuance of any such stop order and to obtain as soon as possible
its lifting, if issued); and (iv) any notification of the suspension of
qualification of the Notes for sale in any jurisdiction or the initiation or
threat of any proceedings for that purpose.
(c) If, at any time when a prospectus relating to the Notes is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will advise the Managing Agent promptly
thereof and will prepare promptly and file with the Commission an amendment or
supplement which will correct such statement or omission or an amendment which
will effect such compliance.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Company will make generally available
to its security holders an earnings statement covering a period of at least 12
months beginning after the Effective Date which will satisfy the provisions of
Section 11(a) of the Act and Rule 158 thereunder. For the purpose of the
preceding sentence, "Availability Date" means the 45th day after the end of the
fourth fiscal quarter following the fiscal quarter that includes the Effective
Date, except that, if such fourth fiscal quarter is the last quarter of the
Company's fiscal year, "Availability Date" means the 90th day after the end of
such fourth fiscal quarter.
(e) The Company will furnish to the Managing Agent copies of
the Registration Statement (two of which will be originally executed and will
include all exhibits), 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 Managing Agent shall reasonably request.
(f) The Company will use its best efforts to arrange for the
qualification of the Notes for sale under the blue sky laws of such
jurisdictions as the Managing Agent reasonably designates, and to continue such
qualifications in effect so long as this offering continues. The preparation and
filing of the applications and other documents relating to such qualifications
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have been conducted by counsel to the Company. After the termination of the
offering and until all of the Notes have been paid in full by the Company at
maturity, the Company will file and make, and pay all fees applicable thereto,
such statements and reports and renewals of registration necessary in order to
continue to qualify the Notes for secondary market transactions in the various
states in which the Notes were originally registered for sale.
(g) As long as any Notes remain outstanding, the Company will
furnish to the Managing Agent, as soon as practicable after the end of each
fiscal year, a copy of any annual report to its security holders for such year,
and the Company will furnish to the Managing Agent (i) as soon as available, a
copy of each report or proxy statement of the Company filed with the Commission
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
mailed to security holders pursuant to the Indenture, and (ii) from time to
time, such other information concerning the Company or the Notes as the Managing
Agent may request including, without limitation, a list of the Noteholders as of
a date within 15 days of such request, such list to be furnished to the Managing
Agent within 15 days of the receipt of such request.
(h) The Company will use the net proceeds received by it from
the sale of the Notes substantially in the manner specified in the Prospectus
under the caption "Use of Proceeds."
(i) The Company will not claim the benefit of any usury laws
against any holders of the Notes.
(j) Whether or not the transactions contemplated hereunder are
consummated, the Company will pay (i) all costs, fees and expenses incurred in
connection with the performance of the Company's obligations hereunder,
including, without limiting the generality of the foregoing, all fees and
expenses of legal counsel for the Company and of the Company's independent
accountants and auditors, all costs and expenses incurred in connection with the
preparation, any printing, filing and distribution of the Registration
Statement, each preliminary prospectus and the Prospectus (including all
exhibits and financial statements) and all amendments and supplements thereto,
this Agreement and the blue sky memoranda, (ii) all out-of-pocket expenses of
the Managing Agent in connection with the sale of the Notes, including the legal
fees and disbursements of counsel to the Managing Agent up to $65,000, subject
to any unusual or unexpected circumstances under which the Company may agree to
pay any additional reasonable fees and disbursements of counsel to the Managing
Agent, (iii) all costs, fees and expenses (including legal fees and
disbursements of counsel for the Company incurred in connection with qualifying
or registering all or any part of the Notes for offer and sale under blue sky
laws, including the preparation of blue sky memoranda relating to the Notes
supplied to the Managing Agent by counsel for the Company, (iv) the fees of the
NASD in connection with the request for clearance of such offering with the
NASD, (v) all fees and expenses of the Trustee under the Indenture and any
paying agent and registrar, (vi) all fees and expenses associated with the
production of materials prepared in connection with the informational meetings
to be held in selected cities, and the travel expenses incurred by the
management of the Company related to such meetings, (vii) all fees and expenses
to compensate or reimburse the Escrow Agent for its services as such, and (vii)
costs of printing the certificates for the Notes and all transfer taxes, if any,
with respect to the sale and delivery of any certificated Notes to the Managing
Agent.
11
6. Conditions of the Obligations of the Managing Agent. The obligations
of the Managing Agent to act as Managing Agent in connection with the offer and
sale of the Notes, to make payment for the Notes and to take delivery thereof at
each Closing Date shall be subject to the following: the accuracy of the
representations and warranties on the part of the Company herein set forth, the
accuracy in all material respects of the statements of the Company officers made
pursuant to the provisions hereof, the performance by the Company of its
obligations hereunder and the satisfaction of the following additional
conditions precedent:
(a) The Managing Agent shall have received a letter, dated the
date of delivery thereof (which, if the Effective Time is prior to the execution
and delivery of this Agreement, shall be on or prior to the date of this
Agreement or, if the Effective Time is subsequent to the execution and delivery
of this Agreement, shall be prior to the filing of the amendment or
post-effective amendment to the Registration Statement to be filed shortly prior
to the Effective Time) of Deloitte & Touche LLP confirming that they are
independent public accountants within the meaning of the Act and the applicable
rules and regulations thereunder and stating in effect, with respect to the
consolidated financial statements of the Company, that:
(i) in their opinion, the consolidated financial
statements and related schedules of the Company examined by them and included in
the Registration Statement and Prospectus on their authority as experts comply
as to form in all material respects with the applicable accounting requirements
of the Act, the applicable published rules and regulations of the Commission
thereunder, Staff Accounting Bulletins with respect to registration statements
on Form S-2, and the requirements of Form S-2;
(ii) on the basis of a limited review, not
constituting an audit, including a reading of the latest available interim
financial statements, a reading of the minutes of the shareholders and of the
Board of Directors of the Company, and inquiries of officials of the Company
responsible for financial and accounting matters and such other inquiries and
procedures as they may specify, nothing has come to their attention which, in
their judgment, would indicate,
(A) that any unaudited consolidated financial
statements and related notes thereto of the Company included in the Registration
Statement and the Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of the Act and of the published
instructions, rules and regulations of the Commission thereunder with respect to
registration statements on Form S-2, or that such unaudited financial
information contained in the Prospectus was not prepared in conformity with
generally accepted accounting principles applied on a basis consistent with
those followed in the preparation of the audited financial statements of the
Company included therein, or would require any material adjustment for a fair
presentation of the information purported to be shown thereby;
(B) at a specified date not more than five days prior
to the date of this Agreement, the First Closing Date or any Additional Closing
Date, as applicable, there was any change in the capital stock, long-term debt
12
or short-term debt of the Company, or any decrease in total assets, net current
assets, net assets or shareholder's investment as compared with amounts shown on
the latest balance sheet included in the Registration Statement and Prospectus,
except as set forth or contemplated in the Prospectus;
(C) for the period from the closing date of the
latest income statement included in the Registration Statement and Prospectus to
the specified dates referenced in clause (B) above, there were any decreases, as
compared with the corresponding period of the previous year, in operating
revenues, income before income taxes or in the total or per share amounts of net
income, except as set forth or contemplated in the Prospectus;
(iii) they have compared specific dollar amounts,
number of shares, percentages and other financial information pertaining to the
Company set forth in the Prospectus, which have been specified by the Managing
Agent, with the general accounting records of the Company, with the results
obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter,
and found them to be in agreement; and
(iv) such other matters as the Managing Agent may
reasonably request.
For purposes of this subsection, if the Effective Time is subsequent to the
execution and delivery of this Agreement, "Registration Statement" shall mean
the registration statement as proposed to be amended by the amendment or
post-effective amendment to be filed shortly prior to the Effective Time, and
"Prospectus" shall mean the prospectus included in the Registration Statement.
(b) If the Effective Time is not prior to the execution and
delivery of this Agreement, the Effective Time shall have occurred not later
than 10:00 P.M., Minneapolis time, on the date of this Agreement or such later
date as shall have been consented to by you. If the Effective Time is prior to
the execution and delivery of this Agreement, the Prospectus shall have been
filed with the Commission in accordance with the Act and Section 5(a) of this
Agreement. 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 best knowledge of the Company or you, shall be
contemplated by the Commission.
(c) The Notes shall have been qualified for sale under the
blue sky laws of such states and in such amounts as shall have been specified by
the Managing Agent and agreed to by the Company.
(d) The NASD, upon review of the terms of the public offering
of the Notes, shall not have objected to such offering, the terms of the
offering or the Managing Agent's participation in the offering.
13
(e) The legality and sufficiency of the authorization,
issuance and sale or transfer and sale of the Notes hereunder, the validity and
form of the certificates representing the Notes, the execution and delivery of
this Agreement and the Indenture and all corporate proceedings and other legal
matters incident thereto, and the form of the Registration Statement and the
Prospectus (except financial statements) shall have been approved by counsel for
the Managing Agent exercising reasonable judgment.
(f) The Managing Agent shall not have advised the Company that
the Registration Statement or the Prospectus or any amendment or supplement
thereto contains an untrue statement of fact which, in the opinion of counsel
for the Managing Agent, is material or omits to state a fact which, in the
opinion of such counsel, is required to be stated therein or necessary to make
the statements therein not misleading.
(g) The Managing Agent shall have received an opinion, dated
each Closing Date, of Winthrop & Weinstine, P.A., counsel for the Company, to
the effect that:
(i) The Company and the Subsidiaries have been duly
incorporated and are validly existing as corporations in good standing under the
laws of their respective states of incorporation, with full corporate power and
authority to own their properties and conduct their business as described in the
Prospectus. The Company and the Subsidiaries are duly qualified as foreign
corporations to transact business and are in good standing in each jurisdiction
in which such qualification is required, other than jurisdictions in which the
failure to so qualify would not have a material adverse effect on the Company
and the Subsidiaries, taken as a whole.
(ii) All of the shares of capital stock of the
Subsidiaries have been duly and validly authorized and issued, are fully paid
and nonassessable and are owned by the Company, free and clear of any security
interest, lien or restriction except for the security interest of Diversified
Business Credit, Inc. The Company has no subsidiaries (other than the
Subsidiaries) or affiliates or affiliated corporations except as explicitly
stated in the Registration Statement.
(iii) The authorized capital stock of the Company is
as set forth under the caption "Capitalization" in the Prospectus as of the
date(s) indicated, and the issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable. The long-term debt and short-term debt of the Company and the
Subsidiaries have been duly authorized. No holder of the Company's common stock
has the right to cause the Company to redeem such common stock.
(iv) This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company enforceable in accordance with its terms
except as enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws or equitable principles
affecting the enforcement of creditors' rights generally and except as rights to
indemnity hereunder may be limited by applicable securities laws, including the
Act and the rules and regulations thereunder.
14
(v) The Indenture and the Notes have been duly and
validly authorized, executed and delivered by the Company and constitute the
legal, valid and binding obligations of the Company enforceable in accordance
with their respective terms except as enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws or
equitable principles affecting enforcement of creditors' rights generally. The
Notes are entitled to the benefits of the Indenture.
(vi) The Notes and the Indenture conform in all
material respects to the descriptions thereof contained in the Prospectus. The
global certificate for the Notes to be inserted in book-entry form hereunder and
the certificates for any Notes to be certificated are in due and proper form.
(vii) Neither the issue and sale of the Notes, the
performance of this Agreement, the Indenture, nor the consummation of the
transactions contemplated herein and therein will conflict with or constitute a
breach of, or default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any
Subsidiary pursuant to any contract, indenture, mortgage, loan agreement, note,
lease or other instrument or agreement to which the Company or any Subsidiary is
a party or by which any of them may be bound, or to which any of the property or
assets of any of them is subject, nor will such actions result in any violation
of any administrative or court decree known to such counsel after due inquiry or
the provisions of the charter or bylaws of the Company or any Subsidiary or, to
the best of such counsel's knowledge after due inquiry, any applicable law or
administrative regulation.
(viii) No consent, approval, authorization or other
order of any court, regulatory body, administrative agency, other governmental
body or any self-regulatory agency is required for the execution and delivery of
this Agreement, the Indenture or the Notes or the consummation of the
transactions contemplated herein or therein, except such as have been obtained
under the Act and as may be required under applicable blue sky laws and under
the rules and regulations of the NASD.
(ix) Neither the Company nor any Subsidiary is in
violation of its articles of incorporation or bylaws or, to the best of such
counsel's knowledge after due inquiry, in default under any administrative or
court decree or in default with respect to any material provision of any lease,
loan agreement, franchise, license or permit to which it is a party or by which
it may be bound, or to which any of the property or assets of the Company or any
Subsidiary is subject. To the best knowledge of such counsel, there does not
exist any state of facts which constitutes an event of default as defined in
such documents or which, with notice or lapse of time or both, would constitute
such an event of default.
(x) To the best of such counsel's knowledge after due
inquiry, there is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending or threatened,
against or affecting the Company or the Subsidiaries, which is required to be
disclosed in the Registration Statement.
15
(xi) There are no holders of securities of the
Company having preemptive rights with respect to the issuance and sale of the
Notes and no rights to register outstanding shares of the Company's capital
stock or, except as described in the Prospectus, shares issuable upon the
exercise of outstanding warrants, options, convertible securities or other
rights to acquire shares of such capital stock exist with respect to the
Registration Statement.
(xii) To the best knowledge of such counsel after due
inquiry, there are no contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments, documents or agreement ("Agreements") of a
character required to be described or referred to in the Registration Statement
or the Prospectus or to be filed as an exhibit to the Registration Statement
which are not described or referred to or filed as required. All descriptions or
references to such Agreements in the Registration Statement are correct in all
material respects.
(xiii) The Indenture is not required to be qualified
under the Trust Indenture Act of 1939, as amended.
(xiv) The information in the Registration Statement,
to the extent that it constitutes summaries of matters of law, descriptions of
statutes, legal and government proceedings, contracts and other legal
conclusions, is accurate and fairly presents the information required to be
shown, and such counsel does not know of any statutes or legal or governmental
proceedings required to be described in the Prospectus that are not described as
required.
(xv) The conditions for use of a registration
statement on Form S-2 set forth in the General Instructions to Form S-2 have
been satisfied with respect to the Company and the Registration Statement.
(xvi) The Registration Statement was declared
effective under the Act as of the date and time specified in such opinion, the
Prospectus either was filed with the Commission pursuant to the subparagraph of
Rule 424(b) specified in such opinion on the date specified therein or was
included in the Registration Statement (as the case may be), and, to the best
knowledge of such counsel, no stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and no proceedings
for that purpose have been instituted or are pending or contemplated under the
Act, and the Registration Statement and the Prospectus, and each amendment or
supplement thereto, as of their respective effective or issue dates, complied as
to form in all material respects with the requirements of the Act and the rules
and regulations thereunder; and nothing has come to such counsel's attention
that would lead such counsel to believe that either the Registration Statement
or the Prospectus or any such amendment or supplement, as of such respective
dates, contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, it being understood that such counsel need express no
opinion as to the financial statements or other financial or statistical data or
compilations contained in any of the documents mentioned in this clause,
including the Registration Statement or the Prospectus or as to any statements
in or omissions from the documents mentioned in this clause, including the
Registration Statement and the Prospectus, in reliance upon and in conformity
with written information furnished to the Company by the Managing Agent
specifically for use therein.
16
(xvii) The Company has not sold any securities in
violation of Section 5(a) of the Act or any state securities laws.
(xviii) To the best of such counsel's knowledge, the
Company and the Subsidiaries own, possess or have obtained all material
governmental licenses, permits, certificates, consents, orders, approvals and
other authorizations necessary to own or lease, as the case may be, and to
operate their properties and to carry on their respective business as presently
conducted and as contemplated by the Prospectus, and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such licenses, permits, certificates, consents, orders,
approvals or authorizations. The business of the Company and the Subsidiaries is
not being conducted in violation of any applicable federal, state, local or
foreign law, ordinance, regulation, judgment, decree, injunction or order or
requirement of any court or other governmental entity known to such counsel. To
the best knowledge of such counsel after due inquiry, no such company and no
officer, director, shareholder or agent of such company has been authorized to
receive or make, and is not receiving or making, any bribe, kickback, or other
illegal payment with respect to the business conducted by such company.
(xix) The Company is not and after giving effect to
the Offering and sale of the Notes will not be an "investment company" or an
entity "controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(xx) Such other matters as the Managing Agent may
reasonably request.
(h) The Managing Agent shall have received from Xxxxxxx,
Street and Deinard, Professional Association, counsel for the Managing Agent,
such opinion or opinions, dated each Closing Date, as the Managing Agent may
require, and the Company shall have furnished to such counsel such documents as
they request for the purpose of preparing such opinion. In rendering such
opinion, such counsel may rely upon the opinion of Winthrop & Weinstine, P.A.,
referred to above.
(i) The Managing Agent shall have received a certificate,
dated each Closing Date, of the President and the principal financial officer of
the Company on behalf of the Company to the effect that the representations and
warranties of the Company in this Agreement are true and correct on and as of
the applicable Closing Date to the same effect as if made on such Closing Date,
that the Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied hereunder at or prior to such Closing
Date, that no stop order suspending the effectiveness of the Registration
Statement has been issued and, to the best of their knowledge, no proceedings
for such purpose have been instituted or are contemplated by the Commission, and
that there has not been, since the date hereof or since the respective dates as
of which information is given in the Registration Statement and the Prospectus,
any material adverse change in the condition, financial or other, or in the
results of operations, business affairs or business prospects of the Company or
any Subsidiary.
17
(j) The Managing Agent shall have received a letter, dated
each Closing Date, of Deloitte & Touch LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to in
such subsection will be a date not more than five days prior to the applicable
Closing Date for the purposes of this subsection.
(k) The Company shall have received, with copies to the
Managing Agent, duly executed waivers from each holder of the Company's common
stock having redemption rights, permanently waiving such rights.
(l) The Managing Agent's Credit Committee shall have approved
the Offering.
The Company will furnish the Managing Agent with such manually signed or
conformed copies of such opinions, certificates, letters and documents as the
Managing Agent reasonably requests and of such other certificates and documents
as the Managing Agent may reasonably request.
7. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless the Managing
Agent and any Sub-Agents against any losses, claims, damages or liabilities to
which the Managing Agent and Sub-Agents may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon a breach by the Company of the
representations, warranties or covenants contained herein, or any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or any related 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 therein or necessary to make the statements therein not misleading, and
will reimburse the Managing Agent and Sub-Agents for any legal or other expenses
reasonably incurred by the Managing Agent and Sub-Agents in connection with
investigating or defending any such loss, claims, damage, liability or action as
such expenses are incurred, provided that the Company will not be liable in any
such case to the extent that any such loss, claims, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by the Managing
Agent, as described in the last sentence of paragraph (b) below; and provided
further that the foregoing indemnity agreement with respect to any Preliminary
Prospectus or Prospectus shall not inure to the benefit of the Managing Agent
and Sub-Agents on account of any loss, liability, claim, damage and expense
whatsoever arising from the sale of any Notes by the Managing Agent and
Sub-Agents to any person if (A) the untrue statement or alleged untrue statement
or omission or alleged omission of a material fact contained in such Preliminary
Prospectus or Prospectus from which such loss, liability, claim, damage or
expense arose was corrected in a later Prospectus by amendment or supplement,
and (B) a copy of such later Prospectus (if such amendments or supplements shall
have been furnished to the Managing Agent and Sub-Agents prior to the
confirmation of the sale involved) shall not have been sent or given by or on
behalf of the Managing Agent or Sub-Agents to such person, if required by law,
with or prior to the written confirmation of the sale involved.
18
(b) The Managing Agent will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the Company
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of material fact contained
in the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or the 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 reliance upon and in conformity with written information furnished to the
Company by the Managing Agent, as described in the last sentence of this
paragraph (b), and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are incurred.
For all purposes of this Agreement, the information set forth (i) on the last
paragraph of the cover page of the Prospectus, and (ii) in the section entitled
"The Offering" in the Prospectus is the only information furnished to the
Company by the Managing Agent for use in the Registration Statement or the
Prospectus, or any related preliminary prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 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 subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof, but the failure so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying 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 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party, without the prior written consent of the indemnified party, shall effect
any settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Managing Agent on the other from the
offering of the Notes or (ii) if the allocation provided by clause (i) above is
19
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 Managing Agent on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Managing Agent on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bears to the total underwriting discounts and commissions
received by the Managing Agent. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Managing Agent and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), the Managing Agent shall not be required to
contribute any amount in excess of the commissions and discounts applicable to
the Notes. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(e) The obligations of the Company under this Section shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, jointly and severally, to each
person, if any, who controls the Managing Agent within the meaning of the Act.
The obligations of the Managing Agent under this Section shall be in addition to
any liability which the Managing Agent may otherwise have and shall extend, upon
the same terms and conditions, jointly and severally, to each director of the
Company, to each officer of the Company who has signed the Registration
Statement and to each person, if any, who controls the Company within the
meaning of the Act.
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers, and the Managing Agent set forth in or made pursuant to
this 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 Managing Agent, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Notes. If for any reason the purchase of the Notes by the
Managing Agent is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by them pursuant to Section 5(j) and the
respective obligations of the Company and the Managing Agent under Section 7
shall remain in effect, and if any Notes have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section 5
shall also remain in effect.
9. Termination. This Agreement may be terminated by the Managing Agent
or the Company at any time prior to the Effective Date. In such case, the
Managing Agent will be paid for its fees and expenses accrued as of such date
20
within thirty (30) days of such termination. Notwithstanding the foregoing, this
Agreement shall be subject to termination in the Managing Agent's absolute
discretion, by notice given to the Company prior to delivery of and payment for
the Notes, if prior to such time (i) prevailing market or general economic or
political conditions, in the judgment of the Managing Agent, have become
unfavorable such that the Managing Agent's ability to sell the Notes will be
impaired or it would be impracticable to proceed (ii) any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the business or properties of the Company or any Subsidiary shall
have occurred which, in the judgment of the Managing Agent, materially impairs
the investment quality or the value of the Notes, (iii) trading in securities
generally on the New York Stock Exchange or the Nasdaq shall have been suspended
or limited or minimum prices shall have been established on such exchange or
market system, (iv) a banking moratorium shall have been declared either by
Federal, New York or Minnesota banking authorities, (vi) there shall have
occurred any outbreak or escalation of hostilities, declaration by the United
States of a national emergency or war or other calamity or crisis or terrorist
act, the effect of which on financial markets is such as to make it, in the
Managing Agent's judgment, impracticable or inadvisable to proceed with the
offering or delivery of the Notes as contemplated by the Prospectus or (v) there
shall have occurred any material adverse change in the financial or securities
markets beyond normal fluctuations.
10. Notices. All communications hereunder will be in writing and, if
sent to the Managing Agent, will be mailed, delivered or telegraphed and
confirmed to the Managing Agent at Xxxxxxxxx & Company LLC, 00 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Xxxxx Xxxxxx; or,
if sent to the Company, will be mailed, delivered or telegraphed and confirmed
to it at Xxxxxx Investment Corporation, 00 Xxxx Xxxxxx, X.X., Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxx, or to such other
address of which a party hereto shall notify the other party hereto pursuant to
this paragraph.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder. No purchaser of Notes from
the Managing Agent shall be deemed to be a successor by reason merely of such
purchase.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and same Agreement.
13. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Minnesota.
21
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and the
Managing Agent in accordance with its terms.
Very truly yours,
Xxxxxx Investment Corporation
By:
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
The foregoing Agency Agreement is hereby confirmed and accepted as of the date
first above written.
XXXXXXXXX & COMPANY LLC
By:
--------------------------------
Name:
Title:
22
