UNDERWRITING AGREEMENT
between
THE BILTMORE GROUP OF LOUISIANA, L.L.C. ("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 $9,900,000.00 and
shall be designated as follows:
Series 1999-I (Minden Project) $1,800,000.00 Co-First Mortgage
Series 1999-II (Oak Creek Project) $2,700,000.00 Co-First Mortgage
Series 1999-III (Bastrop Project) $1,800,000.00 Co-First Mortgage
Series 1999-IV (Farmerville Project) $1,800,000.00 Co-First Mortgage
Series 1999-V (Natchitoches Project) $1,800,000.00 Co-First Mortgage
SECURITY
The addresses of the properties securing the Series 1999-I, II, III,
IV and V Bonds are as follows:
Series 1999-I The Minden Project will be located on 5.72 acres of land
on the North side of Germantown Road just South of Country
Club Drive within the City of Minden, Louisiana.
Series 0000-XX Xxx Xxx Xxxxx Project is located on 2.8 acres of land at
78 Canyon Diablo Road just outside the City of Sedona,
Arizona and within the Village of Oak Creek.
Series 1999-III The Bastrop Project will be located on 3.35 acres of land
at 00000 Xxxxxxx Xxxxx just outside the city limits of
Bastrop, Louisiana.
Series 1999-IV The Farmerville Project will be located on approximately 4
acres of land on the West side of Louisiana Highway 33 just
outside the city limits of Farmerville, Louisiana.
Series 1999-V The Natchitoches Project will be located on approximately
4 acres of land on the East side of Louisiana Highway
1 just oustide the city limits of Natchitoches, Louisiana.
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
Organization, its Operating Agreement, 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 appraisals of its properties and improvements to the
Underwriter. The Underwriter may require MAI appraisals. The
Issuer agrees to pay all expenses of the appraisals.
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 properties or in a co-first mortgage
position with the interim/construction lenders.
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 the Issue Date for each Series of Bonds.
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 seven and one half (7 1/2)
years from the date of issue of the Series 1999-III Bonds, and at
the end of the seven and one half (7 1/2) 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 theproper 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
Properties that secures the Bonds for a period not to exceed three years from
date of issue on the first Series of Bonds.
FEES
The Issuer agrees to pay the Underwriter an investment banking fee of
1.3% of the aggregate amount of the bond issue ($128,700.00). The
investment banking fee is due in full prior to filing the bond issue with the
regulatory agencies.
In the event the issue is canceled prior to the issuance of the Bonds,
the Underwriter shall be entitled to the above fee only to the extent of its
actual, accountable out-of-pocket expenses, 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 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.
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 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 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: 2-10-1999
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/S/XXXXXX XXXXXXXX-XXXXXX
------------------------------------------
Signed by Managing Member
Issuer's Name: The Biltmore Group of Louisiana
Address: 000 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Phone: (000) 000-0000
/S/XXXXX XXXXXX
------------------------------------------------
Approved by MMR Investment 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.
