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EXHIBIT 1.1
SELLING AGREEMENT
$10,000,000 OF 11% SUBORDINATED DEBENTURES, SERIES 1997
DUE JUNE 1, 2003
MCA FINANCIAL CORP.
MCA Financial Corp.
00000 Xxxxxxxxxxxx Xxx
Xxxxxxxxxx, XX 00000
MCA FINANCIAL CORP., a Michigan corporation (the "Company"), proposes
to issue and sell (the "Offering") $10,000,000 in aggregate principal amount of
11% Subordinated Debentures, Series 1997, due June 1, 2003 (the "Debentures").
The Debentures shall be offered to the public in multiples of $1,000. The
purpose of this Agreement is to confirm the arrangements between the Company and
the undersigned (the "Placement Agent") with respect to the sale by the
Placement Agent as agent for the Company, on a best efforts basis, of
$10,000,000 of Debentures. The Agreement shall be effective on and after the
effective date of the Offering.
In consideration of the mutual agreements set forth herein, the parties
hereto agree as follows:
I. Representations, Warranties, and Agreements of the Company. The Company
represents and warrants to and agrees with the Placement Agent that:
(1) A registration statement on Form S-1 (File No. 333-27307) with
respect to the Debentures has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act"), and the
applicable rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") under the Act and has been filed with
the Commission; and such amendments to such registration statement as may have
been required prior to the date hereof have been similarly prepared and filed
with the Commission. Copies of such registration statement and amendment or
amendments have been delivered to the Placement Agent. The Company has prepared
in the same manner, and has filed a further amendment to such registration
statement incorporating a final form of prospectus or proposes to file a final
form of prospectus in accordance with the requirements of Rule 424 of the Rules
and Regulations. The Company will not at any time hereafter file any amendments
to such registration statement of which the Placement Agent shall not have been
furnished a copy. The registration statement and prospectus, in the forms in
which they become effective, are herein respectively referred to as the
"Registration Statement" and the "Prospectus" provided, however, that if, after
the effectiveness of the Registration Statement, the Company shall file a form
of Prospectus under Rule 424 of the Rules and Regulations, the term "Prospectus"
shall refer to the form of Prospectus so filed.
(2) As of the date (the "Effective Date") that the Registration
Statement is declared effective by the Commission and at all times thereafter up
to the termination of the Offering, (i) the Registration Statement and
Prospectus, and any amendments or supplements thereto, will contain all
statements and information which are required to be included therein in
accordance with the Act and the Rules and
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Regulations and will in all material respects conform to the requirements of the
Act and the Rules and Regulations and (ii) neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto, will include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company makes no representations and warranties as
to information contained in or omitted from the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with information furnished to the Company by the Placement Agent
specifically for use in the preparation thereof.
(3) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Michigan, with full power and
authority (corporate and other) to own, lease and operate its properties and
conduct its business as described in the Prospectus; this Agreement has been
duly authorized, executed and delivered by the Company and is binding upon the
Company in accordance with its terms; the performance of this Agreement and the
consummation of the transactions herein contemplated will not result in a breach
or violation of any of the terms and provisions of, or constitute a default
under, (i) any indenture, mortgage, deed of trust, loan agreement, bond,
debenture, note agreement, or other evidence of indebtedness, lease, contract,
or other agreement or instrument to which the Company is a party or by which the
property of the Company is bound, (ii) the Company's articles of incorporation
or bylaws, or (iii) any statute or any order, rule, or regulation of any court
or governmental agency or body having jurisdiction over the Company or over the
properties of the Company; and no consent, approval, authorization, or order of
any court or governmental agency or body is required for the consummation by the
Company of the transactions on its part contemplated herein, except such as may
be required under the Act or under state or other securities laws.
(4) Except as set forth in the Prospectus, there is not now and at or
prior to the closing date there will not be any action, suit, or proceeding, at
law or equity, against the Company by a private litigant, by any federal, state
or other commission, board or agency wherein any unfavorable result or decision
could materially adversely affect the business, property, financial condition or
income or earnings of the Company, or prevent consummation of the transactions
contemplated hereby; and there are no contracts or documents of the Company
which would be required to be filed as exhibits to the Registration Statement by
the Act or by the Rules and Regulations which have not been filed as exhibits to
the Registration Statement.
(5) The Debentures to be issued and sold by the Company have been duly
authorized for issuance and sale to investors, pursuant to this Selling
Agreement and the Indenture, as amended, with First Union National Bank, as
Trustee and, when issued and delivered by the Company pursuant to this Selling
Agreement against payment therefor, such Debentures will be duly and validly
issued, fully paid, and nonassessable, and will constitute legal, valid and
binding obligations of the Company in accordance with their terms.
(6) Xxxxx Xxxxxxxx Xxxxxx Xxxxxx and Xxxxx Xxxxxxxx, acting in a joint
venture capacity who have audited and reviewed certain of the financial
statements filed with the Commission as a part of the Registration Statement and
included in the Prospectus, are independent public accountants within the
meaning of the Act and the Rules and Regulations; and the financial statements
filed as a part of the
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Registration Statement and included in the Prospectus present fairly the
financial position and the results of operations of the Company at the
respective dates and for the respective periods to which they apply and have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved.
(7) Prior to the closing date, the Company will supply and deliver to
the Placement Agent at its offices, all information required to enable it to
make such investigation of the Company and its business prospects as it shall
desire and shall make available to it such persons as it deems reasonably
necessary or appropriate in order to verify or substantiate any information
regarding the Company. In addition, the Placement Agent shall have the right to
review any materials prepared in connection with any offering of securities of
the Company conducted prior to the Offering for compliance with applicable
federal and state securities laws.
(8) The Company will make arrangements to have available, at the
offices of the Trustee, First Union National Bank, certificates for Debentures
in such quantities as may, from time to time, be necessary.
(9) The Company is not aware of the occurrence or likelihood of
occurrence of any event or events which would cause it to use the proceeds of
the offering in any way materially different from that stated in the Prospectus.
II. Representations, Warranties and Agreements of the Placement Agent. The
Placement Agent represents and warrants to and agrees with the Company that:
(1) The Placement Agent is registered as a broker-dealer with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, is registered as a broker-dealer with the state or states
listed on Annex A under applicable securities laws of such state(s), and is a
member in good standing of the National Association of Securities Dealers, Inc.
("NASD").
(2) The Placement Agent will only sell Debentures after the Effective
Date and will comply with the applicable provisions of the Act and the
securities laws of the jurisdictions in which the Debentures are sold by the
Placement Agent with respect to such sales.
(3) No person was or is entitled, directly or indirectly, to
compensation from it or any of its affiliates for services as a finder in
connection with the proposed public offering.
(4) The Placement Agent will comply with all applicable Sections of
Article III of the NASD Rules of Fair Practice and with Rules 2730, 2740, 2750
and 2420 of the NASD Conduct Rules with respect to the Offering.
III. Employment of Placement Agent. Upon the foregoing representations,
warranties and agreements, and subject to the terms and conditions of this
Selling Agreement:
(1) The Company hereby employs the Placement Agent as its agent to sell
for the account of
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the Company up to $10,000,000 in principal amount of Debentures in multiples of
$1,000 per Debenture.
(2) The Placement Agent will be paid a commission of 6.5% of the gross
sales price of the Debentures, provided, however, if the Placement Agent sells
$250,000 in principal amount of the Debentures it will be paid a commission of
7.0% on all sales, and if the Placement Agent sells $500,000 or more of the
Debentures it will be paid a commission of 8.0% on all sales.
(3) The Placement Agent will use its best efforts to find purchasers
for the Debentures as follows:
(i) For the duration of the Offering, all funds received by
the Placement Agent from purchasers of the Debentures shall
remit the proceeds from the sale of the Debentures to the
Company in accordance with any applicable rules of the NASD.
The Placement Agent shall instruct all purchasers to make
their investment checks payable to the Company and all checks
or funds that the Placement Agent receives from purchasers of
the Debentures shall be transmitted to the Company.
(4) The Placement Agent agrees to make a public offering of the
Debentures in accordance with, and as set forth in, the Prospectus. Such public
offering shall be made directly to the public.
(5) Through its legal counsel, the Company has sought to register or
qualify the Debentures under the securities or Blue Sky laws of Michigan, Ohio,
Illinois, Florida, Pennsylvania, and other states to be determined at the
Company's sole discretion and such counsel will use their best efforts to effect
such registrations or to obtain such qualifications. The Company shall pay for
all Blue Sky filing fees as well as all costs and expenses of such counsel in
seeking clearance of the Offering in these states, and will file such consents
to service of process or other documents as may be necessary to effect such
clearance and continue the same in effect for as long a period as the Placement
Agent may reasonably request.
IV. Further Agreements of the Company. The Company agrees with the
Placement Agent that:
(1) The Company will use its best efforts to cause the Registration
Statement to become effective and will advise the Placement Agent promptly and,
if requested by the Placement Agent, will confirm such advice in writing (i)
when the Registration Statement has become effective and when any amendment
thereto becomes effective, (ii) of any request by the Commission or other
governmental authority for amendments or supplements to the Registration
Statement or Prospectus or for additional information, (iii) of the issuance by
the Commission or other governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose, and (iv) within the period of time referred to in Section IV
(5) below, of the happening of any event which makes any statement made in the
Registration Statement or the Prospectus untrue or which requires the making of
any additions to or changes in the Registration Statement or the Prospectus in
order to make the statements therein not misleading. If at any time the
Commission or other governmental authority issues any stop order suspending the
effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible moment.
(2) The Company will pay all expenses in connection with the delivery
to the purchasers of the
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Debentures and all expenses in connection with the printing, preparation and
filing of the Registration Statement (including this Selling Agreement and all
other exhibits to the Registration Statement) and the Prospectus and any
amendments or supplements thereto.
(3) The Company will furnish to the Placement Agent, without charge,
conformed copies of the Registration Statement as originally filed and of any
amendment thereto, including exhibits.
(4) The Company will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus of which the
Placement Agent shall not previously have been advised or with respect to which
the Placement Agent promptly after being so advised reasonably shall object in
writing.
(5) On the Effective Date and thereafter from time to time for such
period as in the opinion of counsel for the Placement Agent the Prospectus is
required by law to be delivered in connection with sales by the Placement Agent,
the Company will deliver to the Placement Agent without charge as many copies of
the Prospectus (and of any amendments or supplements thereto) as the Placement
Agent may reasonably request. The Company consents to the use of the Prospectus
(and of any amendments or supplements thereto) in accordance with the provisions
of the Act and with the securities laws of the jurisdictions in which the
Debentures are offered by the Placement Agent, both in connection with the
offering or sale of the Debentures and for such period of time thereafter as the
Prospectus is required by law to be delivered in connection therewith. If during
such period of time any event occurs which, in the judgement of the Company or
in the opinion of counsel for the Placement Agent, should be set forth in the
Prospectus in order to make the statements therein, in light of the circumstance
in which they were made, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with the Act or any other law, the Company
will forthwith prepare and file with the Commission an appropriate amendment or
supplement thereto and will furnish to the Placement Agent, without charge, a
reasonable number of copies thereof, which the Placement Agent shall use
thereafter.
(6) From the date hereof until one year after the termination of the
Offering, the Company will furnish to the Placement Agent (i) as soon as
available, a copy of each report of the Company mailed to its Debenture holders
or filed with the Commission, and (ii) from time to time, such other information
concerning the business and financial condition of the Company as the Placement
Agent may reasonably request.
(7) The Company shall promptly notify the Placement Agent of the filing
of a registration statement with the Commission pursuant to Section 12 of the
Securities Exchange Act of 1934, furnish the Placement Agent with a copy of such
registration statement and promptly inform the Placement Agent of its
effectiveness.
(8) The Company will apply the net proceeds from the sale of the
Debentures in the manner set forth under the caption "Use of Proceeds" in the
Prospectus, except where, as a result of events brought to its attention after
the closing date, it is determined that such application would not be in the
best interest of the Company and would not violate any applicable law.
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V. Indemnity and Contribution Provisions.
(1) The Company agrees to indemnify and hold harmless the Placement
Agent and any person who controls any Placement Agent within the meaning of
Section 15 of the Act against any and all losses, claims, lawsuits, damages or
liabilities, joint and several, to which such Placement Agent or such
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, lawsuits, damages or liabilities (including awards and/or
judgements) arise out of any untrue or alleged untrue statement of a material
fact contained in the Registration Statement, the Prospectus and related
exhibits, or any amendment or supplement thereto; or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statement therein not misleading; and will reimburse the Placement
Agent and each such controlling person for any and all costs and expenses,
including reasonable counsel fees incurred by such Placement Agent or such
controlling persons in connection with the investigation or defense of any such
loss, claim, lawsuit, damage or liability; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
lawsuit or liability arises out of or is based upon an untrue statement or
omission made in the Registration Statement or the Prospectus and related
exhibits or any amendment or supplement thereto in reliance upon and in
conformity with information furnished to the Company by or on behalf of the
Placement Agent specifically for use with reference to such Placement Agent in
preparation thereof. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(2) The Placement Agent will indemnify and hold harmless the Company,
each of its directors, each of its officers who signs the Registration Statement
and any person who controls the Company within the meaning of the Act against
any and all losses, claims, lawsuits, damages or liabilities to which the
Company or any such director or officer or controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, lawsuits,
damages or liabilities (including awards and/or judgements) arise out of or are
in connection with any information furnished to the Company by the Placement
Agent and are included in the Registration Statement, the Prospectus and related
exhibits or any amendment or supplement thereto and will reimburse any and all
costs and expenses, including reasonable counsel fees incurred by the Company or
such director or officer or controlling person in connection with investigating
or defending any such loss, claim, lawsuit, damage or liability. This indemnity
agreement will be in addition to any liability which the Placement Agent may
otherwise have.
(3) Promptly after receipt by an indemnified party under this Article V
of notice of any such liability, claim or lawsuit, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party under
this Article V, notify the indemnifying party in writing of the commencement
thereof; but the omission to so notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Article V. In case any such action is brought against any indemnified
party and it notifies any indemnifying party of the commencement thereof, the
indemnifying party will be entitled to take any and all necessary and proper
action, at its sole cost and expense, with respect to such liability, claim or
lawsuit, including the right to settle, compromise and dispose of such
liability, claim or lawsuit, excepting therefrom any and all proceedings or
hearings before any regulatory bodies and/or authorities.
(4) If the indemnification provided for in Section (1) or (2) of this
Article V is, for any reason
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other than as specified in such sections, held by a court to be unavailable and
the Company or the Placement Agent has been required to pay damages as a result
of a determination by a court that the Registration Statement, the Prospectus,
or any amendment or supplement thereto contains an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, then the Company shall
contribute to the damages paid by the Placement Agent and the Placement Agent
shall contribute to the damages paid by the Company, but in each case only to
the extent that such damages arise out of or are based upon such untrue
statement or omission, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Placement
Agent on the other from the offering of the Debentures, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect the relative benefits referred to
in clause (i) above but also the relative fault of the Company and the Placement
Agent in such damages, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Placement Agent shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total selling
commissions and allocable expenses received by the Placement Agent, as set forth
in the table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue statement of
a material fact or the omission to state a material fact relates to information
supplied by the Company or the Placement Agent and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
untrue statement or omission. For purposes of this Section, the term "damages"
shall include any counsel fees or other expenses reasonably incurred by the
Company or the Placement Agent in connection with investigating or defending any
action or claim which is the subject of the contribution provisions of this
Section. Notwithstanding the provisions of this Section, the Placement Agent
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Debentures distributed to the public were offered
to the public exceeds the amount of any damages which Placement Agent has
otherwise been required to pay by reason of any such untrue statements or
omissions. No person adjudged 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.
(5) The agreements contained in this Article V and the representations
and warranties of the Company and the Placement Agent set forth in this Selling
Agreement shall remain operative and in full force and effect, regardless of (a)
any investigation made by or on behalf of the Placement Agent or any person
controlling the Placement Agent or by or on behalf of the Company, any of its
directors or officers, or any person controlling the Company, (b) acceptance of
any Debentures and payment therefor hereunder, and (c) any termination of this
Selling Agreement. A successor of the Placement Agent or of the Company, or any
director or officer thereof or any person controlling the Placement Agent or the
Company, as the case may be, shall be entitled to the benefits of the agreements
contained in this Article V.
VI. Conditions to Placement Agent's Obligation. The obligations of the
Placement Agent to participate in the offer and sale of the Debentures hereunder
are subject to the accuracy of and compliance with the representations and
warranties and agreements of the Company contained herein on and as of the
closing date and to the following further conditions:
(1) That the Registration Statement shall have become effective; that
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose
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shall have been or to the knowledge of the Company shall be contemplated by the
Commission at or prior to the closing date, and
(2) That the Company shall have delivered to the Placement Agent such
additional documents as it shall reasonably request in order to receive further
assurance as to the accuracy of the Registration Statement and compliance with
the Company's agreements hereunder.
[INTENTIONALLY LEFT BLANK]
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VII. Termination. This agreement may be terminated by either party upon
sixty (60) days written notice to the other party. Any termination of
this Agreement pursuant to this provision shall not affect the
Company's obligation to compensate the Placement Agent for commissions
earned in accordance with Article III hereof.
VIII. Miscellaneous. Except as otherwise provided herein, notice given
pursuant to any of the provisions of this Selling Agreement shall be in
writing and shall be delivered (a) to the Company at the office of the
Company, 00000 Xxxxxxxxxxxx Xxx, Xxxxxxxxxx, XX 00000, Attention:
Xxxxxx X. Xxxxx; or (b) to the Placement Agent at the office of the
Placement Agent, set forth below or in each case to such other address
as the person to be notified may have requested in writing.
This Selling Agreement has been and is made solely for the benefit of the
Placement Agent, the Company, the controlling persons, directors and
officers referred to in Article V hereof, and their respective
successors and assigns; and no other person shall acquire or have any
right under or by virtue of this Selling Agreement. The terms
"successor" or "successor and assigns" as used in this Selling
Agreement shall not include a purchaser from any of the several
Placement Agents of any of the Debentures in his status as such
purchaser.
This Selling Agreement may be executed in any number of counterparts,
each of which, when taken together, shall be deemed the fully execute
agreement between the parties.
This Selling Agreement shall be governed governed by and construed
in accordance with the laws of the State of Michigan.
MCA FINANCIAL CORP.
By: /s/ Xxx X. Xxxxx
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Its: President
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PLACEMENT AGENT
Apex Capital, L.L.C.
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Please Print Corporate Name
By: /s/ Xxxxxx Xxxxxxx
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Signature of Corporate Officer
Xxxxxx Xxxxxxx
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Please Print Name of Corporate Officer
Its: Chief Operating Officer
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Please Print Title of Coporate Officer
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ANNEX A
STATES IN WHICH AGENT IS REGISTERED
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A-1
