Exhibit No. 1(a)
IBF VI - Guaranteed Income Fund
Form SB-2, Amend. No. 1
File No. 333-71091
IBF VI - PARTICIPATING INCOME FUND
(A Delaware corporation)
INDEPENDENT UNDERWRITER AGREEMENT
CLASS A 10% INCOME PARTICIPATING NOTES
$50,000,000
Xxxxx Xxxxx & Son Incorporated _________________, 1999
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Gentlemen:
IBF VI - Participating Income Fund (the "Company"), a
Delaware corporation, desires to offer for sale to the public
$50,000,000 in principal amount of its Class A 10% Income
Participating Notes ("Notes"). The Company desires to offer the
Notes for sale through Xxxxxxx & Company Securities, Inc. (the
"Dealer-Manager"). The offering will be undertaken by the Dealer-
Manager as agent for the Company on a "best efforts, $500,000
Notes minimum-$50,000,000 Notes maximum" basis so that in the
event $500,000 for the purchase of Notes is not received within
the agreed period, no Notes will be sold, and the Dealer-Manger
will not be entitled to any compensation. The Dealer-Manager is
an affiliate of the Company. Accordingly, the offering will be
conducted under Rule 2720 of the NASD Rules of Conduct, which
imposes certain requirements on the distribution. One
requirement is that a qualified independent underwriter
participate in the offering and assume the obligations of pricing
the offering and conducting due diligence on the issuer. Xxxxx
Xxxxx & Son, Incorporated (the "Independent Underwriter"), is
acting as the qualified independent underwriter for this
offering. On these premises, we set forth the terms of our
proposed agreement as follows:
1. Appointment of Independent Underwriter. The Company
hereby appoints the Independent Underwriter, on all the terms and
conditions hereinafter set forth, as the Company's non-exclusive
agent to use its best efforts to sell on behalf of the Company
the Notes.
2. Representations and Warranties of the Company. As an
inducement to, and to obtain the reliance of, the Independent
Underwriter in connection herewith, the Company represents,
warrants, and agrees with the Independent Underwriter as follows:
(a) The Company has prepared and filed or will prepare
and file with the United States Securities and Exchange
Commission (the "Commission"), a registration statement on
form SB-2, including a prospectus, relating to the Notes in
accordance with section 5 of the Securities Act of 1933, as
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amended (the "Securities Act"), and the rules and
regulations of the Commission thereunder. As used in this
Agreement, the term "Registration Statement" means such
Registration Statement, including exhibits, financial
statements, and schedules, as amended, when it becomes
effective, and the term "Prospectus" means the Prospectus
filed with the Registration Statement. (The Registration
Statement and Prospectus, as defined herein, are hereinafter
collectively referred to as the "Filing.") The Company will
utilize its best efforts to cause the Filing to become
effective and to maintain its effectiveness during the term
hereof.
(b) The Commission has not issued and, to the
knowledge and belief of the Company, does not have cause to
issue an order preventing or suspending the use of the
Filing; the Filing conforms or shall conform in all material
respects with the requirements of the Securities Act and the
rules and regulations of the Commission promulgated
thereunder (the "Regulations") and does not include any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading; and on the Effective Date (as hereinafter
defined) and at all times subsequent thereto up to the
Termination Date (as hereinafter defined), the Filing and
any amendment or supplement thereto will fully comply with
the provisions of the Securities Act and the Regulations and
will not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the
statements made, in light of the circumstances under which
they are made, not misleading; provided, that the foregoing
representations and warranties shall not apply to statements
in or omissions from the Filing, or any amendments or
supplements thereto, made in reliance on and in conformity
with information furnished herein or in writing to the
Company by or on behalf of the Independent Underwriter
expressly for use therein.
(c) The Company has no subsidiaries.
(d) Except as reflected in or contemplated by the
Filing, since the respective dates as of which information
is given in the Filing, there has not been and on the
Effective Date there will not have been, any material
adverse change in the condition of the Company, financial or
otherwise, or in the results of its operations.
(e) The authorized capital stock of the Company
consists of 1,000 shares of common stock, par value $1.00,
of which 1,000 shares are issued and outstanding. On the
date of issuance, the Notes will be duly and validly
authorized and, when issued and paid for in accordance with
this Agreement and the Indenture dated _______________, 1999
("Indenture"), will be validly issued, fully paid, and non-
assessable, and will conform to the description thereof
contained in the Filing; and the execution and delivery of,
and compliance with, this Agreement and the Indenture and
the issuance of the Notes will not conflict or constitute a
breach of or default under the certificate of incorporation
or bylaws of the Company, any indenture, agreement, or other
instrument by which the Company is bound, any order, decree,
rule, or regulation of any court, or any law or
administrative regulation applicable to the Company.
(f) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the state of Delaware, with an authorized and
outstanding capitalization as set forth in the Filing and
with full corporate power and authority to carry on the
business in which it is now engaged. The Company is
qualified or licensed and in good standing as a foreign
corporation in each jurisdiction in which the ownership or
leasing of any properties or the character of its operations
requires such qualification or licensing. The Company has
all requisite corporate power and authority and all material
and necessary authorizations, approvals, orders, licenses,
certificates, and permits of and from all governmental
regulatory officials and bodies to own or lease its
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properties and conduct its business as described in the
Prospectus, and the Company is doing business in strict
compliance with all such authorizations, approvals, orders,
licenses, certificates, and permits and all federal, state,
and local laws, rules, and regulations concerning the
business in which the Company is engaged. The disclosures
in the Filing concerning the effects of federal, state, and
local regulation on the Company's business as currently
conducted and as contemplated are correct in all material
respects and do not omit to state a material fact. The
Company has all corporate power and authority to enter into
this Agreement and the Indenture and to carry out the
provisions and conditions hereof and thereof, and all
consents, authorizations, approvals, and orders required in
connection therewith have been obtained or will have been
obtained prior to the time of closing as provided in
subparagraph 3(f) hereto. No consent, authorization, or
order of, and no filing with any court, governmental agency,
or other body is required for the issuance of the Notes
pursuant to the Filing, except with respect to applicable
federal and state securities laws.
(g) The Filing contains an audited balance sheet of
the Company as of April 30, 1999, and the related audited
statement of stockholders' equity of the Company, including
the notes thereto, together with the opinion of Radin, Glass
& Co., LLP, independent certified public accountants, with
respect to the audited balance sheet and related audited
statements. Such financial statements have been prepared in
accordance with generally accepted accounting principles
consistently followed throughout the periods indicated,
except as otherwise indicated in the notes thereto. The
balance sheet presents fairly as of its date the financial
condition of the Company. The Company did not have, as of
the date of such balance sheet, except as and to the extent
reflected or reserved against therein (including the notes
thereto), any liabilities or obligations (absolute or
contingent) of a nature customarily reflected in a balance
sheet or the notes thereto prepared in accordance with
generally accepted accounting principles. The statement of
stockholders' equity presents fairly the information that
should be presented therein in accordance with generally
accepted accounting principles.
(h) Except as set forth in the Filing, there is no
action, suit, or proceeding before any court or government
agency, authority, or body pending or, to the knowledge of
the Company, threatened which might result in judgments
against the Company which are not adequately covered by
insurance, or which is pending or, to the knowledge of the
Company, threatened by any public body, agency, or
authority, which might result in any material adverse change
in the condition (financial or otherwise), business, or
prospects of the Company or would materially affect its
properties or assets.
(i) The execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and
compliance with the terms and provisions hereof will not
conflict with, or constitute a breach of, any of the terms,
provisions, or conditions of any agreement or instrument to
which the Company is a party, nor will any one nor any
combination of the foregoing have such a result.
(j) The Company has the legal right, power, and
authority to enter into this Agreement, and the execution,
delivery, and, except as otherwise indicated in this
Agreement, performance thereof by the Company, do not
require the consent or approval of any governmental body,
agency, or authority which has not been obtained.
(k) The Company is not a party to any material
contract (meaning thereby a contract materially affecting
its business or properties) that is not referred to in the
Filing. No default of any material significance exists in
the due performance and observance by the Company of any
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term, covenant, or condition of any such contract; all such
contracts are in full force and effect and are binding on
the parties thereto in accordance with their terms; and, to
the knowledge of the Company, no other party to any such
material contract has threatened or instituted any action or
proceeding wherein the Company is alleged to be in default
thereunder.
(l) No stock options or warrants are or will be
outstanding or issued during the period covered by this
Agreement, except as set forth in the Filing.
(m) The Company is not delinquent in the filing of any
tax return or in the payment of any taxes, knows of no
proposed redetermination or assessment of taxes, and has
paid or provided for adequate reserves for all known tax
liabilities.
3. Employment of the Independent Underwriter. On the
foregoing representations, agreements, and warranties and subject
to the terms and conditions of this Agreement:
(a) The Company hereby employs the Independent
Underwriter as non-exclusive agent to sell for the Company's
account the Notes.
(b) In the event the Dealer-Manager does not find
subscribers for Notes having a total aggregate purchase
price of $500,000 within three months following the
Effective Date (unless extended by agreement of the Company
and Dealer-Manager for an additional period not to exceed
three months), this Agreement shall terminate, and neither
party to this Agreement shall have any obligation to the
other party hereunder. Appropriate arrangements for placing
the funds received for the Notes in escrow until a total of
$500,000 in cash has been received shall be made prior to
the commencement of the offering hereunder, with provision
for refund to the purchasers as set forth above or for
delivery to the Company of the net proceeds therefrom if
$500,000 or more in cash has been received from the sale of
Notes hereunder within the specified time period.
(c) The Notes shall be offered to the general public
at face value without discount; provided, that the
Independent Underwriter may, at its discretion, waive its
commission under subsection 3(e), below, and offer Notes at
face value less the amount of the commission so waived.
(d) The Dealer-Manager has irrevocable authority as
agent for the Company to declare any contract to purchase
Notes offered to the public hereunder in default if the
Notes are not paid for in cash within seven business days
after the contract date. The Independent Underwriter shall
instruct investors to make all checks tendered as payment
for the Notes payable to "CSTTC, Escrow Account" and shall
deposit promptly, but in no event later than noon of the
next business day following receipt, the gross proceeds from
sales of Notes in the account with the escrow agent until
$500,000 (or such other amount as may be required by the
securities commission of any state in which the Notes are
offered and sold) in good funds is received from said sale,
and, thereafter, the escrow account shall continue to be
used as a clearing account into which all checks for the
payment for securities shall likewise be promptly deposited.
Subject to and after the sale of Notes with a minimum public
offering price of $500,000 and the release by the escrow
agent of such funds under the terms of the escrow agreement,
as funds are collected and subscriptions accepted by the
Company, the net proceeds (gross proceeds minus the
Independent Underwriter's sales commissions and non-
accountable expense allowance as provided herein) shall be
promptly paid to the Company and the Independent
Underwriter's sales commission and non-accountable expense
allowance shall be paid to it.
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(e) As its compensation, and subject to the sale of
$500,000 of Notes, the Independent Underwriter shall be
entitled to receive a commission of 8% of the principal
amount of the Notes sold by it and for which payment is made
to the Company. In addition, the Independent Underwriter
will receive an engagement fee of $5,000 plus 0.225% of the
gross proceeds of the offering for expenses incurred in
connection with the offering, and reimbursement of all out-
of-pocket expenses incurred by the Independent Underwriter
on an accountable basis. Finally, the Independent
Underwriter shall be entitled to receive its pro rata share
of 2.5% of the Company's annual Net Income for each calendar
year through 2005 based on the Notes sold by the Independent
Underwriter. For purposes of this provision, Net Income
shall be calculated in the same manner as set forth in the
Indenture. In the event the Dealer-Manager does not find
subscribers for Notes having a total aggregate purchase
price of $500,000 within three months following the
Effective Date (unless extended by agreement of the Company
and the Dealer-Manager for an additional period not to
exceed three months), the Independent Underwriter will be
reimbursed by the Company $5,000 only on a non-accountable
basis.
(f) The Company agrees to issue or have issued Notes
in such names and denominations as may be specified by the
Dealer-Manager and to deliver certificates representing the
Notes to the purchasers in accordance with the Indenture
against payment of the purchase price of the Notes net of
the applicable sales commissions (including the Independent
Underwriter's expense allowance), as provided herein. Such
payment and delivery shall be at such place and at such date
and time within 21 days following the sale of the minimum
amount of Notes as provided in subsection 3(b) hereof as
shall be agreed on by the Dealer-Manager and the Company
(the "time of closing"). Thereafter, further payments and
deliveries shall be made at such address and at such
subsequent times and dates similarly agreed on so as to
effect the prompt transmittal of funds and of certificates
for Notes to the purchasers (a "subsequent time of
closing").
(g) The Company has appointed Continental Stock
Transfer & Trust Company, 0 Xxxxxxxx, Xxx Xxxx, XX 00000, as
Trustee under the Indenture and registrar of the Notes.
4. Representations and Warranties of the Independent
Underwriter. As an inducement to, and to obtain the reliance of,
the Company in connection herewith, the Independent Underwriter
represents, warrants, and agrees with the Company as follows:
(a) The Independent Underwriter is duly registered as
a securities broker-dealer in accordance with the Securities
Exchange Act of 1934, as amended.
(b) The Independent Underwriter will not publish,
issue, or circulate or authorize the publication, issuance,
or circulation of any circular, notice, or advertisement
which offers the Notes for sale which shall not have
previously been approved by the Company and its counsel,
except for so-called "tombstone" advertisements and which
has not been approved by the Commission prior to its use, if
such prior approval is required.
(c) The Independent Underwriter is in good standing
and in full and current compliance in all material respects
with the rules of the National Association of Securities
Dealers, Inc.
(d) The Independent Underwriter shall confirm sales to
customers only in those states in which it is licensed to do
so as a securities broker or dealer and shall ensure that
all participating dealers similarly confirm sales to
customers only in states in which they are duly licensed to
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do so. The Independent Underwriter and participating
dealers in the distribution of the offering will comply with
sections 8, 24, 25 and 36 of Article III of the NASD Rules
of Fair Practice and rule 15c2-8 promulgated under the
Securities Exchange Act of 1934, as amended.
5. Covenants by the Company. In further consideration of
the agreements by the Independent Underwriter herein contained,
the Company covenants as follows:
(a) At least 48 hours prior to submission of the
Filing or any amendment thereto to the Commission, the
Independent Underwriter shall be provided with a copy of
such Filing or amendment, and no such Filing will be made to
which the Independent Underwriter shall object within the 48
hour period.
(b) The Company will use its best efforts to cause the
Registration Statement to become effective and will not at
any time, whether before, on, or after the Effective Date,
file any amendments to the Filing or supplement thereto
without first obtaining the Independent Underwriter's
approval. Such approval shall be obtained by compliance
with subsection (a) above. Said Filings or any amendments
or supplements thereto shall be in compliance with the
Securities Act and the Regulations of the Commission to the
best of the Company's knowledge, information, and belief.
(c) As soon as the Company is advised thereof, the
Company will advise the Independent Underwriter and confirm
the advice in writing (i) as to when the Registration
Statement has become effective; (ii) of any request made by
the Commission for amendment of or supplement to the Filing,
or for additional information with respect thereto; and
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement
or of any amendment thereto or the initiation, or threat of
initiation, of any proceedings for such purpose, and the
Company will use its best efforts to prevent the issuance of
any such order and to obtain as soon as possible the lifting
thereof, if issued.
(d) The Company will deliver to the Independent
Underwriter prior to the Effective Date, copies of the
preliminary prospectus and, on the Effective Date of the
Registration Statement, without charge and from time to time
thereafter, copies of the Prospectus and amendments thereto
as required by law to be delivered in connection with sales,
in such quantities as the Independent Underwriter may
reasonably request.
(e) The Company will deliver to the Independent
Underwriter, without charge, one manually executed copy of
the Registration Statement, together with all required
exhibits as filed and all amendments thereto with exhibits
which have not previously been furnished to the Independent
Underwriter, and will deliver to the Independent
Underwriter, without charge, such reasonable number of
copies of the Registration Statement and Prospectus
(excluding exhibits) and all amendments thereto as the
Independent Underwriter may reasonably request.
(f) Prior to the Termination Date if, in the opinion
of the Independent Underwriter, any statements are contained
in the Filing which are misleading or inaccurate in light of
the circumstances under which they are made, the Independent
Underwriter may require the Company to amend or supplement
the Filing to correct said statements and may request such
reasonable number of copies of any amended or supplemented
Filing as may be necessary to comply with the Securities Act
and Regulations.
(g) The Company will have used and will use its best
efforts to secure on or before the Effective Date of the
Registration Statement, and to maintain for such period as
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may be required for distribution, such exemptions,
registrations and qualifications of the Notes as will permit
the public offering thereof under the "Blue Sky Laws" of
such states as the Dealer-Manager and the Company shall
agree upon; provided, that no such qualification shall be
required if, as a result thereof, the Company would be made
subject to qualify for authority to do business as a foreign
corporation in a jurisdiction where it is not now so subject
or so qualified. The Company's counsel shall furnish copies
of any such filings or other materials submitted in
connection with this subparagraph to the Independent
Underwriter and shall notify the Independent Underwriter, in
writing, of those states in which the Notes may be offered
and sold pursuant to the terms hereof. The Independent
Underwriter agrees to cooperate in securing such exemptions,
registrations and qualifications in accordance with the
terms hereof.
(h) The Company will pay all costs and expenses
incident to the performance of its obligations under this
Agreement, including (i) all expenses incident to its
issuance and delivery of the Notes; (ii) the fees and
expenses incident to the preparation, printing, and filing
of the Filing (including all exhibits thereto) with the
Commission, the various "blue sky" agencies and the National
Association of Securities Dealers, Inc.; and (iii) the costs
of furnishing to the Independent Underwriter copies of the
Filing and preliminary and definitive prospectus. The
Company shall not, however, be required to pay for transfer
tax stamps on any sales of the Notes which the Independent
Underwriter may make or to pay for any of the Independent
Underwriter's expenses or those of any other dealers other
than as hereinabove set forth.
(i) For a period of six years from the Effective Date,
the Company will furnish the Independent Underwriter (i) all
reports and financial statements, if any, the Company files
with or furnishes to the Commission or any stock exchange on
which the securities of the Company are listed; (ii) such
other periodic and special reports as the Company from time
to time furnishes generally to holders of any class of its
stock; (iii) every press release and every news item and
article with respect to the affairs of the Company which is
released by the Company; and (iv) such additional documents
and information with respect to the affairs of the Company
and any future subsidiaries of the Company as the
Independent Underwriter may from time to time reasonably
request.
(j) The Company will mail or otherwise make generally
available to its security holders as soon as practicable,
but in no event more than 15 months after the close of the
fiscal quarter ending after the Effective Date of the
Registration Statement, an earnings statement, which need
not be audited, covering a period of at least 12 months
beginning after the Effective Date of the Registration
Statement.
(k) The Company will, as promptly as practicable after
the end of each fiscal year, release an appropriate report
covering its operations for such year and send to the
Independent Underwriter, to all holders of record of the
Company's Notes, and to recognized statistical services, a
report covering operations for such year, including a
balance sheet of the Company and statements of earnings and
of retained earnings, as examined by the Company's
independent accountants.
(l) The Company will apply the net proceeds from the
offering received by it in substantially the manner set
forth in the Prospectus.
(m) The Company will comply with the reporting
requirements to which it is subject pursuant to section
15(d) of the Securities Exchange Act of 1934, as amended.
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(n) The Company will, as soon as practicable following
the filing of the Filing with the Commission, make
application for and receive a CUSIP number for its
securities from Standard and Poor's Corporation.
6. Reciprocal Indemnification.
(a) The Company will indemnify and hold harmless the
Independent Underwriter, its affiliates and its parent and
its affiliates, and the respective directors, officers,
agents and employees of the Independent Underwriter, its
affiliates and its parent and its affiliates (the
Independent Underwriter and each such entity or person, an
"Indemnified Person") from and against any losses, claims,
damages judgments, assessments, costs and other liabilities
(collectively "Liabilities"), and will reimburse each
Indemnified Person for all fees and expenses (including the
reasonable fees and expenses of counsel) (collectively,
"Expenses") as they are incurred in investigating,
preparing, pursuing or defending any claim, action,
proceeding or investigation, whether or not in connection
with pending or threatened litigation and whether or not any
Indemnified Person is a party (collectively, "Actions"), (i)
caused by, or arising out of or in connection with, any
untrue statements or alleged untrue statement of a material
fact contained in the Filing (including any amendments
thereof and supplements thereto) or by any omission or
alleged omission to state therein a material fact necessary
to make the statements therein, in light of the
circumstances under which they were made, not misleading
(other than untrue statements or alleged untrue statements
in, or omissions or alleged omissions from, information
relating to an Indemnified Person furnished in writing by or
on behalf of such Indemnified Person expressly for use in
the Offering Materials) or (ii) otherwise arising out of or
in connection with advice or services rendered or to be
rendered by any Indemnified Person pursuant to this
Agreement, the transactions contemplated hereby or any
Indemnified Person's actions or inactions in connection with
any advice, services or transactions; provided that, in the
case of clause (ii) only, the Company will not be
responsible for any Liabilities or Expenses of any
Indemnified Person that are determined by a judgment of a
court of competent jurisdiction which is no longer subject
to appeal or further review to have resulted solely from
such Indemnified Person's gross negligence or willful
misconduct in connection with any of the advice, actions
inactions or services referred to above. The Company also
agrees to reimburse each Indemnified Person for all Expenses
as they are incurred in connection with enforcing such
Indemnified Person's right under this Agreement.
(b) Upon receipt by an Indemnified Person of actual
notice of an Action against such Indemnified Person with
respect to which indemnity may be sough under this
Agreement, such Indemnified Person shall promptly notify the
Company in writing; provided that failure so to notify the
Company shall not relieve the Company from any liability
which the Company may have on account of this indemnity or
otherwise, except to the extent the Company shall have been
materially prejudiced by such failure. The Company shall,
if requested by the Independent Underwriter, assume the
defense of any such Action including the employment of
counsel reasonable satisfactory to the Independent
Underwriter. Any Indemnified Person shall have the right to
employ separate counsel in any such Action and participate
in the defense thereof, but the fees and expenses of such
counsel shall be at the expenses of such Indemnified Person,
unless; (i) the Company has filed promptly to assume the
defense and employ counsel or (ii) the named parties to any
such Action (including any impleaded parties) include such
Indemnified Person and the Company, and such Indemnified
Person shall have been advised by counsel that there may be
one or more legal defenses available to it which are
different from or in addition to those available to the
Company; provided that the Company shall not in such event
be responsible hereunder for the fees and expenses of more
than one firm of separate counsel in connection with any
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Action in the same jurisdiction, in addition to any local
counsel. The Company shall not be liable for any settlement
of any Action effected without its written consent (which
shall not be unreasonably withheld). In addition, the
Company will not, without the prior written consent of the
Independent Underwriter, settle, compromise or consent to
the entry of any judgment in or otherwise seek to terminate
any pending or threatened Action in respect of which
indemnification or contribution may be sought hereunder
(whether or not any Indemnified Person is a party thereto)
unless such settlement, compromise, consent or termination
includes an unconditional release of each Indemnified Person
from all Liabilities arising out of such Action.
(c) In the event that the foregoing indemnity is
judicially determined to be unavailable to an Indemnified
Person (other than in accordance with the terms hereof), the
Company shall contribute to the Liabilities and Expenses
paid or payable by such Indemnified Person in such
proportion as is appropriate to reflect (i) the relative
benefits to the Company and its shareholders, on the one
hand, and to the Independent Underwriter, on the other hand,
of the matters contemplated by this Agreement, or (ii) if
the allocation provided by the immediately proceeding clause
is not permitted by the applicable law, not only such
relative benefits but also the relative fault of the
Company, on one hand, and the Independent Underwriter, on
the other hand, in connection with the matters as to which
such Liabilities or Expenses relate, as well as any other
relevant equitable considerations; provided that in no event
shall the Company contribute less than the amount necessary
to ensure that all Indemnified Persons, in the aggregate,
are not liable for any Liabilities and Expenses in excess of
the amount of fees actually received by Xxxxx Xxxxx pursuant
to the Agreement. For purposes of this paragraph, the
relative benefits to the Company and its shareholders, on
the one hand, and to the Independent Underwriter, on the
other hand, of the matters contemplated by this Agreement
shall be deemed to be in the same proportion as (a) the
total value paid or contemplated to be paid or received or
contemplated to be received by the Company or the Company's
shareholders, as the case may be, in the transaction or
transactions that are within the scope of this Agreement,
whether or not any such transaction is consummated, bears to
(b) the fees paid or to be paid to the Independent
Underwriter under this Agreement.
(d) The Company also agrees that no Indemnified Person
shall have any liability (whether direct or indirect in
contract or tort or otherwise) to the Company for or in
connection with advice or services rendered or to be
rendered by any Indemnified Person pursuant to this
Agreement, the transaction contemplated hereby or any
Indemnified Person's actions or inactions in connection with
any such advice, services or transactions except for
Liabilities (and related Expenses) of the Company that are
determined by a judgment of a court of competent
jurisdiction which is no longer subject to appeal or further
review to have resulted solely from such Indemnified
Person's gross negligence or willful misconduct in
connection with any such advice, actions, inactions or
services.
(e) If any term, provision, covenant or restriction
contained in this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void,
unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in
full force and effect and shall in no way be affected,
impaired or invalidated. The reimbursement, indemnity and
contribution obligation of the Company set forth herein
shall apply to any modification of this Agreement and shall
remain in full force and effect regardless of any
termination of, or the completion of any Indemnified
Person's services under or in connection with, this
Agreement.
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7. Conditions to Obligations of the Company. The
obligation of the Company to deliver the Notes being sold by the
Independent Underwriter hereunder is subject to the conditions
that (i) the Registration Statement shall have become effective
not later than 5:00 p.m., Eastern Time, the twenty-fifth business
day following the date hereof or such later time and date as is
acceptable to the Company, and (ii) no stop order suspending the
effectiveness of the Registration Statement shall have been
issued and shall be in effect at the time of closing or at each
subsequent time of closing, if any, and no proceeding for that
purpose shall have been initiated or, to the knowledge of the
Company, threatened by the Commission, it being understood that
the Company shall use its best efforts to prevent the issuance of
any such stop order and, if one has been issued, to obtain the
lifting thereof. In the event that the Notes (or any part
thereof) are not delivered by virtue of the provisions of clause
(i) of this paragraph, the Company shall not be liable to the
Independent Underwriter.
8. Conditions to the Obligations of the Independent
Underwriter. The several obligations of the Independent
Underwriter hereunder are subject to the accuracy, as of the date
hereof, at the time of closing and at each subsequent time of
closing, if any, of the representations and warranties made
herein by the Company; to the accuracy in all material respects
of the statements of the officers of the Company made pursuant to
the provisions hereof; to the performance by the Company of its
obligations hereunder required on its part to be performed or
complied with prior to or at such time of closing; and to the
following additional conditions:
(a) The Filing shall have fully complied with the
provisions of the Securities Act and the Regulations and
shall not contain any untrue statement of a material fact or
omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading; provided, however, that statements or omissions
in the Filing in reliance on, and in conformity with,
information furnished in writing by or on behalf of the
Independent Underwriter expressly for use therein shall not
be considered within the scope of this provision.
(b) The Independent Underwriter shall not have advised
the Company that the Filing, or any amendment or supplement
thereto, contains an untrue statement of fact which, in the
opinion of the Independent Underwriter, is material or omits
to state a fact which, in the opinion of the Independent
Underwriter, is material and is required to be stated
therein or is necessary to make the statements therein not
misleading.
(c) The Registration Statement shall have become
effective not later than the date specified in section 7, or
such later time and date as is acceptable to the Independent
Underwriter and, prior to the time of closing, no stop order
shall have been issued by the Commission with respect to the
Filing, no proceedings therefor shall have been initiated by
the Commission, and to the knowledge of the Company or the
Independent Underwriter, no such proceedings shall be
contemplated by the Commission.
(d) Each contract to which the Company is a party and
which is filed as an exhibit to the Registration Statement
shall be in full force and effect at such time of closing,
or shall have been terminated, in accordance with its terms;
no party to any such contract shall have given any notice of
cancellation or, to the knowledge of the Company, shall have
threatened to cancel any such contract; and there shall be
no material misstatement in any description of a contract
contained in the Filing.
(e) From the date hereof until the time of closing and
until each subsequent time of closing, if any, no material
litigation or legal proceedings of any nature shall have
been commenced or threatened against the Company, nor any
litigation or legal proceedings which are directed against
E-23
the consummation of the transactions herein contemplated and
no substantial change, financial or otherwise, shall have
occurred in or relating to the condition, business, or
assets of the Company which shall render such condition,
business, or assets substantially less favorable, in the
Independent Underwriter's judgment, than as set forth in the
Filing.
(f) The Independent Underwriter shall have been
furnished at the time of closing and at each subsequent time
of closing, if any, with such certificates as the
Independent Underwriter may reasonably request evidencing
the continued accuracy in all material respects of the
respective representations and warranties made herein by the
Company and the fulfillment of the conditions stated above
in subsections (a), (c), (d), and (e) of this section.
(g) The Independent Underwriter shall have received at
the time of closing an opinion of the firm of Xxxxxx, Xxxxxx
& Xxxxxxx, X.X., counsel for the Company, dated as of the
time of closing and in a form and substance satisfactory to
counsel for the Independent Underwriter, to the following
effect:
(i) The Company has been duly incorporated
and is validly existing as a corporation in good
standing under the laws of Delaware, with power and
authority to own its properties, hold its franchises,
and conduct its business, as described in the
Prospectus, and, to the best of the knowledge and
information of said counsel, is duly qualified to do
business and is in good standing in every other
jurisdiction where the location of its properties or
the conduct of its business makes such qualification
necessary;
(ii) The Notes have been duly and validly
authorized and are fully paid and non-assessable; and
the description of the Notes made in the Filing
accurately sets forth matters respecting such
securities required to be set forth therein;
(iii) This Agreement has been duly
authorized, executed, and delivered by the Company and
constitutes a valid and binding agreement of the
Company (except that counsel need render no opinion as
to the enforceability of the indemnification
provisions);
(iv) The certificates to be issued for the
Notes are in proper form;
(v) The final Registration Statement has
become effective under Securities Act and, to the best
knowledge of such counsel, no stop orders suspending
the effectiveness of the offering have been issued and
no proceeding for that purpose has been instituted or
pending or contemplated under the Securities Act; and
(vi) The Registration Statement and each
amendment or supplement thereto (except for the
financial data included therein and any information
furnished to the Company by or on behalf of the
Independent Underwriter), complies as to form in all
material respects with the requirements of the
Securities Act and the rules and regulations of the
Commission promulgated thereunder.
The Independent Underwriter shall have received, at
each subsequent time of closing, if any, an opinion of such
counsel dated as of the time of such closing and addressed
to the Independent Underwriter, confirming their opinion
delivered at the time of closing as to the matters set forth
in subparagraphs (i), (ii), (iii), (iv), (v), and (vi) of
subsection 8(g).
E-24
Such counsel may rely, as to matters of local law, on
opinions of local counsel satisfactory to it, and, as to
matters of fact, on affidavits or certificates of officers
of the Company.
(h) All proceedings taken and to be taken in
connection with the sale of the Notes pursuant to this
Agreement shall be satisfactory as to legal aspects to the
Independent Underwriter.
(i) If any of the foregoing conditions set forth in
subsections (a), (b), (c), (d), and (e), of this section 8
shall not have been fulfilled as above provided at or prior
to the time of the initial public offering as defined below,
the condition of the securities market or any material
factor, whether of an economic, military, or political
nature or otherwise, bearing on the marketability of the
Notes proposed to be sold shall be such as, in the
Independent Underwriter's reasonable judgment, would
seriously affect the offering, sale, or delivery to the
public of the Notes, or would render such delivery at the
initial public offering price impracticable or inadvisable,
the Independent Underwriter shall have the right to
terminate its obligations under this Agreement forthwith, by
written or telegraphic notice to the Company, without any
liability on the part of the Independent Underwriter. The
term "initial public offering" means the first publication
authorized by the Dealer-Manager following effectiveness of
the Filing of a newspaper advertisement relating to the
Notes to be offered pursuant to this Agreement, or the first
allotments or confirmations by the Independent Underwriter
of any of the Notes to customers or dealers or others by
letter or telegram, whichever shall occur first.
(j) If at any time prior to the time of closing (i)
trading in securities on the New York Stock Exchange shall
be suspended, (ii) minimum prices shall be established on
said exchange by action of said exchange or the Commission,
(iii) a bank moratorium shall be declared by federal
authorities, (iv) a significant decline in the United States
or international economies results in a domestic securities
market or other commercial conditions in the opinion of the
Independent Underwriter that are materially adverse or
detrimental to the offering, or (v) there shall be an
outbreak of hostilities between the United States and any
foreign power which has resulted in the declaration of a
national emergency or declaration of war or there shall be
an outbreak of civil disorder within the United States which
has resulted in the declaration of a national emergency, the
Independent Underwriter shall have the right to terminate
its obligations under this Agreement forthwith, by written
or telegraphic notice to the Company, without any liability
on the part of the Independent Underwriter.
If the sale of the Notes as herein contemplated shall not be
carried out because of any of the conditions set forth in
sections 7 or 8 hereof shall not have been fulfilled, then the
Company shall not be liable to the Independent Underwriter for
lost profits or expenses incurred by it in connection herewith.
9. Definitions.
(a) "Effective Date" shall mean the date, following
any required waiting period, when the Commission shall have
declared the Registration Statement effective.
(b) "Termination Date" shall mean the date specified
below which first occurs:
(i) December 31, 2000;
(ii) The date on which the escrow period set
forth in subsection 3(b) expires without the minimum
number of Notes having been subscribed to;
E-25
(iii) The date on which all offered Notes
are sold.
10. Miscellaneous Provisions.
(a) This Agreement contains the entire agreement of
the parties hereto and cannot be altered, except in a
writing making specific reference hereto.
(b) The representations and warranties contained
herein shall be effective regardless of any investigations
made or participation in the preparation of the Filing, or
any amendment or supplement thereto and shall survive the
Termination Date and the delivery of and payment for the
Notes contemplated herein for a period of three years.
(c) This Agreement has been and is made solely for the
benefit of the Independent Underwriter, the Company, and
each's respective successors, and, to the extent expressly
provided herein, for the benefit of the directors of the
Company, the officers of the Company who signed the Filing
or authorized the same, the persons controlling the
Independent Underwriter or the Company, and each's
respective successors and assigns, and no other person or
persons shall acquire or have any right under or by virtue
of this Agreement. The term "successor" shall not include
any purchaser, as such, of any Notes from the Independent
Underwriter.
(d) Each of the parties hereto respectively warrant
and represent that the persons executing this Agreement on
its behalf have full power and authority to execute,
acknowledge, and deliver this Agreement for and on behalf of
such corporation.
(e) Except as otherwise provided herein, all
communications hereunder shall be in writing and, if sent to
the Independent Underwriter, shall be mailed, delivered, or
telegraphed to it at the following address:
Xxxxx Xxxxx & Son Incorporated
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
or, if sent to the Company, shall be mailed, delivered, or
telegraphed and confirmed to it at the following address:
IBF VI - Participating Income Fund
0000 Xxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
with copies to:
Xxxx X. Xxxxxx, Esq.
Xxxxxx, Xxxxxx & Xxxxxxx, X.X.
0 Xxxx Xxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
(f) In the event that any party prevails in any action
or suit brought by them to obtain relief for any default
under the terms hereof, the non-prevailing party shall be
liable to the prevailing party for all costs, including
reasonable attorneys' fees, incurred in connection with such
action or suit.
E-26
(g) The representations, warranties, and undertakings
herein on the part of the Company and the Independent
Underwriter shall not create any rights in or duties to any
person to a party to this Agreement. It is expressly
understood and agreed that such persons as shall purchase
Notes in the public offering described herein, shall be
entitled to rely solely and only on the statements and
representations made in the Filing.
(h) This Agreement may be executed in one or more
counterparts, which taken together shall constitute one and
the same instrument.
If the foregoing correctly sets forth our understanding,
please so indicate in the space provided below for that purpose,
whereupon this document shall constitute a binding agreement
among us.
Very truly yours,
IBF VI - Participating Income Fund
By____________________________________
Xxxxx X. Xxxxxxx, President
The foregoing Independent Underwriter Agreement is accepted
as of the date first above written.
Xxxxx Xxxxx & Son Incorporated
By____________________________________
Duly Authorized Officer
The foregoing Independent Underwriter Agreement is approved
as of the date first above written.
Xxxxxxx & Company Securities, Inc.
By____________________________________
Duly Authorized Officer
E-27
