EXHIBIT 1.1
BEST EFFORTS UNDERWRITING AND SELECTED DEALERS AGREEMENTS
$25,000,000
INVESTMENT DEBENTURES, SERIES I
UNDERWRITING AGREEMENT
January ____, 1999
PACIFIC WEST SECURITIES, INC.
As Managing Dealer
000 Xxxxxx Xxxxxx XX
Xxxxxx, XX 00000
Dear Sirs:
1. INTRODUCTORY. SFG Mortgage and Investment Company, Inc., a Washington
corporation (the "Company"), has authorized the issuance of $25,000,000 in
Investment Debentures, Series I, at face value (the "Debentures"), none of which
were issued and outstanding prior to the date of this Agreement. This Agreement
contemplates that you will use your best efforts to sell, for the account of the
Company, up to $25,000,000 of the Debentures bearing the following terms and
interest rates:
AMOUNT OF INVESTMENT TERM TO MATURITY ANNUAL INTEREST RATE
----------------------- ----------------- ---------------------
$2,000-$9,999 60 Months 7.0%
$10,000-$24,999 60 Months 8.0%
$25,000-$99,999 60 Months 8.35%
$100,000-$249,999 60 Months 8.65%
$250,000-$999,999 60 Months 9.0%
$1,000,000+ 60 Months Negotiable
The term "Debentures," as used herein, includes as many of the Investment
Debentures, Series I, as are issued and sold pursuant to the terms hereof unless
the context indicates otherwise.
The Company hereby agrees with you as follows:
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company represents and warrants to, and agrees with, you that:
(a) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement (File No. ) on
Form SB-2 and may have prepared and filed one or more amendments thereto
covering the registration of the Debentures under the Securities Act of 1933, as
amended (the "Securities Act"), including the related preliminary prospectuses,
each and all such preliminary prospectuses (together with all documents
incorporated therein by reference) being herein referred to as the "Preliminary
prospectus," and has prepared and proposes to file, prior to the effective date
of such registration statement, an additional amendment to such registration
statement, including a final prospectus, copies of which have heretofore been
delivered to you. The Company will not, without your prior consent (which shall
not be unreasonably withheld), file any other amendment thereto prior to the
time such registration statement shall become effective or make any change in
such form of final prospectus prior to the time it is first filed with the
Commission pursuant to
Rule 424(b) of the rules and regulations of the Commission under the Securities
Act (the "Rules and Regulations"). Such registration statement and prospectus,
including all exhibits thereto and documents incorporated therein by reference,
as finally amended and revised at the time the registration statement becomes
effective are herein, respectively, called the "Registration Statement" and the
"Prospectus," except that, if the prospectus first filed by the Company pursuant
to Rule 424(b) of the Rules and Regulations shall differ from the Prospectus,
the term "Prospectus" shall mean the prospectus first filed pursuant to Rule
424(b).
(b) When the Registration Statement shall become effective and at all
times subsequent thereto up to and including the Closing Date (as hereinafter
defined), and, when any post-effective amendment thereof shall become effective,
the Registration Statement (and any post-effective amendment thereof) will fully
comply with the applicable provisions of the Securities Act and the Rules and
Regulations thereunder, and the Registration Statement will not contain any
untrue statement of a material fact and will not omit to state any material fact
required to be stated therein or necessary in order to make the statement
therein not misleading, and when the Registration Statement shall become
effective and at all times subsequent thereto up to and including the Closing
Date, the Prospectus (and the Prospectus as amended or supplemented, if the
Company shall have filed with the Commission any amendment thereof or supplement
thereto) will fully comply with the provisions of the Securities Act and the
Rules and Regulations and will not contain any untrue statement of a material
fact and will not omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; except that the
foregoing does not apply to statements or omissions in the Registration
Statement or the Prospectus, or any amendment or supplement thereto, based upon
written information furnished to the Company by you specifically for use
therein.
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Washington and the
Company has full power and authority (corporate and other) to own its properties
and conduct its business as described in the Prospectus and as being conducted,
and is in compliance in all material respects with all laws requiring its
qualification to do business as a foreign corporation in all other jurisdictions
in which it owns or leases substantial properties or in which the conduct of its
business requires such qualification.
(d) The Debentures have been duly authorized, and when issued and
delivered as contemplated by this Agreement, will have been validly issued and
will be fully paid and nonassessable, and conform to the description thereof
contained in the Prospectus. The certificates used to evidence the Debentures
will be in due and proper form. No further approval or authority of the
stockholders or the Board of Directors of the Company will be required for the
issuance and sale of the Debentures as contemplated herein.
(e) This Agreement and the Trust Indenture Agreement (as defined below)
have each been duly authorized, executed and delivered by the Company and each
of this Agreement and the Trust Indenture Agreement constitutes a legal, valid
and binding obligation of each of the Company enforceable in accordance with its
terms and is in all respects in full compliance with all applicable provisions
of the Securities Act.
(g) The execution and delivery of this Agreement and the Trust Indenture
Agreement and the performance by the Company hereunder and thereunder will not
conflict with, result in a breach or violation of or constitute a default under
any agreement or instrument to which the Company is a party or the corporate
charter or by-laws of the Company or any law, order, rule, regulation, decree or
injunction of any jurisdiction, court or governmental agency or body, and no
consent, approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the performance by the Company or
the Trust Indenture Agreement or
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the consummation by the company, of the transactions contemplated hereby or
thereby, except such as may be required under the Securities Act, or state
securities or Blue Sky laws.
(h) The Prospectus and the Preliminary Prospectus as originally filed or
as amended and supplemented, if the Company shall have filed with the Commission
any amendment thereof or supplement thereto will fully comply with the
applicable provisions of the Securities Act and the Rules and Regulations and
will not contain any untrue statement of a material fact and will not omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(i) The Company has not given any information or made any representation
in connection with the offering of the Debentures, written or oral, other than
as contained in the Prospectus or Preliminary Prospectus.
3. OFFERING AND SALE OF THE DEBENTURES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company appoints you as its exclusive
agent to effect sales of the Debentures for the account of the Company at the
face value thereof and upon the other terms and conditions set forth herein and
in the Prospectus, and you agree to use your best efforts as such agent to sell
the Debentures during the term of this Agreement upon the terms and conditions
set forth herein and in the Prospectus.
As compensation for your services hereunder, the Company will, at the
Closing (as hereinafter defined), pay you commissions each year in an amount
equal to 1.5% of the principal balance of all issued and outstanding Debentures
resulting from the sale of Debentures pursuant to the offering contemplated
herein. Such amounts shall be payable quarterly, in arrears, based upon the
principal amount of Debentures issued and outstanding as of the end of each
calendar quarter. Your appointment shall commence upon the date of the
execution of this Agreement, and shall continue for a period (such period,
including any extension thereof as hereinafter provided, being herein called the
"Offering Period") of 360 days from the effective date (the "Effective Date") of
the Registration Statement (and for any additional period extended by agreement
of the Company and you), unless all of the Debentures have previously been
subscribed for.
You hereby acknowledge that you will promptly upon receipt deliver all cash
and checks received by you from applicants to purchase Debentures to the
Company. Such cash or checks will be accompanied by one executed copy of the
Subscription Application pursuant to which applications to purchase Debentures
are made, properly completed and executed and in the form of Exhibit A to the
Prospectus ("Subscription Application"). All checks received by you from
applicants to purchase shall be made payable to "SFG Mortgage and Investment
Company, Inc." Promptly after receipt of a Subscription Application and the
funds therefore, the Company will mail an interim receipt to each such
subscriber to purchase the Debentures for the amount of such purchase. Any
entity selected by you to process orders for Debentures on behalf of applicants
to purchase may deliver cash or checks and Subscription Applications received
from such applicants directly to the Company.
It is understood that you shall have the right to refuse to forward to the
Company any Subscription Application, and in such event you shall promptly remit
all funds received by you to the person on whose behalf such funds were
submitted to you.
4. CLOSING. Subject to the prior termination of the offering as provided
herein, there shall be an initial closing (the "Initial Closing") at the Law
Offices of Xxxx X. Xxx, P.S., on the tenth business day immediately following
the effective date of the Registration Statement, a final closing (the "Final
Closing") on the tenth business day after termination of the Offering Period and
such interim closings (or at such other place or time not later than ten
business
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days thereafter as You and the Company shall determine) (hereinafter
collectively the "Closings" or "the Closing Date") . Such Closings shall
include the following: (i) satisfaction of the conditions set forth in Section
7; (ii) payment for the Debentures to the Company and delivery to the Company of
properly completed and executed Subscription Applications to each purchaser (if
payment and delivery have not previously been effected); and (iii) delivery by
the Company of copies of the certificates for the Debentures purchased by each
Debenture purchaser. The copies of certificates for the Debentures to be
delivered at the Closing will be in definitive form in such denominations and
registered in such names as have been previously requested by you at least three
business days prior to the Closing Date.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees with you
that:
(a) The Company will use its best efforts to cause the registration
statement as filed and any subsequent amendments thereto to become effective as
promptly as possible and will notify you immediately and confirm in writing (i)
when the Registration Statement and any amendment thereto shall have become
effective or any supplement to the Prospectus or any amended Prospectus shall
have been filed, (ii) 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, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of the
institution of any proceedings for that purpose, or of the institution or
threatening by the Commission of any investigation or other proceeding that
might result in the suspension of the use of the Prospectus, or of the
suspension of the qualification of the Debentures for offering or sale in any
jurisdiction, or of the institution or threatening of any proceedings for any
such purpose or for the purpose of preventing the use of or noticing a
deficiency in the Prospectus, any amended Prospectus or any supplement thereto.
The Company will not file any post-effective amendment to the Registration
Statement or supplement or amendment to the Preliminary Prospectus or the
Prospectus or, prior to the completion of the offering of the Debentures, make
any supplement to the Prospectus, unless you shall have been advised thereof and
shall not have reasonably disapproved such amendment or supplement.
(b) If prior to the Closing Date or at any time thereafter when a
Prospectus relating to the Debentures is required to be delivered under the
Securities Act any event occurs as a result of which the Preliminary Prospectus
or the Prospectus as then amended or supplemented would, in your judgment with
the concurrence of your counsel, include an untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or if it
is necessary at any time to amend the Preliminary Prospectus or the Prospectus
to comply with the Securities Act, the Company promptly will prepare and file
with the Commission an amendment or supplement which will correct such statement
or omission or an amendment which will effect such compliance and, at the
Company's expense, will prepare and furnish as many copies of any such amendment
or supplement as you may reasonably request.
(c) Not later than sixteen months from the date hereof, the Company will
make generally available to its security holders an earnings statement covering
a period of at least twelve months beginning after the effective date of the
Registration Statement which will satisfy the provisions of Section 11(a) of the
Securities Act.
(d) The Company will furnish to you copies of the Registration Statement
(two of which will be signed and will include all exhibits), each related
preliminary prospectus, the Prospectus and all amendments and supplements to
such documents, in each case as soon as available and in such quantities as you
reasonably request.
(e) The Company will use its best efforts to arrange for the qualification
of the Debentures under the laws of such jurisdictions as you designate and will
continue such qualifications in effect so long as required for the
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offering of the Debentures as contemplated herein, PROVIDED that the Company
shall not be obligated to file any general consent to service of process, or to
qualify as a foreign corporation or as a dealer in securities in any state in
which it is not now so qualified.
(f) During the period of five years from the date hereof, the Company will
furnish to you, as soon as practicable after the end of each fiscal year, a copy
of its annual report to security holders for such fiscal year, and during such
period the Company will also furnish to you (i) as soon as available, a copy of
each report or definite proxy statement of the Company filed with the Commission
under the Securities Exchange Act of 1934 (the "Securities Exchange Act") or
mailed to security holders and (ii) from time to time such other information
concerning the Company as you may reasonably request.
(g) The Company will apply the net proceeds from the sale of the
Debentures to be sold by it hereunder for the purposes set forth in the
Prospectus.
(h) During the course of the offering of the Debentures the Company will
not take directly or indirectly any action designed to or that might, in the
future, reasonably be expected to cause or result in stabilization or
manipulation of the price of the Debentures.
(j) The Company will not give any information or make any representation
in connection with the offering of the Debentures, written or oral, other than
as contained in the Prospectus or the Preliminary Prospectus.
6. EXPENSES. Whether or not the transactions contemplated hereunder are
consummated, the Company will pay all costs and expenses incident to the
performance of its obligations hereunder, including, without limiting the
generality of the foregoing, all costs and expenses incurred in connection with:
(i) the issuance, sale and delivery of the Debentures being offered hereby
(including all transfer and other taxes thereon); (ii) the preparation, filing,
printing, and delivery of the Registration Statement (including all exhibits
thereto and documents incorporated therein by reference), the Preliminary
Prospectus, the Prospectus and - any amendments thereof and supplements thereto,
the Blue Sky memorandum, this Agreement and related selling and other documents
in connection with the offering (iii) the filing fees and expenses (including
fees and disbursements of your counsel) incurred in connection with the
qualification of the Debentures under state securities or Blue Sky laws and the
preparation of the Blue Sky memorandum for the offering and filing fees in
connection with the review of the terms of the public offering of the Debentures
by the National Association of Securities Dealers, Inc. ("NASD"); (iv) the fees,
disbursements and expenses of the accountants and counsel for the Company; (v)
the fees of the Company's transfer agent and registrar; (vi) all expenses of
obtaining approval for listing of the Debentures on any stock exchange; (vii)
the advertising costs (including tombstone advertisements, newspaper
advertising, direct mailings to potential investors and fees and expenses of
marketing consultants) of the offering not to exceed $5,000.00; and (viii) the
costs to you relating to arrangement of order processing services not to exceed
$5,000.00. It is understood that except as provided in this Section 6 and
Section 7 you will pay all of your costs and expenses, including travel,
telephone, advertising, and fees, disbursements and expenses of your counsel,
relating to the offering of the Debentures.
7. CONDITIONS OF YOUR OBLIGATIONS. Your obligations to use your best
efforts to sell the Debentures as provided herein and the delivery of funds on
the Closing Date shall be subject to the accuracy of the representations and
warranties of the Company as of the date hereof and at the Closing Date, to the
accuracy of the statements of the officers of the Company made pursuant to the
provisions hereof, to the performance by the Company, of its respective
obligations hereunder and to the following additional conditions:
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(a) The Registration Statement shall have become effective not later than
9:00 A.M., Seattle time, on the day of this Agreement, or such later time or
date as shall have been consented to by you. No stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted, or, to the knowledge of
the Company, shall be contemplated, by the Commission.
(b) You shall not have advised the Company that the Registration Statement
or Prospectus, or any amendment or supplement thereto, contains an untrue
statement of fact or omits to state a fact which, you have concluded, after
conferring with your counsel, is in either case material and in the case of an
omission is required to be stated therein or is necessary to make the statements
therein not misleading.
(c) You shall received an opinion of counsel for the Company, dated the
Closing Date, to the effect that:
(i) The Company has been duly incorporated and are validly existing as
corporations in good standing under the laws of the State of Washington and the
Company has full corporate power and authority to own its property and conduct
its business as described in the Prospectus, is in compliance in all material
respects with all laws requiring its qualification to do business as a foreign
corporation in all other jurisdictions in which it owns or leases substantial
properties or in which the conduct of its business requires such qualification;
(ii) The Debentures delivered on the Closing Date have been duly
authorized and validly issued and are fully paid and nonassessable and conform
to the description thereof contained in the Prospectus. The certificates used
to evidence the Debentures are in due and proper form. All actions of the
Company in connection with the offer and sale of the Debentures have been
effected in compliance with applicable law;
(iii) This Agreement has been duly authorized, executed and delivered by
the Company, and (assuming due authorization, execution and delivery by you)
constitutes a legal, valid and binding agreement of the Company, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws affecting enforcement of
creditors rights generally and to equitable principles that may restrict the
availability of remedies and except as rights to indemnity hereunder may be
limited under the Securities Act;
(iv) The Trust Indenture Agreement attached as Exhibit 3.2 to the
Registration Statement as amended has been duly authorized, executed and
delivered by the Company and (assuming due authorization, execution and delivery
by the other parties thereto) constitutes the legal, valid and binding
agreements of the Company enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization and moratorium laws and other
laws affecting enforcement of creditors' rights generally and to equitable
principles that may restrict the availability of remedies, and such agreement is
in all respects in full compliance with all applicable provisions of the
Securities Act and the Trust Indenture Act;
(v) All required action has been taken by the Company under the
Securities Act and the Securities Exchange Act to make the public offering and
consummate the sale of the Debentures pursuant to this Agreement; the issue and
sale by the Company of the Debentures and the execution and delivery of this
Agreement, the Trust Indenture Agreement by the Company and the performance by
the Company of its obligations hereunder and thereunder will not conflict with,
result in a breach of, or constitute a default under any agreement or instrument
known to such counsel to which the Company is a party or any applicable law,
order, rule, regulation, decree or injunction of any jurisdiction, court or
governmental agency or body or the corporate charter or by-laws of the Company;
and no consent, approval, authorization or order of, or filing with, any court
or governmental agency or body is required in connection with the issuance or
sale of the Debentures by the Company or for the performance by the Company of
this Agreement, or the Custodian Agreement or the consummation by the Company,
of the
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transactions contemplated hereby or thereby, except such as have been obtained
under the Securities Act, and/OR the Securities Exchange Act and such as may be
required under state securities or Blue Sky laws in connection with the offering
of the Debentures as contemplated herein;
(vi) The Registration Statement and the Prospectus (except as to the
financial information contained therein, as to which they need express no
opinion) complied as to form in all material respects with the requirements of
the Securities Act, the 1940 Act and the rules and regulations of the Commission
thereunder;
(vii) The terms of the Trust Indenture Agreement comply in all material
respects with the requirements of the Trust Indenture Exchange Act.
Such counsel shall also have stated that (i) the Registration Statement has
become effective under the Securities Act, and, to the best of the knowledge of
such counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for such purposes have been
instituted or are pending or contemplated under the Securities Act; (ii) in the
course of their review and discussion of the contents of the Registration
Statement and Prospectus with certain officers and employees of the Company and
its independent accountants, no facts have come to their attention which would
lead them to believe that either the Registration Statement as of its effective
date or the Prospectus (except as to the financial information contained
therein, as to which they need express no opinion), as of its issue date or
thereafter to and including the Closing Date, contained an 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.
In rendering such opinion, such counsel may rely as to matters involving
the application of laws other than the laws of the jurisdictions in which such
counsel is admitted, to the extent such counsel deems proper and to the extent
specified in such opinion, upon an opinion or opinions of other counsel,
satisfactory to you. The opinion of counsel for the Company shall also state
that the opinion of any other counsel on whom such counsel is relying is in form
and substance satisfactory to such counsel and that, in such counsel's opinion,
you and they are justified in relying thereon.
(d) You shall have received from your counsel, such opinion or opinions,
dated such Closing Date, with respect to matters relating to the offering of the
Debentures as you may reasonably request, and the Company shall have furnished
to such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(e) You shall have received a certificate of the chief executive officer
and a principal financial or accounting officer of each of the Company dated the
Closing Date, to the effect that:
(i) The representations and warranties herein of the Company are true
and correct as of the Closing Date with the same force and effect as if made on
that date;
(ii) The Company has performed all of its obligations hereunder to be
performed at or prior to the Closing Date; and
(iii) Since the effective date of the Registration Statement, there has
not occurred any event required to be set forth in an amended or supplemented
Prospectus which has not been so set forth, and any such amendment or supplement
does not 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.
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(f) At the time of the signing of this Agreement and at the Closings, you
shall have received a letter of Xxxxxxxx Xxxxxxxx PLLC, certified public
accountants, dated the date of this Agreement or the Closing Date, confirming
that they are independent certified public accountants with respect to the
Company within the meaning of the Securities Act and the Rules and Regulations
and stating in effect that:
(i) In their opinion the balance sheet included in the Prospectus
complies as to form in all material respects with the applicable accounting
requirements of the Securities Act and the Rules and Regulations;
(ii) On the basis of a reading of the latest available interim financial
statements of the Company, inquiries of officials of the Company responsible for
financial and accounting matters and other specified procedures, nothing came to
their attention that caused them to believe that at the date of the latest
available balance sheet read by such accountants, or at a subsequent specified
date not more than five days prior to the Closing Date, there was any change in
the capital stock or stockholders equity of the Company as compared with amounts
shown on the balance sheet included in the Prospectus, except for such changes
as are contemplated by the Prospectus and as are described in such letter; and
(iii) They have confirmed such procedures with respect to certain information
contained in the Prospectus as were previously agreed
upon by you and them.
(g) The Company shall have furnished to you such additional certificates,
if any, with respect to the representations and warranties of the Company
contained herein as you shall reasonably have requested.
(h) Since the respective dates as of which information is given in the
Prospectus, there shall not have been any change, or any development involving a
prospective change, in the condition (financial or otherwise) of the Company or
in any pending action, suit, proceeding or investigation involving the Company
whether or not arising from transactions in the ordinary course of business,
that, in your reasonable judgement, is material and renders it impractical or
inadvisable to proceed with the completion of the sale of and payment for the
Debentures on the Closing Date.
(i) No notice of disapproval shall have been issued or proceedings for
that purpose shall have been instituted by the Commission, the NASD, or any
state securities or Blue Sky authority with respect to the distribution
arrangements relating to the offering of the Debentures.
The Company will furnish you with such conformed copies of such opinions,
certificates, letters and documents as you reasonably request.
8. INDEMNIFICATION AND CONTRIBUTION. (a) the Company will indemnify and
hold harmless you and each person, if any, who controls you within the meaning
of the Securities Act against any losses, claims, damages or liabilities, joint
or several, to which you or such controlling person may become subject, under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or any Preliminary Prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; and will reimburse
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, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any of such documents in reliance upon and in
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conformity with written information furnished to the Company by you specifically
for use therein; and PROVIDED FURTHER, that the indemnity agreement contained in
this Section 9(a) with respect to any Preliminary Prospectus shall not inure to
the benefit of you (or of any person controlling you) on account of any such
losses, claims, damages, or liabilities (or actions in respect thereof), arising
from the sale of any of the Debentures to any person if you shall have failed to
send or give to such person with or prior to the delivery to you by such person
of a Subscription Application, a copy of the Prospectus or the Prospectus as
amended or supplemented, if any amendments or supplements thereto shall have
been furnished at or prior to the time of receipt by you of such person's
subscription application, to the extent that any such loss, claim, damage or
liability results from an untrue statement or an omission which was corrected in
the Prospectus or the Prospectus as amended or supplemented. 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 have signed the Registration Statement and
each person, if any, who controls the Company within the meaning of the
Securities 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 Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any Preliminary Prospectus or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by you
specifically for use therein; 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. 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 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 8. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 9 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. An indemnifying
party against whom indemnity may be sought shall not be liable to indemnify an
indemnified party under this Section 9 if any settlement of any such action is
effected without such indemnifying party's consent.
(d) If the indemnification provided for in subsection (a), (b) or (c) of
this Section 8 is for any reason, other than as specified in such subsections,
unavailable and the Company or you have been required to pay damages as a result
of a determination by a court that the Registration Statement, any Preliminary
Prospectus or the Prospectus, or any amendment or supplement thereto contains a
misrepresentation of a material fact or omits to state a material fact untrue
statement required to be stated therein or necessary to make the statements
therein not misleading, then the Company shall contribute to the damages paid by
you, and you 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
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or omission, (i) in such proportion as is appropriate to reflect the relative
benefits by the Company on the one hand and you 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 not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company, on the one hand and you on the other in connection with
the statements or omissions which resulted in such damages as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and you on the other 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 commissions received by you,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company on the one hand and you on the other 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 on the hand or by you on the other, and the parties
relevant intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company and you agree that it
would not be just and equitable if their respective obligations to contribute
pursuant to this Section 8(e) were to be determined by pro rata allocation of
the aggregate damages or by any other method of allocation which does not take
account of the equitable considerations referred to in the first sentence of
this Section 8(e). For purposes of this Section 8(e), the term "damages" shall
include any legal or other expenses reasonably incurred by the Company or you in
connection with investigating or defending against any action or claim which is
the subject of the contribution provisions of this Section 8(e).
Notwithstanding the provisions of this Section 8(e), you 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 you have otherwise been required to pay
by reason of such untrue statement or omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
9. TERMINATION. You shall have the right to terminate this Agreement and
the offering of the Debentures at any time prior to the Closing if, after the
date hereof, there shall have been any declaration of war by the Government of
the United States, the Armed Forces of the United States shall be engaged in any
major hostilities, or any event shall have occurred resulting in (i) the closing
of the New York Stock Exchange or the American Stock Exchange, (ii) the general
suspension of trading on either such Exchange, (iii) the general establishment
of minimum prices by either such Exchange or by the Commission, or (iv) the
declaration of a bank moratorium by authorities of the United States or of the
State of New York, the effect of which in your judgment makes it impracticable
or inadvisable to proceed with the offering.
10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The respective
indemnities, agreements, representations, warranties and other statements of
Company and its officers set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation, or statement
as to the results thereof, made by or on behalf of you, the Company or any of
its officers, directors or controlling persons, and will survive payment to the
Company for the Debentures. If this Agreement is terminated pursuant to Section
9 hereof or if for any reason the sale of the Debentures is not consummated, the
Company shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 6 and 8 and to you pursuant to Section 8 shall remain in
effect.
11. NOTICES. All communications hereunder will be in writing and, if sent
to you, will be mailed, delivered, or telegraphed and confirmed to you at 000
Xxxxxx Xxxxxx XX, Xxxxxx, XX, 00000; if sent to the Company, will be mailed,
delivered, or telegraphed and confirmed to it at 0000 - 000xx Xxxxxx XX, Xxxxx
X, Xxxxxxxx, XX, 00000, Attention-Xxxx Xxxxxxx, President.
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12. SUCCESSORS. This Agreement will inure to the benefit and be binding
upon the parties hereto and their respective successors and the officers,
directors and controlling persons referred to in Section 9, and no other person
will have any right or obligation hereunder.
13. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Washington.
14. COUNTERPARTS. This Agreement may be executed in counterparts, all of
which, taken together, shall constitute a single agreement.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicate hereof, whereupon it will
become a binding agreement among the Company and you in accordance with its
terms.
Very truly yours,
SFG MORTGAGE AND INVESTMENT
COMPANY, INC.
By
--------------------------------
Xxxx Xxxxxxx, President
The foregoing Underwriting Agreement is herein confirmed and accepted as of the
date first above written.
------------------------------
Pacific West Securities, Inc.
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