UNDERWRITING AGREEMENT
between
SENIOR RETIREMENT COMMUNITIES (Issuer)
000 Xxxxxxx Xx.
Xxxx Xxxxxx, XX 00000
and
MMR INVESTMENT BANKERS, INC. (Underwriter)
000 X. 000xx Xxxx, Xxxxx 000
X.X. Xxx 000000
Xxxxxxx, Xxxxxx 00000-0000
(000) 000-0000
Toll Free 0-000-000-0000
INTRODUCTION
The Underwriter will provide professional and technical services in preparing
a bond issue for the Issuer.
AMOUNT
The Bond Issue shall be in the aggregate amount of $9,000,000.00 and shall be
designated as follows:
Series 1998-I (Ruston, LA) $3,685,000.00 First Mortgage
Series 1998-II (Bossier City, LA) $3,470,000.00 First Mortgage
Series 1998-III (Shreveport, LA) $1,845,000.00 First Mortgage
SECURITY
The addresses of the properties securing this Bond Issue are:
Series 1998-I 6 acres on the north side of X.X. Xxxxxxx 00
approximately 1/4 mile east of the corporate limits of
Ruston, Lincoln Parrish, LA
Series 1998-II 6 acres on the south side of Xxxxxxx Avenue just east
of Industrial Drive within the corporate limits of
Bossier City, Bossier Xxxxxxx, LA
Series 0000-XXX Xxx 0, Xxxxxxx Xxxxxx Subdivision located on East Kings
Highway located on approximately 3 acres within the
corporate limits of Shreveport, Caddo Xxxxxxx, LA,
or such other location of equal value in the same area.
ISSUER'S RESPONSIBILITIES
The Issuer agrees to:
1. The Issuer shall complete the prospectus information forms, and
provide any other information requested by the Underwriter. An independent
audit performed by a Certified Public Accountant will be required.
2. Engage an attorney to prepare a legal debt letter, secure a title
insurance policy in the amount of the Bond Issue and to review the necessary
legal documents, including, but not limited to, the Resolution authorizing the
Bond Issue and the Trust Indenture. This work shall be completed in a manner
and within a time period satisfactory to the Underwriter. The Issuer shall
pay the attorney's fees.
3. Furnish to the Underwriter a certified copy of its Articles of
Incorporation, its Constitution and/or By-Laws, and any other forms required
by the Underwriter and the Securities Commission of its state or any other
state in which it wishes to sell the bonds.
4. Furnish an appraisal of its property and improvements to the
Underwriter. The Underwriter may require an MAI appraisal. The Issuer
agrees to pay all expenses of the appraisal.
5. Engage a paying agent, registrar, and independent trustee, selected
by the Underwriter. The Issuer agrees to pay any expenses pertaining to
these services.
6. Prior to the delivery of the bonds, execute the Trust Indenture and
cause it to be recorded in all places required by law and as may be
agreed upon by the Underwriter and the Issuer. The Issuer shall take such
steps as necessary to make the Indenture a valid obligation of the Issuer and
a lien on and security interest in the property owned by the Issuer and
included in the lien of the Indenture. The Issuer agrees that the Bonds will
be secured by a first mortgage on the property or in a co-first mortgage
position with the construction lender.
7. The Issuer shall pay the expenses of furnishing the title insurance,
the filing and recording fees, the Attorney's fees, the Appraiser's fees,
the Accountant's fees (if any), all Trustee's fees, any registration,
recording or mortgage taxes levied on bonds by either state or federal
government bodies and any registration and licensing fees required by any
regulatory body, any state or the federal government.
8. Furnish the Underwriter copies of the architectural and construction
contracts, final plans and specifications, and detail of all bids.
9. The Issuer shall pay all expenses related to all local Investment
Seminars.
10. The Issuer is responsible to begin making Sinking Fund Payments the
week of Issue Date.
11. The Issuer agrees to set up a Bond Reserve Account in an amount
equivalent to six months of Sinking Fund Payments of each Series of Bonds to
be controlled and used by the Trustee to pay principal and interest due on
the bonds, should the Issuer ever be in an event of default on the bond issue.
This Bond Reserve Account shall be in effect for a period of ten (10) years
from the date of issue, and at the end of the ten (10) years, the Bond
Reserve Account will be used to call bonds provided the Issuer is current on
all Sinking Fund payments. The Issuer will establish the Bond Reserve
Account from sale of the bonds. In addition, the first six months of the
Initial Operating Fund Payments will be funded from the initial proceeds from
the sale of the bonds.
12. The Issuer agrees that it shall not contact any person listed in the
records of the Underwriter as a Customer of the Underwriter for any reason
whatsoever. This provision shall not be construed to prohibit the Issuer
from providing any reports or notification to securities holders that may be
mandated by any federal or state laws or regulations.
UNDERWRITER'S RESPONSIBILITIES
The Underwriter agrees to:
1. Furnish the preliminary organizational material to the Issuer.
2. Set the interest rates and calculate the maturity schedule just
prior to filing the issue with the proper regulatory bodies.
3. Furnish a printed prospectus prepared from the information provided
by the Issuer.
4. Process all information sent to the Underwriter by the Issuer.
5. Make appropriate filings with all regulatory bodies on behalf of the
Issuer. The Issuer agrees to pay all costs of these filings.
6. Will offer and sell the Bonds on a "best efforts" basis at the
public offering price of $250 per Bond, or integral multiples thereof.
DEPOSIT OF PROCEEDS FROM BOND SALES
The Issuer agrees to deposit proceeds from the sale of the bonds pursuant to
the Trust Indenture. Any funds received by the Underwriter subject to the
terms of the Trust Indenture will be delivered to the bond proceeds account
no later than 12:00 noon the next business day following receipt. The
Underwriter shall instruct investors to make their checks payable to the
Registrar. If there is an escrow, then the Underwriter will instruct
investors to make their checks payable to the Escrow Agent.
FUTURE BOND ISSUES
In accordance with the Trust Indenture, additional bonds may be issued from
time to time on a par and equality basis with the same underlying security,
(plus improvements), provided the proceeds are used to enhance the existing
project, to make additional improvements, to purchase more land, or to
refinance indebtedness. The Underwriter shall have the first right of
refusal for any additional financing and/or refinancing for the Issuer
involving the Property that secures the Bonds for a period not to exceed
three years from date of issue.
FEES
The Issuer agrees to pay the Underwriter an investment banking fee
of 1.3% of the aggregate amount of the bond issue ($117,000.00).
The investment banking fee is due in the following manner:
$63,000.00 at the time of signing of the Underwriting Agreement.
The remaining balance of the investment banking fee ($54,000.00) is due
prior to filing the bond issue with the regulatory agencies.
In the event the issue is canceled prior to issuance of the bonds, the
underwriter shall be entitled to the above fee only to the extent of its
actual accountable out-of-pocket epensed, upon submission to the Issuer a
listing of these expenses. These expenses may include, but are not limited to
legal fees, travel, telephone, photo copies, postage and printing. If the
Issuer terminates this agreement for any reason not enumerated in the section
entitled "Termination", such action shall be considered a material breech of
this Agreement and the Issuer shall be liable to the Underwriter for the amount
of the investment banking fee for out-of-pocket expenses for services rendered
and not as a penalty.
In addition to the investment banking fee, the Issuer agrees to pay the
Underwriter one of the following concessions:
Processing fee of 1% of the face amount of each bond sold to the
Constituents of the Issuer;
Concession of 5% of the face amount of each bond sold to clients of
the Broker;
Concession of 6% of the face amount of each bond sold through
certain selected members of the National Association of Securities Dealers,
Inc. through a Selling Group Agreement.
All bond sales are on a best efforts basis. The concession shall be deducted
from the sale price of each bond by the Registrar and forwarded to the
Underwriter.
The Custodian of the Bond Proceeds Account is authorized to pay MMR Investment
Bankers, Inc. any fees and/or brokerage concessions due them according to the
priority of disbursements as set forth in the Trust Indenture and Prospectus.
In the event the issue is canceled, the Underwriter shall
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be entitled to the above fee to the extent of its costs, including due
diligence and consulting costs incurred by the Registered Representative, and
costs paid on behalf of the Issuer, upon submission to the Issuer of a listing
of these costs.
SYNDICATION
The Underwriter may offer these bonds for sale to and through certain selected
members of the National Association of Securities Dealers, Inc.
INDEMNIFICATION
The Issuer will indemnify and hold harmless the Underwriter, its agents and
each person, if any, who controls the Underwriter within the meaning of the
Securities Act of 1933 (the "Act") against any losses, claims, damages or
liabilities, joint or several, to which they 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 drawings,
pictures, opinions of counsel or appraisals furnished by the Issuer to the
Underwriter or caused by the failure or refusal of the Issuer to furnish such
information to the Underwriter, 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 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,
liabilities or action; provided, however, that the Issuer will not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or omission made in
any of such documents in reliance upon and in conformity with written
information furnished to the Issuer by the Underwriter specifically for use
therein; provided, however, that the indemnification contained in this
paragraph 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, liabilities or expenses
arising from the sale of the Bonds by the Underwriter to any person if a
copy of the Prospectus (as amended or supplemented if any amendments
or supplements thereto shall have been furnished to such Underwriter prior
to the written confirmation of the sales involved) shall not have been
given or sent to such person, if required by law, by or on behalf of the
Underwriter with or prior to the written confirmation of the sale involved,
and the untrue statement or omission of a material fact contained in such
preliminary prospectus was corrected in the Prospectus (as amended or
supplemented if amended or supplemented as aforesaid). This indemnity
agreement will be in addition to any liability which the Issuer may
otherwise have.
The Underwriter will indemnify and hold harmless the Issuer, each of its
directors, each of its officers who has signed the Registration Statement
and each person, if any, who controls the Issuer within the meaning of the
Act, against any losses, claims, damages or liabilities to which the Issuer
or any such director, officer or controlling person 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 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 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 Issuer by the Underwriter specifically for use therein; and
will reimburse any legal or other expenses reasonably incurred by the Issuer
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 with the
Underwriter may otherwise have.
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 the indemnifying party under this
Section, notify the indemnifying party of the commencement thereof, 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. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, 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. The
indemnified party shall have the right to employ its counsel in any such
action, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the employment of the counsel by such
indemnified party has been authorized by the indemnifying party, (ii)
the indemnified party shall have reasonably concluded that there may be
conflict of interest between the indemnifying party and the indemnified
party in the conduct of the defense of such action (in which case the
indemnifying party shall not have the right to direct the defense of such
action on behalf of the indemnified party) or (iii) the indemnifying party
shall not in fact have employed counsel to assume the defense of such action, in
each of which cases the fees and expenses of such counsel shall be at the
expense of the indemnifying party. An indemnifying party shall not be
liable for any settlement of any action or claim effected without its consent.
TERMINATION
This agreement may be terminated by the Underwriter without liability to the
Underwriter if, prior to the time of delivery of any bonds any substantial
change in the financial position of the Issuer or in the existing operating,
political, international, economic or market conditions shall have taken
place, which in the judgment of the Underwriter makes it impractical to
market the bonds. The Underwriter may also terminate this agreement if
the Issuer becomes one month delinquent in any Sinking Fund Payment, or
fails to comply with any of the provisions of this agreement.
This agreement may be terminated by the Underwriter or the Issuer without
liability if, after the date of this agreement the Issuer sustains a
substantial loss on account of fire, accident or other act of God, or in the
case of war or other national emergency makes it impractical in the judgment
of the Underwriter or the Issuer to sell the bonds. The Underwriter or the
Issuer may also terminate this agreement without liability if registration or
exemption from registration from any state or regulatory body is finally
denied after a good faith effort on the part of the Issuer and the Underwriter
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to obtain such registration or exemption from registration. If the Issuer
terminates this Agreement for any reason not enumerated in the section entitled
"Termination", such action shall be considered a material breach of this
Agreement and the Issuer shall be liable to the Underwriter for the amount of
the investment banking fee for out-of-pocket expenses for services rendered
and not as a penalty.
It is understood that no agreements will exist between MMR Investment Bankers,
Inc., its officers, agents, employees, and/or registered representatives and
the Issuer other than that which is in written form, signed by the authorized
signatories of the Issuer and MMR Investment Bankers, Inc.
This agreement must be approved by an officer of the Underwriter. Prior to
signing by an officer, there will be an analysis of the Issuer's ability to
perform the proposed contract by the loan committee of the Underwriter. This
agreement constitutes a binding contract. Please read it carefully
before signing.
CONCLUSION AND VENUE
This written agreement represents the entire agreement and understanding
between the Underwriter and the Issuer. This agreement, and any legal
action brought to enforce its provisions shall be governed by the laws of
the State of Kansas. The parties mutually agree that venue for any legal
action on this agreement shall be in El Dorado, Xxxxxx County, Kansas.
Date: 1-29-98 /S/XXXXXX XXXXXXXX-XXXXXX-PRES
____________________________ ______________________________
Signed by Officer -- Title
Issuer's Name: Senior Retirement Communities
Address: 000 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Phone: (000) 000-0000
/S/XXXXX XXXXXX-CEO /S/M. XXXXX XXXXX
----------------------------- ----------------------------
Approved by MMR Investment MMR Registered Representative
Bankers, Inc. Officer
This agreement must be approved by an officer of MMR. Prior to signing by an
officer, there will be an analysis of the Issuer's ability to perform
the proposed contract by the loan committee of MMR. This agreement
constitutes a binding contract. Please read it carefully before signing.
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