FORM OF
VARIABLE RATE CUMULATIVE PREFERRED STOCK
SELLING AGREEMENT
This Agreement made as of the day of ____________, 1997,
by and between METROPOLITAN MORTGAGE & SECURITIES CO., INC., a
Washington corporation ("Metropolitan") and METROPOLITAN INVESTMENT
SECURITIES, INC., a Washington corporation (the "Selling Agent").
WHEREAS, Metropolitan proposes to issue and sell 250,000 shares
WITNESSETH:
Variable Rate Cumulative Preferred Stock, Series E-7 (par value
$10.00 per share) ("Preferred Stock") pursuant to a Registration
Statement (or Registration Statements) and a Prospectus (or
Prospectuses) filed under the Securities Act of 1933; and
WHEREAS, the Selling Agent, for good and valuable consideration
the receipt of which is hereby acknowledged, desires to assist in the
sale of the Preferred Stock upon the terms and in reliance upon the
representations, warranties and agreements set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. APPOINTMENT OF SELLING AGENT.
Metropolitan hereby appoints the Selling Agent as its agent to
offer and sell the Preferred Stock at the prices and in the manner
described in the Registration Statement and the Prospectus and in
compliance with the terms and conditions thereof. Metropolitan
agrees to provide the Selling Agent with such number of Registration
Statements and Prospectuses as it reasonably requests to enable it to
offer the Preferred Stock and authorizes the Selling Agent to
distribute the Registration Statements and Prospectuses.
2. UNDERTAKING OF SELLING AGENT.
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The Selling Agent agrees to use its best efforts to sell the
Preferred Stock on the terms stated herein and in the Registration
Statement and Prospectus and to notify Metropolitan of the number of
shares of Preferred Stock with respect to which subscription
agreements have been executed by subscribers. It is understood that
the Selling Agent has no commitment to sell the Preferred Stock other
than to use its best efforts. The Selling Agent will deliver all
cash and checks received from subscribers to Metropolitan by noon of
the next business day. All checks received by the Selling Agent from
subscribers shall be made payable to Metropolitan.
The Selling Agent will not maintain discretionary customer
accounts and undertakes that it will not in any event make
discretionary purchases of the Preferred Stock for the accounts of
customers.
3. AMENDMENT OF THE REGISTRATION STATEMENT AND PROSPECTUS.
Metropolitan agrees, at its expense, to amend or supplement that
Registration Statement or the Prospectus and to provide the Selling
Agent with sufficient copies thereof for distribution as
contemplated in the Registration Statement or the Prospectus or
otherwise for purposes contemplated by federal and state securities
laws, if (i) the Selling Agent advises Metropolitan that in its
opinion and that of its counsel, such amendment or supplement is
necessary or advisable, or (ii) such amendment or supplement is
necessary to comply with federal or state securities laws or the
rules or regulations promulgated thereunder or is necessary to
correct any untrue statement therein or eliminate any material
omissions therein which make any of the statements therein
misleading. The representation, warranties, and obligations to
indemnify all parties thereto contained herein relating to the
Registration Statement or the Prospectus shall attach to any such
amendment or supplement.
4. UNDERTAKINGS OR METROPOLITAN.
Metropolitan will promptly notify the Selling Agent in the event
of the issuance by the Securities and Exchange Commission ("SEC") of
any stop order or other orders us pending the Registration of the
Preferred Stock, or in the event of the institution or intended
institution of any action or preceding for that purpose. In the
event that the SEC shall enter a stop order suspending or otherwise
suspend the Registration of the Preferred Stock, Metropolitan will
make every reasonable effort to obtain as promptly as possible the
entry of an appropriate order setting aside such stop order or
otherwise reinstate the Registration of the Preferred Stock.
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5. REPRESENTATIONS AND WARRANTIES.
Metropolitan represents and warrants to the Selling Agent that:
(i) The Registration Statement and the Prospectus comply
as to form in all material respects with the Securities
Act of 1933; and the rules and regulations of the SEC
thereunder, accurately describe the operations of
Metropolitan and do not contain any misleading or untrue
statements of a material fact or omit to state a material
fact which is necessary to prevent the statements therein
from being misleading.
(ii) Metropolitan is a corporation duly organized and
validly existing under the Washington Business
Corporation Act with full corporate power to perform its
obligations as described in the Registration Statement
and the Prospectus.
(iii) The Preferred Stock, when issued and sold
pursuant to the terms hereof and of the Registration
Statement, Prospectus and subscription agreements, will
be legally issued, fully paid and nonassessable.
(iv) This Agreement has been duly and validly authorized,
executed, and delivered on behalf of Metropolitan and is
a valid and binding agreement of Metropolitan in
accordance with its terms.
6. INDEMNIFICATION.
Metropolitan and the Selling Agent each (a) agree to indemnify and
hold harmless the other (and each person, if any, who controls the
other) against any loss, claim, damage, charge or liability to which
the other or such charge or liability (or actions in respect thereof)
(i) arises out of or is based upon any misrepresentation or breach of
warranty of such party herein or any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement or the Prospectus (or any amendment or supplement thereto)
which relates to or was supplied by such party, or (i) arises out of
or is based upon the omission or alleged omission to state therein a
material fact relating to such party required to be stated therein or
necessary to make the statements therein not misleading, including
liabilities under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and (b) agree to
reimburse such other party (and any controlling persons) for any
legal
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or other fees or expenses reasonably incurred in connection with
investigating or defending any action or claim arising out of or
based upon any of the foregoing.
7. FEES AND EXPENSES.
Metropolitan will pay all expenses incurred in connection with the
offering and sale of the Preferred Stock, including without
limitation, fees and expenses of counsel, blue sky fees and expenses
(including legal fees), printing expenses, and accounting fees and
expenses. Provided, however, that in the event of termination of the
offering, Selling Agent will only be reimbursed for its actual,
accountable, out-of-pocket expenses.
The maximum commissions payable upon sale of the Preferred Stock
shall be 6% of the investment amount.
8. This agreement shall not in any way affect, modify or change
the terms of those certain Selling Agreements, dated August 14, 1980
and December 21, 1984, as amended, between the parties hereto which
provides for the sale of Investment Debentures, Series II and
Installment Debentures, Series I, respectively.
9. GOVERNING LAW.
This Agreement shall be deemed to be made under and governed by the
laws of the State of Washington.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the day and year first above mentioned.
METROPOLITAN MORTGAGE & SECURITIES CO., INC.
________________________________________
C. Xxxx Xxxxxxxx, Xx., President
METROPOLITAN INVESTMENT SECURITIES, INC.
________________________________________
Xxxxx X. Xxxxxxx, Vice President
