Exhibit 1.02
FORM OF AGREEMENT TO ACT AS "QUALIFIED INDEPENDENT UNDERWRITER"
METROPOLITAN MORTGAGE & SECURITIES CO., INC.
9% Notes due 2004
This agreement made as of the ___ day of October, 1999 by and between
Metropolitan Mortgage & Securities Co., Inc., a Washington corporation
("Metropolitan"), Metropolitan Investment Securities, Inc., a Washington
corporation ("MIS"), and CRUTTENDEN XXXX INCORPORATED, a California corporation
("CRUTTENDEN").
WITNESSETH:
WHEREAS, Metropolitan intends to offer $25,000,000 in 9% Notes due 2004
(hereinafter referred to as "Notes"), which will be offered in reliance on a
registration statement filed on Form S-2 with the Securities and Exchange
Commission; and,
WHEREAS, MIS, a broker/dealer and affiliate of Metropolitan and a member of
the National Association of Securities Dealers, Inc. ("NASD"), will be engaged
as the sole managing agent for Metropolitan; and,
WHEREAS, pursuant to subparagraph (c) of Rule 2720 of the NASD, MIS, as a
NASD member, may participate in such underwriting only if the yield at which the
Notes offered to the public is not lower than the yield recommended by a
"Qualified Independent Underwriter" as that term is defined in Rule 2720
subparagraph (b)(15) of the NASD Conduct Rules, and who participates in the
preparation of the registration statement and prospectus relating to the
offering and exercises customary standards of due diligence, with respect
thereto; and,
WHEREAS, this agreement ("Agreement") describes the terms under which
Metropolitan is retaining CRUTTENDEN to serve as such a "Qualified Independent
Underwriter" in connection with the offering of Notes;
NOW, THEREFORE, in consideration of the recitations set forth above, and
the terms, promises, conditions, and covenants herein contained, the parties
hereby contract and agree as follows:
DEFINITIONS
As hereinafter used, except as the context may otherwise require, the term
"Registration Statement" means the registration statement on Form S-2 (including
the related preliminary prospectus, financial statements, exhibits and all other
documents to be filed as a part thereof or incorporated therein) for the
registration of the offer and sale of the Notes under the Securities Act of
1933, as amended, and the rules and regulations thereunder (the "Act") filed
with the Securities and Exchange Commission (the "Commission"), and any
amendment thereto, and the term "Prospectus" means the prospectus including any
preliminary or final prospectus and any materials incorporated by reference into
and attached to the Prospectus (including the form of prospectus to be filed
with the Commission pursuant to Rule 424(b) under the Act) and any amendment or
supplement thereto, to be used in connection with the offering.
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Section 1. Rule 2720 Requirement. CRUTTENDEN hereby confirms its agreement
as required by subparagraph (b)(15) of Rule 2720 of the Conduct Rules of the
NASD and represents that, as appropriate, CRUTTENDEN satisfies or at the times
designated in such subparagraph (l5) will satisfy the other requirements set
forth therein or will receive an exemption from such requirements from the NASD.
Section 2. Consent. CRUTTENDEN hereby consents to be named in the
Registration Statement and Prospectus as having acted as a "Qualified
Independent Underwriter" solely for the purposes of Rule 2720 referenced herein.
Except as permitted by the immediately preceding sentence or to the extent
required by law, all references to CRUTTENDEN in the Registration Statement or
Prospectus or in any other filing, report, document, release or other
communication prepared, issued or transmitted in connection with the offering by
Metropolitan or any corporation controlling, controlled by or under common
control with Metropolitan, or by any director, officer, employee, representative
or agent of any thereof, shall be subject to CRUTTENDEN's prior written consent
with respect to form and substance.
Section 3. Pricing Formula And Recommendation Letter. CRUTTENDEN agrees to
render a written letter of recommendation as to the yield below which
Metropolitan's Notes may not be offered and the exchange value below which the
Notes may not be exchanged (the "Pricing Recommendation Letter"). It is
understood and agreed by CRUTTENDEN that the securities to which this Agreement
relates will be offered on a minimum to maximum, best efforts basis by MIS, as
the managing agent, pursuant to the Selling Agreement in effect between MIS and
Metropolitan which is filed as an exhibit to the Registration Statement referred
to above. Metropolitan, through MIS, will offer the Notes according to the terms
and conditions of said agreement, in accordance with this Agreement. CRUTTENDEN
reserves the right to review and amend its Pricing Recommendation Letter upon
the filing of any post-effective amendment to the Registration Statement or upon
occurrence of any material event which may or may not require such an amendment
to be filed, or at such time as the offering under the registration shall
terminate or otherwise lapse under operation of law.
Section 4. Fees And Expense. It is agreed that CRUTTENDEN shall be paid a
fee for its services hereunder in the amount of $25,000.00 payable upon delivery
of the Pricing Recommendation Letter referred to in paragraph 3 above. In
addition, CRUTTENDEN will be reimbursed by Metropolitan for CRUTTENDEN's actual
out-of-pocket expenses, up to a maximum of $7,000.000, incurred in connection
with its performance of its duties and obligations hereunder.
Section 5. Material Facts. Metropolitan represents and warrants to
CRUTTENDEN that at the time the Registration Statement and, at the time the
Prospectus is filed with the Commission (including any preliminary prospectus
and the form of prospectus filed with the Commission pursuant to Rule 424(b))
and at all times subsequent thereto, to and including the date on which payment
for, and delivery of, the Notes to be sold in the Offering is made by the
underwriter or underwriters, as the case may be, participating in the Offering
and by Metropolitan (such date being referred to herein as the "Closing Date"),
the Registration Statement and the Prospectus (as the same may be amended or
supplemented if such documents, including documents incorporated therein by
reference, shall have been so amended or supplemented) will contain all material
statements which are required to be stated therein in accordance with the Act
and will conform to all other requirements of the federal securities laws, and
will not, on such date contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading and that all contracts and documents required
by the Act to be filed or required to be filed as exhibits to the Registration
Statement have been filed. Metropolitan further represents and warrants that any
further filing, report, document, release or communication which in any way
refers to CRUTTENDEN or to the services to be performed by CRUTTENDEN pursuant
to this Agreement will not contain any untrue or misleading statement of a
material fact or omit to state
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a material fact required to be stated therein or necessary to make the
statements therein not misleading.
Metropolitan further warrants and represents that:
(a) All leases, contracts and agreements referred to in or filed as
exhibits to the Registration Statement to which Metropolitan or
its subsidiaries is a party or by which it is bound are in full
force and effect, except as may otherwise be disclosed in the
Registration Statement.
(b) Metropolitan has good and marketable title, except as otherwise
indicated in the Registration Statement and Prospectus, to all
of its assets and properties described therein as being owned by
it, free and clear of all liens, encumbrances and defects except
such encumbrances and defects which do not, in the aggregate,
materially affect or interfere with the use made and proposed to
be made of such properties as described in the Registration
Statement and Prospectus; and Metropolitan has no material
leased properties except as disclosed in the Prospectus.
(c) Metropolitan is duly organized under the laws of the State of
Washington and, as of the effective date of the Registration
Statement and at the Closing Date Metropolitan will be validly
existing and in good standing under the laws of the State of
Washington with full corporate power and authority to own its
properties and conduct its business to the extent described in
the Registration Statement and Prospectus; Metropolitan is duly
qualified to do business as a foreign corporation and is in good
standing in all jurisdictions in which the nature of the
business transacted by it or its ownership of properties or
assets makes qualification necessary; the authorized and
outstanding capitalization of Metropolitan is as set forth in
the Prospectus and the description in the Prospectus of the
capital stock of Metropolitan conforms with and accurately
describes the rights set forth in the instruments defining the
same;
(d) Metropolitan is not in violation of its Certificate of
Incorporation or Bylaws or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any bond, note, note, or other evidence
of indebtedness, contract or lease or in any indenture or loan
agreement to which it is a party or by which it is bound.
(e) The execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action on the
part of Metropolitan and MIS and performance of the foregoing
agreement and the consummation of the transactions contemplated
thereby, will not conflict with or result in a breach of any of
the terms or constitute a violation of the respective
Certificates of Incorporation or Bylaws of Metropolitan or MIS,
or any deed of trust, lease, sublease, indenture, mortgage, or
other agreement or instrument to which Metropolitan or MIS is a
party or by which either of them or their property is bound, or
any applicable law, rule, regulation, judgment, order or decree
of any
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government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over Metropolitan or MIS or their
properties or obligations; and no consent, approval,
authorization or order of any court or governmental agency or
body is required for the consummation of the transactions
contemplated herein and in the other agreements previously
referred to in this paragraph except as may be required under
the Act or under any state securities or laws.
(f) Any certificate signed by an officer of Metropolitan and
delivered to CRUTTENDEN pursuant to this Agreement shall be
deemed a representation and warranty by Metropolitan to
CRUTTENDEN, to have the same force and effect as stated herein,
as to the matters covered thereby.
(g) If any event relating to or affecting Metropolitan shall occur
as a result of which it is necessary, in CRUTTENDEN's opinion,
to amend or supplement the Prospectus in order to make the
Prospectus not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser,
Metropolitan undertakes to inform CRUTTENDEN of such events
within a reasonable time thereafter, and will forthwith prepare
and furnish to CRUTTENDEN, without expense to them, a reasonable
number of copies of an amendment or amendments or a supplement
or supplements to the Prospectus (in form and substance
satisfactory to CRUTTENDEN) which will amend or supplement the
Prospectus so that as amended or supplemented it will not
contain 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 existing at the time the Prospectus
is delivered to a purchaser, not misleading.
(h) Metropolitan hereby warrants and represents that the Notes were
priced at an annual yield of 9% simple interest computed on a
360 day year.
(i) All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of
Metropolitan submitted pursuant hereto, shall remain operative
and in full force and effect, surviving the date of this
Agreement.
Section 6. Availability Of Information. Metropolitan hereby agrees to
provide CRUTTENDEN, at its expense, with all information and documentation with
respect to its business, financial condition and other matters as CRUTTENDEN may
deem relevant based on the standards of reasonableness and good faith and shall
request in connection with CRUTTENDEN's performance under this Agreement,
including, without limitation, copies of all correspondence with the Commission,
certificates of its officers, opinions of its counsel and comfort letters from
its auditors. The above-mentioned certificates, opinions of counsel and comfort
letters shall be provided to CRUTTENDEN as CRUTTENDEN may request on the
effective date of the Registration Statement and on the Closing Date.
Metropolitan will make reasonably available to CRUTTENDEN, its auditors,
counsel, and officers and directors to discuss with CRUTTENDEN any aspect of
Metropolitan which CRUTTENDEN may deem
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relevant. In addition, Metropolitan, at CRUTTENDEN's request, will cause to be
delivered to CRUTTENDEN copies of all certificates, opinions, letters and
reports to be delivered to the underwriter or underwriters, as the case may be,
pursuant to any underwriting agreement executed in connection with the Offering
or otherwise, and shall cause the person issuing such certificate, opinion,
letter or report to authorize CRUTTENDEN to rely thereon to the same extent as
if addressed directly to CRUTTENDEN. Metropolitan represents and warrants to
CRUTTENDEN that all such information and documentation provided pursuant to this
paragraph 6 will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statement therein not misleading. In
addition, Metropolitan will promptly advise CRUTTENDEN of all telephone
conversations with the Commission which relate to or may affect the Offering.
Section 7. Indemnification.
(a) Subject to the conditions set forth below, and in addition to any
rights of indemnification and contribution to which CRUTTENDEN may be entitled
pursuant to any agreement among underwriters, underwriting agreement or
otherwise, and to the extent allowed by law, Metropolitan hereby agrees that it
will indemnify and hold CRUTTENDEN and each person controlling, controlled by or
under common control with CRUTTENDEN within the meaning of Section 15 of the Act
or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or the rules and regulations thereunder (individually, an "Indemnified
Person") harmless from and against any and all loss, claim, damage, liability,
cost or expense whatsoever to which such Indemnified Person may become subject
under the Act, the Exchange Act, or other federal or state statutory law or
regulation, at common law or otherwise, arising out of, based upon, or in any
way related or attributed to (i) this Agreement, (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or Prospectus or any other filing, report, document, release or
communication, whether oral or written, referred to in paragraph 5 hereof or 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, (iii)
any application or other document executed by Metropolitan or based upon written
information furnished by Metropolitan filed in any jurisdiction in order to
qualify the Notes under the securities or Blue Sky laws thereof, or 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, or (iv) the
breach of any representation or warranty made by Metropolitan in this Agreement.
Metropolitan further agrees that upon demand by an Indemnified Person at any
time or from time to time, it will promptly reimburse such Indemnified Person
for, or pay, any loss, claim, damage, liability, cost or expense as to which
Metropolitan has indemnified such person pursuant hereto. Notwithstanding the
foregoing provisions of this paragraph 7, any such payment or reimbursement by
Metropolitan of fees, expenses or disbursement incurred by an Indemnified Person
in any proceeding in which a final judgment by a court of competent jurisdiction
(after all appeals or the expiration of time to appeal) is entered against such
Indemnified Person as a direct result of such person's negligence, bad faith or
willful misfeasance will be promptly repaid to Metropolitan. In addition,
anything in this paragraph 7 to the contrary notwithstanding, Metropolitan shall
not be liable for any settlement of any action or proceeding effected without
its written consent.
(b) Promptly after receipt by an Indemnified Person under sub-paragraph (a)
above of notice of the commencement of any action, such Indemnified Person will,
if a claim in respect thereof is to be made against Metropolitan under paragraph
(a), notify Metropolitan in writing of
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the commencement thereof; but the omission to so notify Metropolitan will not
relieve Metropolitan from any liability which it may have to any Indemnified
Person otherwise than under this paragraph 7 if such omission shall not have
materially prejudiced Metropolitan's ability to investigate or to defend against
such claim. In case any such action is brought against any Indemnified Person,
and such Indemnified Person notifies Metropolitan of the commencement thereof,
Metropolitan will be entitled to participate therein and, to the extent that it
may elect by written notice delivered to the Indemnified Person promptly after
receiving the aforesaid notice from such Indemnified Person, to assume the
defense thereof with counsel reasonably satisfactory to such Indemnified Person;
PROVIDED, HOWEVER, that if the defendants in any such action include both the
Indemnified Person and Metropolitan or any corporation controlling, controlled
by or under common control with Metropolitan, or any director, officer,
employee, representative or agent of any thereof, or any other "Qualified
Independent Underwriter" retained by Metropolitan in connection with the
Offering and the Indemnified Person shall have reasonably concluded that there
may be legal defenses available to it which are different from or additional to
those available to such other defendant, the Indemnified Person shall have the
right to select separate counsel to represent it. Upon receipt of notice from
Metropolitan to such Indemnified Person of its election so to assume the defense
of such action and approval by the Indemnified Person of counsel, Metropolitan
will not be liable to such Indemnified Person under this paragraph 7 for any
fees of counsel subsequently incurred by such Indemnified Person in connection
with the defense thereof (other than the reasonable costs of investigation
subsequently incurred by such Indemnified Person) unless (i) the Indemnified
Person shall have employed separate counsel in accordance with the provision of
the next preceding sentence (it being understood, however, that Metropolitan
shall not be liable for the expenses of more than one separate counsel in any
one jurisdiction representing the Indemnified Person, which counsel shall be
approved by CRUTTENDEN), (ii) Metropolitan, within a reasonable time after
notice of commencement of the action, shall not have employed counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person, or
(iii) Metropolitan shall have authorized in writing the employment of counsel
for the Indemnified Person at the expense of Metropolitan, and except that, if
clause (i) or (iii) is applicable, such liability shall be only in respect of
the counsel referred to in such clause (i) or (iii).
(c) Subject to the conditions set forth below, and in addition to any
rights of indemnification and contribution to which Metropolitan may be entitled
pursuant to any agreement among underwriters, underwriting agreement or
otherwise, and to the extent allowed by law, CRUTTENDEN hereby agrees that it
will indemnify and hold Metropolitan and each person controlling, controlled by
or under common control with Metropolitan within the meaning of Section 15 of
the Act or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or the rules and regulations thereunder (individually, an
"Indemnified Person") harmless from and against any and all loss, claim, damage,
liability, cost or expense whatsoever to which such Indemnified Person may
become subject under the Act, the Exchange Act, or other federal or state
statutory law or regulation, at common law or otherwise, arising out of, based
upon, or in any way related or attributed to the failure of CRUTTENDEN to be a
"qualified independent underwriter" as contemplated by this Agreement.
CRUTTENDEN further agrees that upon demand by an Indemnified Person at any time
or from time to time, it will promptly reimburse such Indemnified Person for, or
pay, any loss, claim, damage, liability, cost or expense as to which CRUTTENDEN
has indemnified such person pursuant hereto. Notwithstanding the foregoing
provisions of this paragraph 7, any such payment or reimbursement by CRUTTENDEN
of fees, expenses or disbursement incurred by an Indemnified Person in any
proceeding in which a final judgment by a court of competent
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jurisdiction (after all appeals or the expiration of time to appeal) is entered
against such Indemnified Person as a direct result of such person's negligence,
bad faith or willful misfeasance will be promptly repaid to CRUTTENDEN. In
addition, anything in this paragraph 7 to the contrary notwithstanding,
CRUTTENDEN shall not be liable for any settlement of any action or proceeding
effected without its written consent. CRUTTENDEN and Metropolitan agree that
they shall each follow the procedures set forth in paragraph 7(b) with respect
to any claim against CRUTTENDEN hereunder.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph 7 is due in
accordance with its terms but is for any reason held by a court to be
unavailable from Metropolitan to CRUTTENDEN on grounds of policy or otherwise,
Metropolitan and CRUTTENDEN shall contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) to which Metropolitan and
CRUTTENDEN may be subject in such proportion so that CRUTTENDEN is responsible
for that portion represented by the percentage that its fee under this Agreement
bears to the public offering price appearing on the cover page of the Prospectus
and Metropolitan is responsible for the balance, except as Metropolitan may
otherwise agree to reallocate a portion of such liability with respect to such
balance with any other person, including, without limitation, any other
"Qualified Independent Underwriter"; PROVIDED, HOWEVER, that (i) in no case
shall CRUTTENDEN be responsible for any amount in excess of the fee set forth in
paragraph 4 above and (ii) 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. For
purposes of this paragraph (d), any person controlling, controlled by or under
common control with CRUTTENDEN, or any partner, director, officer, employee,
representative or any agent of any thereof, shall have the same rights to
contribution as CRUTTENDEN and each person who controls Metropolitan within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, each officer
of Metropolitan who shall have signed the Registration Statement and each
director of Metropolitan shall have the same rights to contribution as
Metropolitan, subject in each case to clause (i) of this paragraph (d). Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against the other party under this
paragraph (d), notify such party from whom contribution may be sought, but the
omission to so notify such party shall not relieve the party from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this paragraph (d). The indemnity and
contribution agreements contained in this paragraph 7 shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
any Indemnified Person or termination of this Agreement.
Section 8. Authorization By METROPOLITAN. Metropolitan represents and
warrants to CRUTTENDEN that this Agreement has been duly authorized, executed
and delivered by Metropolitan and constitutes a valid and binding obligation of
Metropolitan.
Section 9. Authorization By MIS. MIS represents and warrants to
CRUTTENDEN that this Agreement has been duly authorized, executed and delivered
by MIS and constitutes a valid and binding obligation of MIS.
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Section 10. Authorization By CRUTTENDEN. CRUTTENDEN represents and
warrants to Metropolitan that this Agreement has been duly authorized, executed
and delivered by CRUTTENDEN and constitutes a valid and binding obligation of
CRUTTENDEN.
Section 11. Notice. Whenever notice is required to be given pursuant to
this Agreement, such notice shall be in writing and shall be mailed by first
class mail, postage prepaid, addressed (a) if to CRUTTENDEN XXXX INCORPORATED,
at 00000 Xxx Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000, Attention: Xxxxxx X.
Xxxxxxxxxx and (b) if to Metropolitan, at 000 X. 0xx. Xxxxxx - Department
115000, Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx Xxxxxxx, Assistant
Corporate Counsel.
Section 12. Governing Law. This Agreement shall be construed (both as to
validity and performance) and enforced in accordance with and governed by the
laws of the State of Washington applicable to agreements made and to be
performed wholly within such jurisdiction.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
as of the day and year first above mentioned.
METROPOLITAN MORTGAGE & SECURITIES CO., INC.
By:
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C. Xxxx Xxxxxxxx, Xx., President
METROPOLITAN INVESTMENT SECURITIES, INC.
By:
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C. Xxxx Xxxxxxxx, Xx., President
CRUTTENDEN XXXX INCORPORATED
By:
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Xxxxxx Xxxxxxx,
Executive Vice President, Corporate Finance
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