EXHIBIT 1.1
AGENCY AGREEMENT
___________, 2003
U.S. Bancorp Xxxxx Xxxxxxx Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Ladies and Gentlemen:
Oregon Trail Ethanol Coalition, L.L.C., a Nebraska limited liability
company (the "Company") hereby confirms its agreement with you with respect to
the Company's offer and sale of up to an aggregate of 24,000 of the Company's
membership units (the "Units"). The Company desires to increase the capital of
the Company in the minimum amount of $18,000,000 and a maximum amount of
$24,000,000 by the sale of the Units (the "Offering"). The subscribers therefor,
each of whom will be named in a subscription agreement substantially similar to
the form of subscription agreement attached as an exhibit to the Prospectus
hereinafter referred to (the "Subscription Agreement"), and by which all such
subscribers will be bound, will, at the election of and sole discretion of the
Company, become unitholders ("Unitholders") of the Company. Pursuant to the
terms and conditions hereof, the Company desires to appoint you as the exclusive
third-party selling agent (the "Agent") of the Offering. Agent understands and
agrees that certain of the officers and directors of the Company will also offer
and sell the Units in accordance with the terms and conditions hereof.
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company represents and warrants to, and agrees with, you as of the
date hereof as follows:
(i) A registration statement on Form SB-2 (File No. 333-97451)
and a related prospectus with respect to the Units have been prepared and
filed with the Securities and Exchange Commission ("Commission") by the
Company in conformity with the requirements of the Securities Act of 1933,
as amended (the "Act"), and the rules and regulations of the Commission
thereunder (the "Regulations"), and the Company has so prepared and has
filed such amendments thereto, if any, and such amended prospectuses as may
have been required to the date hereof and will file such additional
amendments thereto and such amended prospectuses as may hereafter be
required. There have been or will promptly be delivered to you a conformed
copy of such registration statement and amendments and a copy of each
exhibit filed therewith.
Such registration statement (as amended, if applicable) at the time it
becomes effective and the prospectus constituting a part thereof (including
the information, if any, deemed to be part thereof pursuant to Rule
430A(b)), as from time to time amended or supplemented, are hereinafter
referred to as the "Registration Statement," and the "Prospectus,"
respectively, except that if any revised prospectus shall be provided to
the Agent by the Company for use in connection with the offering of the
Units which differs from the Prospectus on file at the Commission at the
time the Registration Statement became or becomes effective shall be deemed
to be part of the "Registration Statement" as defined herein, and any
prospectus (including any amendment or supplement thereto or information
which is deemed part thereof) included in such registration statement shall
be deemed to be part of the "Prospectus," as defined herein, as
appropriate. The Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission thereunder are hereinafter collectively
referred to as the "Exchange Act."
(ii) The Commission has not issued any order preventing or
suspending the use of any prospectus, and each prospectus has conformed in
all material respects with the requirements of the Act and, as of its date,
has not included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein not
misleading; and when the Registration Statement became or becomes
effective, and at all times subsequent thereto, up to the Minimum
Subscription Date (as defined in Section 2(e) hereof) and each Issuance
Date (as defined in Section 2(f) hereof), as the case may be, the
Registration Statement, including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to Rule
430A(b), if applicable, and the Prospectus and any amendments or
supplements thereto, contained or will contain all statements that are
required to be stated therein in accordance with the Act and in all
material respects conformed or will in all material respects conform to the
requirements of the Act, and neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, included or will
include any untrue statement of a material fact or omitted or will omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(iii) The Company will not at any time hereafter file any
amendments to the Registration Statement or in accordance with Rule 424(b)
of the Regulations of which the Agent shall not have been previously
advised in advance of filing or to which the Agent shall reasonably object
in writing.
(iv) The Company has not sustained since the date of the latest
audited financial statements included in the Prospectus any material loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth
or contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any material change in the capitalization or
long-term debt of the Company or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial
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position, unitholders' equity or results of operations of the Company,
otherwise than as set forth or contemplated in the Prospectus.
(v) The Company is, and at the Minimum Subscription Date as
defined in Section 2 below, and each subsequent Issuance Date will be, duly
formed and validly existing as a limited liability company in good standing
under the laws of Nebraska, with power and authority to own or lease its
properties and conduct its business as described in the Prospectus, and has
been duly qualified as a foreign limited liability company for the
transaction of business and is and will be in good standing under the laws
of each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification (except where the
failure to be so licensed or qualified would not, individually or in the
aggregate, have a material adverse effect on the financial condition,
results of operations or business of the Company or subject the Company,
its unitholders or its members to any material liability or disability (a
"Material Adverse Effect")). The Company was organized for the purpose of
the transactions contemplated herein and in the Prospectus. Except as
described in the Prospectus, the Company has not engaged in any business
activities other than in connection with its organization and the
transactions contemplated herein. Complete and correct copies of the
Articles of Organization and the Amended and Restated Operating Agreement
(the "LLC Agreement") of the Company have been delivered to the Agent and
are each included as an appendix to the Prospectus.
(vi) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued equity securities of the Company have
been duly and validly authorized and issued and are fully paid and (except
as required to the contrary by the Nebraska Limited Liability Company Act)
non-assessable and conform in all material respects to the descriptions
thereof in the Prospectus.
(vii) The Units have been duly and validly authorized and, when
issued and delivered against payment therefore as provided in this
Agreement and the Prospectus, will be duly and validly issued and fully
paid and (except as non-assessability may be affected by the Nebraska
Limited Liability Company Act) non-assessable and will conform to the
descriptions thereof contained in the Prospectus.
(viii) The issue and sale of the Units by the Company, the execution
of, and the compliance by the Company, with all of the applicable
provisions of this Agreement and the Financial Services Agreement (all as
described in the Prospectus) and the consummation of the transactions
contemplated herein, therein and in the Prospectus will not conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party
or by which the Company is bound or to which any of the property or assets
of the Company is subject; nor will such action result in any violation of
the provisions of any of the formation or governing documents, including
the LLC Agreement, of the Company or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company or any of the properties of the Company; and no consent,
approval, authorization, order, registration or qualification of or with
any such court or
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governmental agency or body is required for the issue and sale of the Units
or the consummation of the transactions contemplated by this Agreement or
the Prospectus, except the registration under the Act as described in
Section 1(a) herein and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or "blue sky" laws in connection with the offer and sale of the Units as
contemplated by this Agreement and the Prospectus.
(ix) The Company is not (A) in violation of its formation or
governing documents, including the LLC Agreement, or (B) in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or
by which it or any of its properties may be bound.
(x) The statements set forth in the Prospectus under the captions
"Summary of Amended and Restated Operating Agreement," insofar as they
purport to constitute a summary of the terms of the Units, and under the
captions "Description of Membership Units", "Income Tax Consequences of
Owning Our Units" and "Subscription to Membership Units," insofar as they
purport to describe the provisions of the laws and documents referred to
therein, are accurate, complete and fair in all material respects.
(xi) BKD, LLP, who have certified certain financial statements and
schedules of the Company included in the Prospectus, are independent public
accountants as required by the Act and the Regulations.
(xii) The financial statements and schedules of the Company
included in the Registration Statement present fairly the financial
position of the Company as of the respective dates of such financial
statements, and the results of operations and cash flows of the Company for
the respective periods covered thereby, all in conformity with accounting
principles generally accepted in the United States of America consistently
applied throughout the periods involved; and the supporting schedules
included in the Registration Statement present fairly the information
required to be stated therein. The financial information set forth in the
Prospectus under "Selected Financial Data" presents fairly on the basis
stated in the Prospectus, the information set forth therein.
(xiii) The projections disclosed under "Prospectus Summary,"
"Management's Plan of Operation" and "Business of OTEC" in the Prospectus,
with respect to both the Company's operations and the ethanol industry, are
based on the sources disclosed therein, are properly summarized, if so
summarized from the identified sources, and, in the opinion of the Company,
the assumptions used in the preparation thereof are reasonable and
appropriate.
(xiv) The Company (A) makes and keeps accurate books and records
and (B) maintains internal accounting controls which provide reasonable
assurance that (1) transactions are executed in accordance with
management's authorization, (2) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain
accountability for its assets, (3) access to its assets is permitted only
in
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accordance with management's authorization, and (4) the reported
accountability for its assets is compared with existing assets at
reasonable intervals.
(xv) The Company is a "small business issuer" as such term is
defined in Rule 405 under the Act.
(xvi) The Company has all of the necessary limited liability
company power and authority to enter into this Agreement and consummate the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by the Company. This Agreement constitutes a valid
and binding agreement of the Company.
(xvii) The Company currently maintains or will maintain insurance
(issued by insurers of recognized financial responsibility) of the types
and in the amounts generally deemed adequate for its businesses and, to the
knowledge of the Company, consistent with insurance coverage maintained by
similar companies in similar businesses, including, but not limited to,
insurance covering real and personal property owned or leased by it against
theft, damage, destruction, acts of vandalism, environmental violations or
liabilities and all other risks customarily insured against, all of which
insurance is in full force and effect.
(xviii) To the Company's knowledge, with limited inquiry, there has
been no storage, disposal, generation, manufacture, refinement,
transportation, handling or treatment of toxic wastes, medical wastes,
hazardous wastes or hazardous substances by the Company (or, to the
knowledge of the Company, its predecessors in interest) at, upon or from
any of the property now or previously owned or leased by the Company in
violation of any applicable law, ordinance, rule, regulation, order,
judgment, decree or permit or which would require remedial action under any
regulation, order, judgment, decree or permit; there has been no material
spill, discharge, leak, emission, injection, escape, dumping or release of
any kind onto such property or into the environment surrounding such
property of any toxic wastes, medical wastes, solid wastes, hazardous
wastes or hazardous substances due to or caused by the Company or with
respect to which the Company has knowledge; the terms "hazardous wastes,"
"toxic wastes," "hazardous substances," and "medical wastes" shall have the
meanings specified in any applicable local, state, federal and foreign laws
or regulations with respect to environmental protection.
(xix) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the
Minimum Subscription Closing Date, defined in Section 2 below, and each
subsequent Issuance Date, except as otherwise may be specifically
described, indicated or contemplated therein, the Company will not have (A)
issued any securities or incurred any material liability or obligation,
direct or contingent, or borrowed money, except borrowings in the ordinary
course of business from the same or similar sources and in similar amounts
as indicated in the Prospectus, or (B) entered into any transaction or
series of transactions which is material in light of the business of the
Company.
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(xx) The Company is not involved in any labor dispute and, to the
knowledge of the Company, no such dispute has been threatened, except for
such disputes as would not have a Material Adverse Effect.
(xxi) To the Company's knowledge, the Company is not in violation
or default of any statute, law, rule, regulation, judgment, order or decree
of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or any
of its properties, as applicable.
(xxii) The Company has or will seek to obtain all licenses, permits,
franchises, or other governmental authorization necessary for the ownership
and operation of an ethanol plant and to the conduct of its business
generally.
(xxiii) There is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the Company
which is required to be disclosed in the Registration Statement (other than
as disclosed therein), or which might result in any material adverse change
in the financial condition, results of operations or business affairs of
the Company; all pending legal or governmental proceedings to which the
Company is a party or of which any of its respective property or assets is
the subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to its business, are
considered in the aggregate not material; and there are no contracts or
documents of the Company which are required to be described in or filed as
exhibits to the Registration Statement which have not been so described or
filed.
(xxiv) The Company has not received a determination from the
Internal Revenue Service, but to its knowledge is qualified and at all
times through the Offering Termination Date, as defined in Section 2
hereof, will qualify for treatment as a partnership for Federal income tax
purposes under current interpretations of the Internal Revenue Code of
1986, as amended, and regulations thereunder.
(xxv) On the date hereof, and at all times through the Offering
Termination Date, defined in Section 2 hereof, the Company is not, and does
not intend to conduct its business in a manner in which it would become, an
"investment company" as defined in Section 3(a) of the Investment Company
Act of 1940, as amended.
(xxvi) The Company has filed all federal income and state and local
franchise tax returns required to be filed and have made timely payments of
all taxes shown as due and payable in respect of such returns, and no
deficiency has been asserted with respect thereto by any taxing authority.
(b) Any certificate signed by any officer of the Company and delivered to
you or your counsel shall be deemed a representation and warranty by the Company
to you as to the matters covered thereby.
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SECTION 2. OFFERING AND SALE OF UNITS.
(a) On the basis of the representations, warranties and covenants herein
contained, but subject to the terms and conditions herein set forth, you are
hereby appointed the selling agent of the Company during the term herein
specified (the "Offering Period") for the purpose of finding subscribers for the
Units for the account and risk of the Company through a public offering, and
subject to the performance by the Company of all of its obligations to be
performed hereunder and to the completeness and accuracy of all the
representations and warranties contained herein, you hereby accept such agency
and agree on the terms and conditions herein set forth to use commercially
reasonable efforts during the Offering Period to find subscribers for the Units
at a public offering price of $1,000 per Unit, each investor being required to
subscribe for at least 5 Units.
The Offering Period will terminate on March 1, 2003, unless extended no
later than April 30, 2003 by the board of directors of the Company (either
March 1, 2003 or such later date, as applicable, the "Offering Termination
Date"). At all times during the Offering Period you shall follow the procedures
set forth in this Section 2.
(b) Signature pages to the Subscription Agreement and the LLC Agreement
(the Subscription Agreement together with the LLC Agreement are hereinafter
referred to as the "Subscription Documents") must be completed by or on behalf
of each person desiring to purchase Units in form and substance satisfactory to
the Company. You shall ascertain that the signature pages to the Subscription
Documents sent in by or on behalf of a prospective purchaser of Units have been
properly completed and executed. You shall return the Subscription Documents
together with a check (in the amount or amounts required by paragraph (a) above)
payable to Midwest Bank, N.A. (the "Bank") with respect to the Company at Oregon
Trail Ethanol Coalition, L.L.C., 000 Xxxx 0xx Xxxxxx, Xxx 000, Xxxxxxxxx, XX,
00000.
You will comply with the requirements of Rule l5c2-4 of the Securities
Exchange Act of 1934, as amended and any applicable state law or regulation
applicable to your efforts in the Offering.
(c) You agree to retain in your records and make available to us, for a
period of at least four years after the Offering Termination Date, information
establishing that each purchaser of the Units pursuant to a Subscription
Agreement solicited by you is within the permitted class of investors under the
requirements, if any, of the jurisdiction in which such purchaser is a resident,
and that investment in the Company is appropriate for each such purchaser's
investment objectives and financial situation. In addition, you agree that you
shall be responsible for determining that each purchaser of Units pursuant to a
Subscription Agreement solicited by you meets the suitability requirement for
investors contained in the Prospectus and you agree to retain records evidencing
such compliance with the suitability requirement for each investor.
(d) The Company, upon receipt of the aforementioned signature pages to the
Subscription Documents, will determine as soon as practicable (but in no event
more than 30 days after receipt) whether it expects to accept the proposed
purchaser as a Unitholder in the Company, it being understood that the Company
reserves the right to reject the tender of any
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signature pages to the Subscription Documents and to reject all tenders after
all of the Units have been sold. The Company, at its sole discretion, will
determine if such Subscription Documents have been properly completed and
executed. Should the Company determine to accept the tender of the signature
pages to the Subscription Documents, the Company will promptly advise you of
such action. Should the Company determine to reject the tender of the signature
pages to the Subscription Documents, it will promptly notify you in writing
(and, if the Company elects, the prospective purchaser), of such determination,
and will promptly cause the return of the tendered signature pages to the
Subscription Documents and payment of the purchase price of the Units directly
to you or to the prospective purchaser.
(e) "Minimum Subscription Date" as used herein shall mean the date, no
later than March 1, 2003 (unless extended no later than April 30, 2003 by
the board of directors of the Company, then no later than such later date), on
which the Company and the Bank shall notify you in writing that subscriptions
and payments for an aggregate of at least 18,000 Units shall have been received
and accepted by the Company. "Minimum Subscription Closing Date" as used herein
shall mean the first full business day following the Minimum Subscription Date
or such day thereafter as shall be mutually agreed upon by you and the Company.
(f) In the event the offering is commenced and subscriptions for at least
18,000 Units shall not have been received by the Offering Termination Date, all
funds received from subscribers (if any) shall be returned by the Bank to the
subscribers in full, without deduction of any escrow or other fees and expenses
and with any interest earned thereon being delivered to the subscribers on a pro
rata basis. If at least 18,000 Units have been subscribed and paid for and
accepted by the Company no later than the Offering Termination Date, then on the
Minimum Subscription Closing Date, at the option of the Company board of
directors, to be exercised in its sole discretion, and upon written notice from
the Company to the Bank of its exercise of such option, the Bank shall make
payment to the Company of 10% of the purchase price for each Unit subscribed and
paid for and accepted by the Company, and the Company shall issue 10% of the
Units subscribed and paid for and accepted by the Company to each purchaser. At
periodic intervals thereafter, to be mutually agreed upon by you and the Company
during the Offering Period, dates shall be established on which the Bank shall
make additional payments to the Company of 10% of the purchase price for each
Unit subscribed and paid for and accepted by the Company after the Minimum
Subscription Date (or after a prior Issuance Date, if applicable), and the
Company shall issue 10% of the Units subscribed and paid for and accepted by the
Company to each additional purchaser (each, an "Issuance Date"). On or following
the Minimum Subscription Closing Date, if the Company receives an executed
commitment letter from a bank or suitable financial institution for the amount
of debt financing that the Company needs (the "Financing Commitment"), then upon
receipt of written notice by the Bank of such Financing Commitment, the Bank
shall make payment to the Company of the remaining 90% of the purchase price for
each Unit subscribed and paid for and accepted by the Company, and the Company
shall issue 90% of the Units subscribed and paid for and accepted by the Company
to each purchaser (an "Issuance Date"). If the Company has not received the
Financing Commitment prior to the Offering Termination Date, then 90% of each
subscriber's purchase price shall be returned by the Bank to the subscribers,
with any interest earned thereon being delivered to the Company.
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(g) As consideration for your services, your compensation will be paid to
you as follows:
(i) If at least 18,000 of the Units are subscribed for and the
required payments and Unit issuances are made at the Minimum Subscription
Closing Date and all conditions precedent hereunder to the obligations of
you and the Company are satisfied on the Minimum Subscription Closing Date,
you will be paid a commission of 1.5833% of the purchase price of a Unit on
each Unit issued on the Minimum Subscription Closing Date, which commission
is due and payable on such date;
(ii) After the Minimum Subscription Closing Date, you will be paid
at each subsequent Issuance Date a commission of 1.5833% of the purchase
price of a Unit on each Unit issued on such Issuance Date, which commission
is due and payable on such date;
(iii) In addition to the compensation set forth above, upon
Successful Commissioning of the Ethanol Plant you will be paid a commission
of .25% of the aggregate purchase price of all Units issued during the
Offering Period, which commission is due and payable in nine monthly
installments on the first day of each month beginning on the first day of
the first month following the Successful Commissioning of the Ethanol
Plant. "Successful Commissioning" shall mean production of ethanol meeting
design specifications on a daily basis of nameplate production and all
production meets guarantees provided by engineers and contractors.
Such commissions and expense allowance shall be paid to you by a Company
check.
(h) Subscriptions for Units may be solicited by one or more dealers (the
"Soliciting Dealers") and sales by Soliciting Dealers shall be made under a
Soliciting Dealer Agreement in the form agreed to by you and the Soliciting
Dealer. Pursuant to any Soliciting Dealer Agreements, you will reallow each
Soliciting Dealer a concession in an amount agreed upon by you and the
Soliciting Dealer with respect to each Unit sold by the Company pursuant to a
Subscription Agreement solicited by such Soliciting Dealer, subject to the terms
and conditions set forth in Section 2(g).
(i) Except as disclosed in the Prospectus and the finders' arrangements
specifically described therein, neither you, the Company, nor any dealer
participating in the offering of the Units shall, directly or indirectly, pay or
award any finder's fees, commissions or other compensation to any person engaged
by a potential investor for investment advice as an inducement to such advisor
to the purchase of Units; provided, however, that normal sales commissions or
payments pursuant to any sales, incentive program referred to in the Prospectus
payable to a registered broker-dealer or other properly licensed person for
selling Units shall not be prohibited hereby.
(j) You agree that you will not disseminate or publish any advertisement
relating to your solicitation of subscribers for the Units (including, without
limitation, any advertisement
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relating to seminars) (i) the form of which has not been submitted to the NASD
by you and (ii) that has not been approved by the Company.
SECTION 3. COVENANTS OF THE COMPANY.
The Company covenants with you as follows:
(a) It will notify you immediately and confirm the notice in writing
(i) when the Registration Statement and any amendment thereto shall have
become effective, (ii) of the receipt of any comments from the Commission
with respect to the Registration Statement, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information relating
thereto, and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any
proceedings for that purpose. The Company will make every reasonable effort
to prevent the issuance by the Commission of any stop order and, if any
such stop order shall at any time be issued, to obtain the lifting thereof
at the earliest possible moment.
(b) It will give you notice of its intention to file or prepare any
amendment to the Registration Statement (including any post-effective
amendment) or any amendment or supplement to the Prospectus (including any
revised prospectus which the Company proposes for use by the Agent in
connection with the offering of the Units which differs from the prospectus
on file at the Commission at the time the Registration Statement became or
becomes effective, whether or not such revised prospectus is required to be
filed pursuant to Rule 424(b)) and will furnish you with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which you shall reasonably object
in writing.
(c) It will deliver to you, as soon as available, one signed copy of
the Registration Statement as originally filed and of each amendment
thereto and one set of exhibits thereto.
(d) It will deliver to you from time to time, before the Registration
Statement becomes effective, such number of copies of the Registration
Statement as originally filed and any amendments thereto and as soon as the
Registration Statement initially becomes effective and thereafter from time
to time during the period when the Prospectus is required to be delivered
under the Act, such number of copies of the Prospectus (as amended or
supplemented) as you may reasonably request for the purposes contemplated
by the Act or the Regulations, and such number of copies of the
Subscription Agreement and the LLC Agreement as you may reasonably request.
(e) During the period when the Prospectus is required to be delivered
pursuant to the Act, the Company will comply, so far as it is able and at
its own expense, with all requirements imposed upon it by the Act, as now
and hereafter amended, and by the Regulations, as from time to time in
force, so far as necessary to permit the continuance
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of sales of or dealings in, the Units during such period in accordance with
the provisions herein and as set forth in the Prospectus.
(f) If any event relating to or affecting the Company shall occur as
a result of which it is necessary, in your view, 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 subscriber, the
Company will forthwith prepare and furnish to you, without expense to you,
a reasonable number of copies of an amendment or amendments of, or a
supplement or supplements to, the Prospectus (in form and substance
satisfactory to you) which amend or supplement the Prospectus so that as
amended or supplemented it will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances existing at the
time the Prospectus is delivered to a subscriber, not misleading. For the
purposes of this Section 3(f), the Company will furnish such information
with respect to themselves as you may from time to time reasonably request.
(g) It will comply with all applicable registration, filing and
reporting requirements of the Exchange Act.
(h) It will endeavor in good faith, in cooperation with you, to
qualify the Units for offering and sale under the applicable securities or
"blue sky" laws of such jurisdictions as you may designate; provided,
however, that the Company shall not be obligated to file any general
consent to service of process or to qualify to do business or to qualify as
a dealer in securities in any jurisdiction in which it is not so qualified.
It will give you notice of any correspondence received from any state
securities commission regarding the Offering and will give you notice of
its intention to file, or prepare for filing, any materials related to the
Offering with any state securities commission; it will furnish you copies
of any of the foregoing promptly upon receipt or prior to filing, as
applicable, and will not file any such materials to which you shall
reasonably object in writing. In each jurisdiction where the Units shall
have been qualified as above provided, the Company will make and file such
statements and reports in each year as are or may be required by the laws
of such jurisdiction.
(i) It will make generally available to the Company's security
holders (i.e., the holders of Units) as soon as practicable, but not later
than 120 days after the close of the period covered thereby, an earnings
statement of the Company (in form complying with the provisions of Section
11(a) of the Act and Rule 158 promulgated thereunder, which need not be
certified by independent public accountants unless required by the Act or
the Regulations) covering the twelve-month period, or such earlier period
since the Company's inception, beginning not later than the first day of
the Company's fiscal quarter following the effective date of the
Registration Statement. As used in this subsection, the terms "earnings
statement" and "made generally available to the Company's security holders"
shall have the meanings contained in Rule 158 promulgated under the Act.
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(j) It will for a period of two years following the Offering
Termination Date or the earlier expiration or termination of this Agreement
pursuant to Section 10 below, furnish directly to you the following:
(i) as soon as practicable after the end of each fiscal year,
one copy of the Company's annual report, including therein the
accountants' report, the balance sheet, the related statements of
profit and loss and cash flows for the Company, together with such
accountants' comments and notations with respect thereto in such
detail as the Company may customarily receive from such accountants;
(ii) as soon as practicable after the end of each fiscal
quarterly period, one copy of a balance sheet of the Company as at the
end of such period, setting forth in reasonable detail its financial
position, together with related statements of profit and loss and cash
flows, none of which statements need be audited, but shall be
certified as correct by the Company;
(iii) copies of any report, application or document which the
Company shall file with the Commission; and
(iv) as soon as the same shall be sent to holders of Units,
each communication which shall be sent to the holders of Units,
including any other annual or interim report of the Company.
(k) It will deliver to you, from time to time, all supplemental sales
material (whether designated solely for broker-dealer use or otherwise)
proposed to be used or delivered by the Company in connection with the
offering of Units.
(l) It intends to source funds and to use funds in the manner
specified in the Prospectus.
(m) It will use the net proceeds received by it from the sale of the
Units being sold by it in the manner specified in the Prospectus.
(n) It will maintain adequate books and records setting forth a true
and accurate account of all business transactions arising out of and in
connection with the conduct of the Company. You or your designated
representative shall have the right, at any reasonable time, to have access
to and inspect and copy the contents of such books and records.
SECTION 4. COVENANTS OF U.S. BANCORP XXXXX XXXXXXX.
You covenant with the Company as follows:
(a) You agree to manage the distribution of the Units and to sell the
Units according to all of the terms and conditions of the Registration
Statement, the Rules of
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Fair Practice of the NASD, all applicable state and federal laws, including
the Act, as amended, and any and all regulations related thereto. You shall
not have any authority to give any information or make any representations
in connection with any offer or sale of the Units other than as contained
in the Prospectus or as is otherwise expressly authorized in writing by the
Company, provided, however, that you shall use only such sales literature
and/or advertising in connection with the sale of the Units as shall be
approved by the Company.
(b) The Units shall be offered and sold only where the Units may be
legally offered and sold, and only to such persons in such states who shall
be legally qualified to purchase the Units. The Company shall give you
written notice at the time of effectiveness of the Registration Statement
of those states in which the offering and sale of the Units may be made,
and shall amend such notice thereafter as additional states are added. No
Units shall be offered or sold in any other states.
(c) Neither you nor any person associated with you shall give any
information, written or oral, or make any representation, written or oral,
in connection with the offering other than those contained in the
Prospectus or such other material as may be provided or approved by the
Company.
SECTION 5. PAYMENT OF EXPENSES AND FEES.
The Company will pay all expenses incident to the performance of the
obligations of the Company under this Agreement, including (i) the printing and
delivery to you in quantities as hereinabove stated of copies of the
Registration Statement and all amendments thereto and of the Prospectus and any
supplements or amendments thereto, and of the Subscription Agreement; (ii) the
printing, execution, filing and delivery to you in quantities as hereinabove
stated of copies of any supplemental sales material to be used in connection
with the offering approved by the Company and utilized in sales of the Units
directly to the public; (iii) the qualification of the Units under the
securities or "blue sky" laws of the jurisdictions designated by you in
accordance with the provisions of Section 3(h), including filing fees and the
fees and disbursements of any counsel incurred in connection therewith; (iv) the
fees and disbursements of counsel and accountants for the Company; (v) the
filing fee of the NASD and the fees and disbursements of counsel incurred in
connection with the obtaining of NASD approval of the compensation arrangements
relating to the offering of the Units; and (vi) delivery to you of such number
of copies as you may reasonably request of the Blue Sky Survey to be prepared by
Xxxxx Xxxx Law Firm L.L.P. which shall be delivered to you and the Company.
SECTION 6. CONDITIONS OF YOUR OBLIGATIONS.
Your obligations hereunder are subject to the accuracy of and compliance
with the representations and warranties of the Company, to the performance by
the Company of its obligations hereunder and to the following further
conditions:
(a) The Registration Statement shall become effective not later than
5:30 P.M., Eastern time, on the date hereof, or, with your consent, at a
later time and date
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not later, however, than 5:30 P.M., Eastern time, on the business day
following the date hereof; and at the Minimum Subscription Closing Date and
Issuance Date no stop order suspending the effectiveness thereof shall have
been issued under the Act or proceeding therefor initiated or threatened by
the Commission and not rescinded.
(b) At the Minimum Subscription Closing Date and on each Issuance
Date thereafter, you shall receive the opinion of Xxxxx Xxxx, as counsel
for the Company, to the effect that:
(i) the Company has been duly organized and is validly
existing as a limited liability company in good standing under the
laws of the State of Nebraska with power and authority to own its
properties and conduct its business as described in the Prospectus;
and the Company has been duly qualified to do business as a foreign
limited liability company under the limited liability company law of,
and is in good standing as such in, every jurisdiction where the
ownership or leasing of property, or the conduct of its business
requires such qualification except where the failure so to qualify
would not have a Material Adverse Effect;
(ii) the authorized equity of the Company, of which there is
outstanding the amount set forth in the Registration Statement and
Prospectus, conforms as to legal matters in all material respects to
the description thereof in the Registration Statement and Prospectus;
(iii) the issued and outstanding equity of the Company has been
duly authorized and validly issued and is fully paid and
non-assessable;
(iv) the certificates for the Units to be delivered hereunder
are in due and proper form, and when duly countersigned by the
Company's transfer agent and delivered to you or upon your order
against payment of the agreed consideration therefor in accordance
with the provisions of this Agreement, the Units represented thereby
will be duly authorized and validly issued, fully paid and
non-assessable;
(v) the Registration Statement has become effective under the
Act, and, to the actual knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Act, and the Registration Statement
(including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b), if
applicable), the Prospectus and each amendment or supplement thereto
(except for the financial statements, schedules and other historical
or prospective statistical or financial data included therein as to
which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Act; although such
counsel cannot guarantee the accuracy or completeness of the
statements contained in the Registration Statement or
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Prospectus, nothing has come to such counsel's attention that has led
counsel to believe that either the Registration Statement (including
the information deemed to be part of the Registration Statement at the
time of effectiveness pursuant to Rule 430A(b), if applicable) or the
Prospectus, or the Registration Statement or the Prospectus as amended
or supplemented (except as aforesaid), as of their respective
effective or issue dates, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus (except as aforesaid) as amended or supplemented, if
applicable, as of the Minimum Subscription Date, and each Issuance
Date, will be, as the case may be, contained any untrue statement of a
material fact or omitted to state any material fact necessary to make
the statements therein not misleading in light of the circumstances
under which they were made (except that we express no opinion as to
financial statements and finance data contained in the Registration
Statement or Prospectus, or any document incorporated by reference
therein); the statements in the Registration Statement and the
Prospectus summarizing statutes, rules and regulations are accurate
and fairly and correctly present the information required to be
presented by the Act or the Regulations, in all material respects and
such counsel does not know of any statutes, rules and regulations
required to be described or referred to in the Registration Statement
or the Prospectus that are not described or referred to therein as
required; and to such counsel's actual knowledge there are no legal or
governmental proceedings pending or threatened required to be
described in the Prospectus which are not described as required, nor
of any contracts or documents of a character required to be described
in the Registration Statement or Prospectus or to be filed as exhibits
to the Registration Statement which are not described or filed, as
required;
(vi) the statements under the captions "Description of
Membership Units" and "Summary of Amended and Restated Operating
Agreement," "Income Tax Consequences of Owning Our Units" and
"Subscription to Membership Units," in the Prospectus, insofar as such
statements constitute a summary of documents referred to therein or
matters of law, are accurate summaries and fairly and correctly
present, in all material respects, the information called for with
respect to such documents and matters;
(vii) this Agreement and the performance of the Company's
obligations hereunder have been duly authorized by all necessary
limited liability company action and this Agreement has been duly
executed and delivered by and on behalf of the Company, and is legal,
valid, and binding on the Company, enforceable in accordance with its
terms; and no approval, authorization or consent of any public board,
agency, or instrumentality of the United States or of any state or
other jurisdiction is necessary in connection with the issue or sale
of the Units pursuant to this Agreement (other than under the Act,
applicable "blue sky" laws and the rules of the NASD) or the
consummation by the Company of any other transactions contemplated
hereby;
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(viii) the execution and performance of this Agreement will not
contravene any of the provisions of, or result in a default under, any
agreement, franchise, license, indenture, mortgage, deed of trust, or
other instrument known to such counsel of the Company; or by which its
property is bound and which contravention or default would be material
to the Company; or violate any of the provisions of the Articles of
Organization or LLC Agreement of the Company or, so far as is known to
such counsel, violate any statute, order, rule or regulation of any
regulatory or governmental body having jurisdiction over the Company;
(ix) to such counsel's knowledge, all offers and sales of the
Company's units since the Company's inception were at all relevant
times exempt from the registration requirements of the Act and were
duly registered or the subject of an available exemption from the
registration requirements of the applicable state securities or "blue
sky" laws;
(x) the Company is not an "investment company" or a person
"controlled by" an "investment company" within the meaning of the
Investment Company Act; and
(xi) the Company has not received a determination from the
Internal Revenue Service, but to such counsel's knowledge the Company
qualifies for treatment as a partnership for Federal income tax
purposes under current interpretations of the Internal Revenue Code of
1986, as amended, and regulations thereunder.
In rendering such opinion, such counsel may state that insofar as
their opinion under clause (v) above relates to the accuracy and
completeness of the Prospectus and Registration Statement, it is based upon
a general review with the Company's representatives and independent
accountants of the information contained therein, without independent
verification by such counsel of the accuracy or completeness of such
information.
(c) At the Minimum Subscription Closing Date and on each Issuance
Date thereafter you shall receive a certificate signed by the principal
executive officer and principal financial officer of the Company to the
effect that (i) the signer has carefully examined the LLC Agreement, the
Registration Statement and the Prospectus and, in the signer's opinion, at
the time the Registration Statement became effective and at the Minimum
Subscription Closing Date and Issuance Date, as the case may be, the
Registration Statement did not contain an 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 the
Prospectus, as of its issue date and as of such date, did not contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; (ii) since the
effective date of the Registration Statement, no event has occurred which
should have been set forth in an amendment of, or supplement to, the
Prospectus but which has not been so set forth; (iii) no stop order
suspending the
- 16 -
effectiveness of the Registration Statement, has been issued and no
proceedings therefor have been instituted or threatened by the Commission
and not rescinded; (iv) the representations, warranties and agreements
contained in Section 1(a) are true and correct in all material respects
with the same effect as though expressly made at the Minimum Subscription
Closing Date and Issuance Date as the case may be; (v) since the effective
date of the Registration Statement, no material adverse change in
circumstance has occurred with regard to the transactions described in the
Prospectus which should have been set forth in an amendment of, or
supplement to, the Prospectus, but which has not been so set forth; (vi)
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, no material and unfavorable
change, financial or otherwise, in the business, condition or prospects of
the Company has occurred or become known; no transaction which is material
and unfavorable to the Company has been entered into by the Company; and
there has not been any obligation, contingent or otherwise, directly or
indirectly incurred by the Company, which is material to the Company, other
than such obligations that are incurred in the ordinary course of the
Company's business; and (vii) subsequent to the execution and delivery of
this Agreement, there has been no change, or any development involving a
prospective change, in or affecting particularly the business or properties
of the Company, whether or not arising in the ordinary course of business,
which is material and adverse to the current or prospective financial
condition or results of operations of the Company.
(d) At the time the Registration Statement initially becomes
effective, you shall have received from BKD, LLP a letter, in form and
substance satisfactory to you and your counsel, advising that (i) they are
independent public accountants as required by the Act and the Regulations,
(ii) it is their opinion that the financial statements of the Company
included in the Prospectus, and covered by their opinions therein, comply
as to form in all material respects with the applicable accounting
requirements of the Act and the Regulations relating to financial
statements in registration statements on Form SB-2, (iii) based on
procedures set forth in such letter nothing has come to their attention
which would indicate that the unaudited financial statements and supporting
schedules, if any, of the Company included in the Registration Statement do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Regulations, or are not
presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the respective
audited financial statements of the Company, (iv) based on procedures set
forth in such letter nothing has come to their attention which would
indicate that during the period from September 30, 2002 to a specified date
not more than five business days prior to the date the Registration
Statement becomes effective there has been any change in the equity,
capital accounts, or short-term or long-term indebtedness of the Company or
any decrease in net assets as compared with the amounts shown in their
respective balance sheets as of September 30, 2002 included in the
Registration Statement, except for changes or decreases that the
Registration Statement discloses have occurred or may occur; (v) they have
carried out certain procedures, as specified in a draft of such letter
approved by you, performed for the purpose of comparing certain financial
information and percentages appearing in the Registration Statement, as
specified in such draft letter, with indicated amounts in the financial
statements or accounting records of the Company
- 17 -
and certain of its affiliates and have found such information and
percentages to be in agreement with the relevant accounting and financial
information of the Company and certain of its affiliates.
At the Minimum Subscription Closing Date and each Issuance Date you
shall receive from BKD, LLP a letter dated as of the Minimum Subscription
Closing Date or Issuance Date to the effect that they reaffirm, as of such
date and as though made at such date, the statements made in the letter
furnished by such accountants pursuant to Section 6(d), except that the
specified date referred to in such subsection will be a date not more than
five days prior to the Minimum Subscription Closing Date or such Issuance
Date.
(e) At the Minimum Subscription Closing Date and at all times through
the Offering Termination Date, Xxxxx Xxxx shall have been furnished with
such additional information, opinions and documents, including supporting
documents relating to parties described in the Prospectus and certificates
signed by such parties with regard to information relating to them and
included in the Prospectus as they may reasonably require for the purpose
of enabling them to pass upon the sale of the Units as herein contemplated
and related proceedings, in order to evidence the accuracy or completeness
of any of the representations or warranties or the fulfillment of any of
the conditions herein contained and in order to qualify the Units under the
securities or "blue sky" laws of the jurisdictions designated by you in
accordance with the provisions of Section 3(h); and all actions taken by
the Company in connection with the sale of the Units as herein contemplated
shall be reasonably satisfactory in form and substance to you.
(f) At the Minimum Subscription Closing Date and on each Issuance
Date, the qualification of the Units under the specified "blue sky"
jurisdictions remain valid.
(g) At the Minimum Subscription Closing Date and on each Issuance
Date the Company shall be in compliance with all reporting requirements
under the Exchange Act.
(h) If any of the conditions specified in this Section 6 shall not
have been fulfilled when and as required by this Agreement to be fulfilled,
this Agreement and all your obligations hereunder may be cancelled by you
by notifying the Company of such cancellation in writing at any time at or
prior to the Minimum Subscription Closing Date, or at any time after the
Minimum Subscription Closing Date, all your obligations hereunder may be
cancelled or terminated by you by notifying the Company of such
cancellation or termination in writing at any time at or prior to the
Offering Termination Date and any such cancellation or termination shall be
without liability of any party to any other party (except for the expenses
to be paid or reimbursed pursuant to Section 5 hereof and except to the
extent provided in Section 7 hereof).
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you which
approval shall not be unreasonably withheld. The Company shall furnish you with
such manually signed or conformed copies of such opinions, certificates, letters
and documents as you request.
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SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless you and each person,
if any, who controls you within the meaning of the Act or the Exchange Act
against any losses, claims, damages or liabilities to which you or such
controlling person may become subject under the Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise
(including in settlement of any litigation if such settlement is effected with
the written consent of the Company), 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, including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to Rule 430A, if
applicable, any preliminary prospectus, the Prospectus, or any amendment or
supplement thereto, 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 you
and each such controlling person for any legal or other expenses reasonably
incurred by you or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case to the extent that (i) any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any preliminary prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by you, specifically for use therein, which
such information is limited to the third paragraph under the subsection
"Underwriting" under the section "Subscription to Membership Units" in the
Prospectus; or (ii) if such statement or omission was contained or made in any
preliminary prospectus and corrected in the Prospectus and (A) any such loss,
claim, damage or liability suffered or incurred by you (or any person who
controls you) resulted from an action, claim or suit by any person who purchased
Units which are the subject thereof from you in the offering and (B) you failed
to deliver or provide a copy of the Prospectus to such person at or prior to the
confirmation of the sale of such Units in any case where such delivery is
required by the Act. In addition to its other obligations under this Section
7(a), the Company agrees that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in this Section 7(a), it will reimburse you on a monthly basis for all
reasonable legal and other expenses incurred in connection with investigating or
defending any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Company's obligation to reimburse you for such expenses
and the possibility that such payments might later be held to have been improper
by a court of competent jurisdiction. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) You will indemnify and hold harmless the Company, each of its
directors, each of its officers who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the Act or the
Exchange Act, against any losses, claims, damages or liabilities to which the
Company, or any such director, officer or controlling person may become subject
under the Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise (including in settlement of any
litigation, if such
- 19 -
settlement is effected with your written consent), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any (i) failure of Agent to comply with laws or regulations,
including, without limitation, NASD rules, applicable to its activities
hereunder as exclusive third-party selling agent; and (ii) untrue or alleged
untrue statement of any material fact contained in the Registration Statement,
any preliminary prospectus, the Prospectus, or any amendment or supplement
thereto, 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, 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 the Registration Statement, any preliminary
prospectus, the Prospectus, or any amendment or supplement thereto in reliance
upon and in conformity with any written information furnished to the Company by
you specifically for use in the preparation thereof, which such information is
limited to the third paragraph under the subsection "Underwriting" under the
section "Subscription to Membership Units" in the Prospectus; and will reimburse
any legal or other expenses reasonably incurred by the Company, or any such
director, officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. In addition to
their other obligations under this Section 7(b), you agree that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this Section 7(b), you will
reimburse the Company on a monthly basis for all reasonable legal and other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of your
obligation to reimburse the Company for such expenses and the possibility that
such payments might later be held to have been improper by a court of competent
jurisdiction. This indemnity agreement will be in addition to any liability
which you may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 7, 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 except to the extent that
the indemnifying party was prejudiced by such failure to notify. In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, or the indemnified and indemnifying parties may have
conflicting interests which would make it inappropriate for the same counsel to
represent both of them, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defense and otherwise to
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of
- 20 -
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 7 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defense in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel, approved by you in
the case of paragraph (a) representing all indemnified parties not having
different or additional defenses or potential conflicting interest among
themselves who are parties to such action), (ii) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
arising out of such proceeding.
(d) If the indemnification provided for in this Section 7 is unavailable
to an indemnified party under paragraphs (a) or (b) hereof in respect of any
losses, claims, damages or liabilities referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and you
from the offering of the Units or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and you in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The respective relative
benefits received by the Company and you shall be deemed to be in the same
proportion in the case of the Company as the total price paid to the Company for
the Units by you (net of commission but before deducting expenses), and in your
case, as the commission received by you bears to the total of such amounts paid
to the Company and received by you as commission in each case as contemplated by
the Prospectus. The relative fault of the Company and you shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the Company or by you and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages and liabilities referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.
Notwithstanding the provisions of this Section 7, you shall not be required
to contribute any amount in excess of the amount by which the total price at
which the Units sold by it and distributed to the public were offered to the
public exceeds the amount of any damages which you have otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
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meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(e) The provisions of this Section 7 shall survive any termination of this
Agreement.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement
(including your covenants provided in Section 4 hereof) or contained in a
certificate of the Company submitted pursuant hereto shall remain operative and
in full force and effect, regardless of any investigation made by, or on behalf
of, you or any person who controls you, or by or on behalf of the Company and
shall survive the Offering Termination Date or the expiration or termination of
this Agreement for a period of two (2) years.
SECTION 9. EFFECTIVE DATE OF THIS AGREEMENT.
This Agreement shall become effective (i) at 11:30 A.M., Eastern time, on
the first full business day following the day on which the Registration
Statement initially becomes effective or (ii) at the time of the initial public
offering by you, after the Registration Statement initially becomes effective,
of the Units, whichever shall first occur. The time of the initial public
offering shall mean the time of the release by you, for publication, of the
first newspaper advertisement, which is subsequently published, relating to the
Units or the time at which the Units are first generally offered by you to
subscribers, whichever shall first occur. You or the Company may prevent this
Agreement from becoming effective by giving the notice indicated in Section 10
prior to the time when this Agreement would otherwise become effective as herein
provided.
SECTION 10. TERMINATION.
Without limiting the right to terminate this Agreement pursuant to any
other provision hereof:
(a) Either the Company or you may terminate this Agreement if by May
1, 2003 the Company has not raised its minimum subscription amount as set forth
in Prospectus and Registration Statement.
(b) In the event the offering is commenced and subscriptions for at
least 18,000 Units shall not have been received by the Minimum Subscription
Date, this Agreement shall terminate without obligation on your part or on the
part of the Company, except as provided in Section 5 hereof and except that the
indemnification or contribution, as the case may be, provided in Section 7
hereof shall continue after such termination of this Agreement.
(c) This Agreement may be terminated by the Company by notice to you
or by you by notice to the Company at any time prior to the time this Agreement
shall become effective as to all its provisions, and any such termination shall
be without liability on the part of
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the Company to you (except for the expenses to be paid or reimbursed pursuant to
Section 5 hereof and except to the extent provided in Section 7 hereof).
(d) This Agreement may also be terminated by you prior to the Minimum
Subscription Closing Date if (i) trading in securities on the New York Stock
Exchange shall have been suspended or minimum prices shall have been established
on such exchange, or (ii) a banking moratorium shall have been declared by
Minnesota, New York, or United States authorities, or (iii) there shall have
been any change in financial markets or in political, economic or financial
conditions which, in your opinion, either renders it impracticable or
inadvisable to proceed with the offering and sale of the Units on the terms set
forth in the Prospectus or materially and adversely affects the market for the
Units, or (iv) if there shall have occurred any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of a
national emergency or war by the United States, an act of terrorism shall have
been committed against the United States or any of its nationals or properties;
or (v) there shall have occurred such a calamity or crisis or such a material
adverse change in general domestic or international economic, political or
financial conditions, including without limitation as a result of terrorist
activities (or the effect of international conditions on the financial markets
in the United States shall be such), that in your judgment makes it
impracticable or inadvisable to proceed with the solicitation of offers to
purchase Units. Any termination pursuant to this paragraph (b) shall be without
liability on your part to the Company or on the part of the Company to you
(except for expenses to be paid or reimbursed pursuant to Section 5 hereof and
except to the extent provided in Section 7 hereof).
(e) This Agreement shall automatically expire nine months after
Successful Commissioning of the Company's ethanol plant. For purposes of this
Section 10(e), the term "Successful Commissioning" shall mean the production of
ethanol meeting design specifications on a daily basis of nameplate production,
and all production meets the guarantees provided by engineers and contractors.
(f) The provisions of Section 7 shall survive the expiration or
earlier termination of this Agreement.
SECTION 11. POST-EFFECTIVE AMENDMENT.
The Company represents, warrants and covenants to you that if as of
March 1, 2003 (unless extended no later than April 30, 2003 by the board of
directors of the Company, then such later date), subscriptions for at least
18,000 Units shall not have been received, it will file a post-effective
amendment to the Registration Statement de-registering all of the Units and if
at the Offering Termination Date subscriptions for all the Units shall not have
been received it will file a post-effective amendment to the Registration
Statement de-registering the unsold Units and, in either case, will terminate
any additional offerings of Units pursuant to such Registration Statement. In
addition, the Company represents and warrants to you that it will file all
reports required by the regulations with regard to sales of the Units and use of
the proceeds therefrom.
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SECTION 12. NOTICES AND AUTHORITY TO ACT.
All communications hereunder shall be in writing and, if sent to you, shall
be mailed, delivered or faxed and confirmed to you at U.S. Bancorp Xxxxx Xxxxxxx
Inc., 0000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx Xxxxx, XX, 00000, Attention: Xxxx
Xxxxxx, with a copy to Xxxxx Xxxxxxx, Esq., Internal Counsel, U.S. Bancorp Xxxxx
Xxxxxxx Inc., 000 Xxxxxxxx Xxxx, Xxxxxxxxxxx, XX 00000, or, if sent to the
Company, shall be delivered or faxed and confirmed at Oregon Trail Ethanol
Coalition, L.L.C., 000 Xxxx 0xx Xxxxxx, Xxx 000, Xxxxxxxxx, XX, 00000 Attention:
President, with a copy to Xxxxx Xxxx, 0000 Xxxxxxx Xxxxx, Xxxxx, XX 00000,
Attention Xxxxxxxx X. Xxxxxx.
SECTION 13. PARTIES.
This Agreement shall inure to the benefit of and be binding upon each of
you and the Company and your and the Company's respective successors, this
Agreement and the conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of the parties hereto and their
respective successors and controlling persons, and for the benefit of no other
person, firm or corporation, except as otherwise specifically provided herein.
SECTION 14. APPLICABLE LAW.
This Agreement shall be construed in accordance with the laws of the State
of Minnesota.
[Remainder of Page Intentionally Left Blank]
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If the foregoing is accordance with your understanding of our agreement,
kindly sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement among you and the
Company in accordance with its terms.
Very truly yours,
OREGON TRAIL ETHANOL COALITION, L.L.C.
By
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Title:
--------------------------------
Confirmed and Accepted as of the date
first above written:
U.S. BANCORP XXXXX XXXXXXX INC.
By
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Title:
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