DISTRIBUTION AGREEMENT
$23,000,000 SERIES B SECURED INVESTOR CERTIFICATES
AMERICAN CHURCH MORTGAGE COMPANY (THE "COMPANY")
AMERICAN INVESTORS GROUP, INC. (THE "UNDERWRITER")
_____________, 2004
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS 3
Section 1.01 Defined Terms 3
Section 1.02 Accounting Terms 5
ARTICLE II. APPOINTMENT OF UNDERWRITER AND RELATED AGREEMENTS 5
Section 2.01 Appointment; Exclusivity 5
Section 2.02 Compensation to Underwriter 5
Section 2.03 Brokers and Dealers 6
Section 2.04 Underwriter's Unrelated Activities 6
Section 2.05 Best Efforts; Independent Contractor 6
ARTICLE III. SERVICES; STANDARD OF CARE 7
Section 3.01 Services 7
Section 3.02 Reports to the Company 7
ARTICLE IV. REPRESENTATIONS AND COVENANTS OF THE COMPANY 8
Section 4.01 Representations, Warranties and Agreements of the Company 8
Section 4.02 Covenants of the Company 13
ARTICLE V. REPRESENTATIONS AND COVENANTS OF UNDERWRITER; CONDITIONS 15
Section 5.01 Representations and Warranties of Underwriter 15
Section 5.02 Covenants of Underwriter 16
ARTICLE VI. CONDITIONS 17
Section 6.01 Conditions of The Underwriter's Obligations 17
ARTICLE VII. INDEMNIFICATION AND CONTRIBUTION 18
Section 7.01 Company's Indemnification of Underwriter 18
Section 7.02 Underwriter's Indemnification of the Company 19
Section 7.03 Notice of Indemnification Claim 20
Section 7.04 Contribution 20
Section 7.05 Notice of Contribution Claim 21
Section 7.06 Reimbursement 21
Section 7.07 Arbitration 22
ARTICLE VIII. TERM AND TERMINATION 22
Section 8.01 Effective Date of this Agreement 22
Section 8.02 Termination Prior to Initial Closing Date 22
Section 8.03 Notice of Termination 23
Section 8.04 Termination After Effective Date 23
ARTICLE IX. MISCELLANEOUS 24
Section 9.01 Survival 24
Section 9.02 Notices 24
Section 9.03 Successors and Assigns; Transfer 24
Section 9.04 Cumulative Remedies 25
Section 9.05 Attorneys' Fees 25
Section 9.06 Entire Agreement 25
Section 9.07 Choice of Law 25
Section 9.08 Confidentiality 25
Section 9.09 Rights to Investor Lists 25
Section 9.10 Waiver: Subsequent Modification 25
Section 9.11 Severability 26
Section 9.12 Joint Preparation 26
Section 9.13 Captions 26
Section 9.14 Counterparts 26
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DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT is entered into as of this _____ day of June,
2004, by and between American Church Mortgage Company, a Minnesota corporation
(the "Company"), and American Investors Group, Inc., a Minnesota corporation, as
underwriter (the "Underwriter").
RECITALS
WHEREAS, the Company proposes to register and publicly offer and sell up to
$23,000,000 aggregate principal amount of Series B Secured Investor Certificates
of the Company (the "Certificates");
WHEREAS, the Company desires to appoint the Underwriter to act as the
Company's exclusive selling agent in connection with the offer, sale and renewal
of the Certificates on a best effort basis, and the Underwriter desires to
accept such appointment, all as provided for by the terms of this Agreement.
NOW, THEREFORE, in consideration of the above and for other good and
valuable consideration, receipt of which is acknowledged, and in consideration
of the mutual promises, covenants, representations and warranties hereinafter
set forth, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01 Defined Terms. Whenever used in this Agreement, the following
terms have the respective meanings set forth below. The definitions of such
terms are applicable to the singular as well as to the plural forms of such
terms.
(a) Advisor. Church Loan Advisors, Inc., or any successor or subsequent
advisor of the Company's business activities.
(b) Agreement. This Distribution Agreement, including any exhibits or
attachments hereto, as originally executed, and as amended or
supplemented from time to time in accordance with the terms hereof.
(c) Certificate Holder. The purchaser of any Certificate or any subsequent
transferee or other holder thereof.
(d) Certificates. Up to $23,000,000 aggregate principal amount of Series B
Secured Investor Certificates of the Company with substantially the
same terms as are described in the Prospectus, up to $3,000,000 of
such amount to be reserved for rollover renewals of the Series A
Secured Investor Certificates previously registered pursuant to the
Company's registration statement on Form S-11 (Reg. No. 333-75863)
declared effective by the Securities and Exchange Commission
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on or about April 30, 2002, which come due during this year, and
which, if renewed, will have maturities ranging from two (2) to three
(3) years, and any additional principal amount of Certificates as may
be registered from time to time pursuant to the Registration
Statement.
(e) Commission or SEC. The Securities and Exchange Commission.
(f) Company. American Church Mortgage Company, or its successors in
interest.
(g) Effective Date. The date and time the Registration Statement is or was
declared effective by the Commission.
(h) Exchange Act. The Securities Exchange Act of 1934, as amended.
(i) Governmental Rule. Any law, rule, regulation, ordinance, order, code,
interpretation, judgment, decree, policy, decision or guideline by any
governmental authority.
(j) Indenture. That certain Indenture dated on or about ________, 2004, by
and between the Company and the Trustee with respect to the
Certificates.
(k) NASD. The National Association of Securities Dealers, Inc.
(l) Offering. The offer and sale of the Certificates in accordance with
the terms and subject to the conditions set forth in the Registration
Statement.
(m) Preliminary Prospectus. Any preliminary prospectus included in the
Registration Statement prior to the time it becomes or became
effective under the Securities Act, including the respective copies
thereof filed with the Commission.
(n) Prospectus. The prospectus included in the Registration Statement at
the time it is or was declared effective by the Commission, except
that if any prospectus provided to the Underwriter by the Company for
use in connection with the offering of the Certificates differs from
the prospectus as filed with the Commission, the term "Prospectus"
shall refer to such differing prospectus from and after the time such
prospectus is first provided to the Underwriter by the Company for
such use, including the respective copies thereof filed with the
Commission.
(o) Registration Statement. That certain Registration Statement on Form
S-11 (File No. 333-________) of the Company with respect to the
Certificates filed with the Securities and Exchange Commission under
the Securities Act of 1933, as amended and declared effective on the
date hereof, including the respective copies thereof filed with the
Commission.
(p) Rules and Regulations. The rules and regulations under the Securities
Act.
(q) Securities Act. The Securities Act of 1933, as amended.
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(r) Trustee. The Xxxxxxx National Bank, or its successors or assigns.
(s) Underwriter. American Investors Group, Inc., a Minnesota corporation,
or its successors in interest.
Section 1.02 Accounting Terms. Unless otherwise specified in this
Agreement, all accounting terms used in this Agreement shall be interpreted, all
accounting determinations under this Agreement shall be made, and all financial
statements required to be delivered by any person pursuant to this Agreement
shall be prepared, in accordance with generally accepted accounting principles
as in effect from time to time applied on a consistent basis. To the extent
generally accepted accounting practices do not apply to certain reports or
accounting practices of the Underwriter, the parties will mutually agree on the
accounting practices and assumptions.
ARTICLE II.
APPOINTMENT OF UNDERWRITER AND RELATED AGREEMENTS
Section 2.01 Appointment; Exclusivity. Subject to the terms and conditions
set forth herein, the Company appoints the Underwriter as its exclusive agent to
sell the Certificates upon the terms and conditions set forth herein. The
Underwriter agrees to use its best efforts as such agent to procure purchasers
for the Certificates until the later of the termination of the Offering or the
sale of all offered Certificates. The Company agrees to direct to the
Underwriter all inquiries it receives with respect to the Certificates.
Section 2.02 Compensation to Underwriter.
(a) Underwriter's Commissions. In consideration of the agreement of the
Underwriter to provide its services of the Underwriter as set forth in
this Agreement, the Company will pay the Underwriter a commission
based on the gross proceeds received on the sale and renewal of each
Certificate, both in accordance with the schedule set forth as Exhibit
A hereto.
(b) Underwriter's Expenses. Whether or not this Agreement becomes
effective or is terminated or cancelled or the sale of the
Certificates hereunder is consummated, and regardless of the reason
for or cause of any such termination, cancellation, or failure to
consummate, the Company will pay or cause to be paid:
(i) all expenses of the Underwriter incurred in connection with the
offer and sale of the Certificates, including, but not limited
to, designing, printing and mailing all offering and advertising
materials; advertisements in newspapers, on the radio, on the
internet and through direct mail; operating a toll-free telephone
number, and assisting the Company with creating a web site,
including any costs of a web developer or other third party
consultants;
(ii) all fees and expenses (including, without limitation, fees and
expenses of the Company's auditors and legal counsel) in
connection with the preparation, printing, filing, and delivery
of the Registration Statement
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(including the financial statements therein and all amendments,
schedules, and exhibits thereto), each Preliminary Prospectus,
the Prospectus, and any amendment thereof or supplement thereto;
(iii)all fees and expenses incurred in connection with the
qualification of the Securities for offer and sale under the
securities or Blue Sky laws of the states and other jurisdictions
which the Underwriter may designate;
(iv) all expenses in connection with the preparation, printing,
filing, and delivery of materials to be sent to Holders;
(v) all fees and expenses of the Trustee i connection with the
Certificates; and
(vi) all costs and expenses incident to the performance of the
Company's obligations hereunder with respect to the Offering that
are not otherwise specifically described herein.
(c) Non-Accountable Expenses. To compensate the Underwriter for its other
expenses incurred in connection with the Offering, the Company agrees
to pay the Underwriter a non-accountable expense allowance of up to
$120,000, payable as follows;
(i) $20,000 upon the sale of $1,000,000 of Certificates; and
(ii) the balance ($100,000) payable ratably based on the principal
amount of Certificates sold thereafter.
Section 2.03 Brokers and Dealers. The Underwriter may, in its sole
discretion and at no additional obligation to the Company, use the services of
other brokers or dealers who are members of the NASD in connection with the
offer and sale of the Certificates. The Underwriter may enter into agreements
with any such broker or dealers to act as sub-agents for the sale of the
Certificates and pay any portion of the Underwriter's compensation hereunder to
such brokers or dealers.
Section 2.04 Underwriter's Unrelated Activities. The Underwriter may sell
other securities in offerings similar to the Offering for other issuers during
the course of the Offering. The Underwriter shall have the right to advertise or
otherwise disclose to unrelated prospective issuers, at its own expense, its
relationship with the Company, the services it provides in connection with the
Certificates and the amount of money that it raised through the Offering.
Section 2.05 Best Efforts; Independent Contractor. Anything in this
Agreement to the contrary notwithstanding, the Underwriter shall have no
obligation to sell any minimum principal amount of Certificates or to purchase
Certificates for its own account, for resale or for any other purpose. All
actions taken by the Underwriter pursuant to this Agreement shall be in the
capacity of an independent contractor, all sales of Certificates conducted by
the Underwriter shall be solely for the account and at the risk of the Company,
and in no event shall the Underwriter have any obligations with regard to or
under the Certificates.
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ARTICLE III.
SERVICES; STANDARD OF CARE
Section 3.01 Services. The services to be provided to the Company by the
Underwriter pursuant to this Agreement shall include the following:
(a) Corporate Finance. The Underwriter shall advise the Company regarding
the structure of the Certificates and provide sample document forms.
Throughout the Offering, the Underwriter shall assist the Company in
determining appropriate Certificate interest rates based on current
market conditions and the Company's capital goals.
(b) Marketing. The Underwriter shall develop and execute a direct response
marketing strategy for the Certificates designed to meet the Company's
capital goals in a timely manner. The Underwriter shall manage the
process of creating, producing and placing any newspaper, radio,
Internet and direct mail advertisements. The Underwriter shall also
oversee designing and printing all marketing materials, in accordance
with applicable SEC and NASD rules and regulations.
(c) Company Logo, Etc. During the term of this Agreement, Company shall
allow the Underwriter to use the Company's logo, corporate colors,
trademarks, tradenames, fonts, and other aspects of corporate identity
in advertisements and marketing materials related to the Certificates.
(d) Securities Issuance; Registrar; Transfer Agent. Upon delivery of each
completed subscription agreement for Certificates to the Underwriter,
the Underwriter shall deliver such subscription agreement to the
Advisor for acceptance or rejection. The Underwriter shall return
funds accompanying each rejected subscription to the person submitting
the subscription. The Underwriter shall pay funds, net of commissions
and expenses, to the Company in connection with accepted subscriptions
as received. Certificates shall be issued by the Trustee on the
Company's behalf in book-entry form only and the Trustee shall deliver
written book entry receipts with respect to all accepted subscription
agreements.
(e) Investor Relations. The Underwriter shall handle all inquiries from
prospective investors, mail investment kits, meet with prospective
investors, process subscription agreements and respond to all written
or telephonic questions by prospective investors relating to the
Certificates.
Section 3.02 Reports to the Company. From time to time as requested by the
Company, the Underwriter shall provide the Company with reports and analysis
regarding the status of the offering, the marketing efforts and the principal
amount of Certificates remaining available for sale under the Registration
Statement.
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ARTICLE IV.
REPRESENTATIONS AND COVENANTS OF THE COMPANY
Section 4.01 Representations, Warranties and Agreements of the Company.
The Company represents and warrants to and agrees with the Underwriter as
follows, which representations and warranties shall be deemed to be made
continuously throughout the term of this Agreement:
(a) The Registration Statement on Form S-11 (File N 333-75836) with
respect to the Certificates, including the Prospectus subject to
completion, has been prepared by the Company in conformity with the
requirements of the Securities Act, and the Rules and Regulations of
the Commission thereunder and has been filed with the Commission under
the Securities Act.
(b) As of the Effective Date, and at all times subsequent thereto until
the termination of the Offering, the Registration Statement and
Prospectus, and all amendments thereof and supplements thereto, will
comply or complied with the provisions and requirements of the
Securities Act and the Rules and Regulations. Neither the Commission
nor any state securities authority has issued any order preventing or
suspending the use of any Preliminary Prospectus or requiring the
recirculation of a Preliminary Prospectus, or issued a stop order with
respect to the offering of the Certificates (if the Registration
Statement has been declared effective), or instituted or, to the
Company's knowledge, threatened the institution of, proceedings for
any of such purposes. When the Registration Statement shall become
effective and when any post-effective amendment thereto shall become
effective, the Registration Statement will not or did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading. When the Registration Statement is or was declared
effective by the Commission and at all times subsequent thereto until
the termination of the offering, the Prospectus (as amended or
supplemented, if the Company shall have filed with the Commission any
amendment thereof or supplement thereto) will not or did not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were
made, not misleading.
(c) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Minnesota,
with full power and authority to own, lease and operate its properties
and conduct its business as described in the Registration Statement
and Prospectus. The Company is duly qualified to do business and is in
good standing in each jurisdiction in which the ownership or lease of
its properties or the conduct of its business requires such
qualification and in which the failure to be qualified or in good
standing would have a material adverse effect on the condition
(financial or otherwise), earnings, operations or business of the
Company, and no proceeding has been instituted in
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any such jurisdiction revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification.
(d) The Company has operated and is operating in material compliance with
all authorizations, licenses, certificates, consents, permits,
approvals and orders of and from all state, federal and other
governmental regulatory officials and bodies necessary to own its
properties and to conduct its business as described in the
Registration Statement and Prospectus, all of which are, to the
Company's knowledge, valid and in full force and effect. The Company
is conducting its business in substantial compliance with all
applicable laws, rules and regulations of the jurisdictions in which
it is conducting business, and the Company is not in material
violation of any applicable law, order, rule, regulation, writ,
injunction, judgment or decree of any court, government or
governmental agency or body, domestic or foreign, having jurisdiction
over the Company or over its properties.
(e) The Company is not in violation of its articles of incorporation or
bylaws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any bond,
debenture, note or other evidence of indebtedness or in any contract,
lease, indenture, mortgage, loan agreement, joint venture or other
agreement or instrument to which it is a party or by which it or its
properties are bound.
(f) The Company has full requisite power and authority to enter into this
Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement on the part of the
Company, enforceable against 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, any
lease, contract, joint venture or other agreement or instrument
to which the Company is a party or by which the Company or its
properties may be bound;
(ii) the articles of incorporation or bylaw of the Company: or
(iii)any applicable law, order, rule, regulation, writ, injunction,
judgment or decree of any court, government or governmental
agency or body, domestic or foreign, having jurisdiction over the
Company or over its properties.
(g) No consent, approval, authorization or order of or qualification with
any court, governmental agency or body, domestic or foreign, having
jurisdiction over the Company or over its properties is required for
the execution and delivery of this Agreement and the consummation by
the Company of the transactions herein contemplated, except such as
may be required under the Securities Act, the
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Exchange Act, or under state or other securities or Blue Sky laws, all
of which requirements have been satisfied.
(h) Except as is otherwise expressly described in the Registration
Statement or Prospectus, there is neither pending nor, to the best of
the Company's knowledge, threatened, any action, suit, claim or
proceeding against the Company or any of its officers or any of its
properties, assets or rights before any court, government or
governmental agency or body, domestic or foreign, having jurisdiction
over the Company or over its officers or properties or otherwise which
(A) might result in any material adverse change in the condition
(financial or otherwise), earnings, operations or business of the
Company or might materially and adversely affect its properties,
assets or rights, or (B) might prevent consummation of the
transactions contemplated hereby.
(i) The Certificates to be sold hereunder by the Company have been duly
authorized for issuance and sale pursuant to this Agreement and, when
issued and delivered against payment therefor in accordance with the
terms of this Agreement, will be duly and validly issued and fully
paid and non-assessable and will be sold free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest; and
no preemptive right, co-sale right, registration right, right of first
refusal or other similar right exists with respect to any of the
Certificates to be sold hereunder by the Company or the issuance and
sale thereof. The Indenture has been duly authorized, executed and
delivered by the Company and the Trustee and is a valid and binding
agreement on the part of the Company, enforceable against the Company
in accordance with its terms. The Certificates will comply as to form
with all applicable laws.
(j) Xxxxxx, Heutmaker, Xxxxxx and Company, P.L.L.P. which has expressed
its opinion with respect to certain of the financial statements filed
as part of the Registration Statement, is an independent accounting
firm within the meaning of the Securities Act and the Rules and
Regulations. The financial statements of the Company set forth in the
Registration Statement and Prospectus comply in all material respects
with the requirements of the Securities Act and fairly present the
financial position and the results of operations of the Company at the
respective dates and for the respective periods to which they apply in
accordance with generally accepted accounting principles 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 selected and summary financial
included in the Registration Statement present fairly the information
shown therein and have been compiled on a basis consistent with the
audited financial statements presented therein. No other financial
statements or schedules are required by the Securities Act or the
Rules and Regulations to be included in the Registration Statement.
(k) Subsequent to the respective dates as of which information is given in
the Registration Statement and Prospectus, except as is otherwise
disclosed in the Registration Statement or Prospectus, there has not
been:
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(i) any change in the capital stock or lon term debt (including any
capitalized lease obligation) or material increase in the
short-term debt of the Company;
(ii) any material adverse change, or any development involving a
material adverse change, in or affecting the condition (financial
or otherwise), earnings, operations, business or business
prospects, management, financial position, stockholders' equity,
results of operations or general condition of the Company;
(iii)any transaction entered into by the Company that is material to
the Company;
(iv) any obligation, direct or contingent, incurred by the Company,
except obligations incurred in the ordinary course of business
that, in the aggregate, are not material; or
(v) any loss or damage (whether or not insured) to the property of
the Company which reasonably could be expected to have a material
adverse effect on the condition (financial or otherwise),
earnings, operations or business of the Company.
(l) Except as is otherwise expressly disclosed in the Registration
Statement or Prospectus:
(i) the Company has good and marketable title to all of the property,
real and personal, and assets described in the Registration
Statement or Prospectus as being owned by it, free and clear of
any and all pledges, liens, security interests, encumbrances,
equities, charges or claims, other than such as would not have a
material adverse effect on the condition (financial or
otherwise), earnings, operations or business of the Company;
(ii) the agreements to which the Company is a party described in the
Registration Statement and Prospectus are valid agreements,
enforceable by the Company except as the enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting
creditors' rights generally or by judicial limitations on the
right of specific performance; and
(iii)the Company has valid and enforceable leases for all properties
described in the Registration Statement and Prospectus as leased
by it, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights
generally or by judicial limitations on the right of specific
performance. Except as set forth in the Registration Statement
and Prospectus, the Company owns or leases all such properties as
are necessary to its operations as now conducted.
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(m) The Company was organized and has been operated to qualify as a real
estate investment trust under Section 856 of the Internal Revenue Code
and, to the knowledge of the Company, no event has occurred that would
cause the Company to fail to so qualify.
(n) The Company has timely filed (or has timely requested an extension of
time to file) all necessary federal and state income and franchise tax
returns and has paid all taxes shown thereon as due; there is no tax
deficiency that has been or, to the best of the Company's knowledge,
could be asserted against the Company that might have a material
adverse effect on the condition (financial or otherwise), earnings,
operations, business or properties of the Company, and all tax
liabilities are adequately provided for in the books of the Company.
(o) The Company owns, or possesses adequate rights to use, all patents,
patent rights, inventions, trade secrets, know-how, technology,
service marks, trade names, copyrights, trademarks and proprietary
rights or information which are necessary for the conduct of its
present or intended business as described in the Registration
Statement or Prospectus. The expiration of any patents, patent rights,
trade secrets, trademarks, service marks, trade names or copyrights
would not have a material adverse effect on the condition (financial
or otherwise), earnings, operations or business of the Company and the
Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with the asserted rights of others with
respect to any patent, patent rights, inventions, trade secrets,
know-how, technology, trademarks, service marks, trade names or
copyrights that, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, might have a material adverse
effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company.
(p) The Company has not taken and will not take, directly or indirectly,
any action (and does not know of any action by its directors,
officers, members or others) which has constituted or is designed to,
or which might reasonably be expected to, cause or result in
stabilization or manipulation, as defined in the Exchange Act or
otherwise, of the price of any security of the Company to facilitate
the sale or resale of the Certificates. The Company has not
distributed and will not distribute prior to the completion of the
distribution of the Certificates, any offering material in connection
with the offering and sale of the Certificates other than any
Preliminary Prospectus, the Prospectus, the Registration Statement and
other materials, if any, permitted by the Securities Act.
(q) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that transactions are
executed in accordance with management's general or specific
authorizations and transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles. To maintain accountability for assets,
access to assets is permitted only in accordance with management's
general or specific authorization, and the recorded accountability for
assets is compared with
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existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(r) Except as set forth in the Registration Statement and Prospectus:
(i) the Company and each entity that owns or possesses real property
in which the Company holds a security interest is in material
compliance with all material rules, laws and regulations relating
to the use, treatment, storage and disposal of toxic substances
and protection of health or the environment (the "Environmental
Laws") which are applicable to its business;
(ii) the Company has received no notice fro any governmental authority
or third party of an asserted claim under Environmental Laws,
which claim is required to be disclosed in the Registration
Statement and the Prospectus;
(iii)the Company will not be required to make any future material
capital expenditures to comply with Environmental Laws: and
(iv) no property which is owned, leased or occupied by the Company or
in which the Company holds a security interest has been
designated as a Superfund site pursuant to the Comprehensive
Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. ss. 9601, et seq.), or otherwise designated as a
contaminated site under applicable state or local law.
(s) No person or entity other than the Underwriter is entitled to any
compensation or other payments from either the Company or the
Underwriter, as a finder, underwriter or agent in connection with the
Offering or any other proposed transaction between the Company and the
Underwriter. The Company agrees to promptly notify the Underwriter of
any such relationships, including consulting or prior agency
agreements entitling other parties to compensation for the transaction
described herein and agrees to provide the Underwriter with a copy of
such agreements.
(t) Any certificate signed by any officer of the Company and delivered to
the Underwriter or to the Underwriter's Counsel shall be deemed a
representation and warranty by the Company to the Underwriter as to
the matters covered thereby.
Section 4.02 Covenants of the Company. The Company hereby covenants and
agrees with the Underwriter as follows:
(a) If the Registration Statement has not already been declared effective
by the Commission, the Company will use its best efforts to cause the
Registration Statement and any post-effective amendments thereto to
become effective as promptly as possible. The Company will notify the
Underwriter promptly of the time when the Registration Statement or
any post-effective amendment to the Registration Statement has become
effective or any supplement to the Prospectus
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has been filed and of any request by the Commission for any amendment
or supplement to the Registration Statement or Prospectus or
additional information. The Company will prepare and file with the
Commission, promptly upon the Underwriter's request, any amendments or
supplements to the Registration Statement or Prospectus that, in the
Underwriter's opinion, may be necessary or advisable in connection
with the distribution of the Certificates by the Underwriter. The
Company will not file any amendment or supplement to the Registration
Statement or Prospectus to which the Underwriter shall reasonably
object by notice to the Company after having been furnished a copy a
reasonable time prior to the filing.
(b) The Company will advise the Underwriter, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement, of the suspension of the qualification of the
Certificates for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceeding for any such purpose. The
Company will promptly use its best efforts to prevent the issuance of
any stop order or to obtain its withdrawal if such a stop order should
be issued.
(c) Within the time during which a prospectus relating to the Certificates
is required to be delivered under the Securities Act, the Company will
comply as far as it is able with all requirements imposed upon it by
the Securities Act, as now and hereafter amended, and by the Rules and
Regulations, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Certificates as
contemplated by the provisions hereof and the Prospectus. If, during
the longer of such period or the term of this Agreement, any event or
change occurs that could reasonably be considered material to the
Offering or that causes any of the representations and warranties of
the Company contained herein to be untrue, or as a result of which the
Prospectus would include an untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in the light of the circumstances then existing, not
misleading, or if, during such period, it is necessary to amend the
Registration Statement or supplement the Prospectus to comply with the
Securities Act, the Company will promptly notify the Underwriter, and
will amend the Registration Statement or supplement the Prospectus (at
the expense of the Company) so as to correct such statement or
omission or effect such compliance.
(d) The Company will use its best efforts to arrang for the qualification
of the Certificates for offering and sale under the securities laws of
such jurisdictions as the Underwriter may designate and to continue
such qualifications in effect for so long as may be required for
purposes of the distribution of the Certificates. In each jurisdiction
in which the Certificates shall have been qualified as herein
provided, the Company will make and file such statements and reports
in each year as are or may be reasonably required by the laws of such
jurisdiction.
(e) The Company will furnish to the Underwriter copies of the Registration
Statement, each Preliminary Prospectus, the Prospectus, and all
amendments and
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supplements to such documents, in each case as soon as available and
in such quantities as the Underwriter may from time to time reasonably
request.
(f) At all times during the term of this Agreement, the Company shall
provide all information reasonably requested by the Underwriter in a
timely manner and shall use its best efforts to insure that such
information is complete and accurate.
(g) The Company will apply the net proceeds from th sale of the
Certificates substantially in the manner set forth under the caption
"Use of Proceeds" in the Prospectus.
ARTICLE V.
REPRESENTATIONS AND COVENANTS OF UNDERWRITER; CONDITIONS
Section 5.01 Representations and Warranties of Underwriter. The Underwriter
hereby represents and warrants to the Company as follows, which representations
and warranties shall be deemed to be made continuously throughout the term of
this Agreement.
(a) The Underwriter (i) has been duly organized, is validly existing and
in good standing as a Delaware corporation, (ii) has qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction where the character of its properties or the nature of
its activities makes such qualification necessary, and (iii) has full
power, authority and legal right to own its property, to carry on its
business as presently conducted, and to enter into and perform its
obligations under this Agreement.
(b) The execution and delivery by the Underwriter o this Agreement are
within the power of the Underwriter and have been duly authorized by
all necessary corporate action on the part of the Underwriter. Neither
the execution and delivery of this Agreement nor the consummation of
the transactions herein contemplated, nor compliance with the
provisions hereof, will conflict with or result in a breach of, or
constitute a default under, any of the provisions of any Governmental
Rule binding on the Underwriter, the charter or by-laws of the
Underwriter, or any of the provisions of any indenture, mortgage,
contract or other instrument to which the Underwriter is a party or by
which it is bound; nor will they result in the creation or imposition
of any lien, charge or encumbrance upon any of the Underwriter's
property pursuant to the terms of any indenture, mortgage, contract or
other instrument.
(c) The Underwriter has all governmental consents, licenses, approvals and
authorizations, registrations and declarations which are necessary for
the execution, delivery, performance, validity and enforceability of
the Underwriter's obligations under this Agreement.
(d) This Agreement has been duly executed and delivered by the Underwriter
and, constitutes a legal, valid and binding instrument enforceable
against the Underwriter in accordance with its terms.
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(e) There are no actions, suits or proceedings pending or, to the
knowledge of the Underwriter, threatened against or affecting the
Underwriter, before or by any court, administrative agency, arbitrator
or governmental body with respect to any of the transactions
contemplated by this Agreement, or which will, if determined adversely
to the Underwriter, materially and adversely affect it or its
business, assets, operations or condition, financial or otherwise, or
adversely affect the Underwriter's ability to perform its obligations
under this Agreement. The Underwriter is not in default with respect
to any order of any court, administrative agency, arbitrator or
governmental body so as to materially and adversely affect the
transactions contemplated by this Agreement.
Section 5.02 Covenants of Underwriter. The Underwriter hereby covenants to
the Company as follows, which covenants shall be deemed in force unless and
until this Agreement is terminated as provided herein:
(a) The Underwriter shall keep in full effect its existence, rights and
franchises as a corporation under the laws of the State of Delaware
and retain and preserve its right to do business as a foreign
corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of the
Certificates and this Agreement and shall hold all licenses in all
jurisdictions which are necessary to perform its obligations under
this Agreement.
(b) The Underwriter shall punctually perform and observe all of its
obligations and agreements contained in this Agreement.
(c) Except as provided in this Agreement, the Underwriter shall not take
any action, or permit any action to be taken by others, which would
excuse any person from any of its covenants or obligations under any
of the Certificates, or under any other instrument related to the
Certificates, or which would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any of the Securities or any such instrument or any
right in favor of the Company in any of the Certificates or such
instrument, without the written consent of the Company.
(d) The Underwriter shall not assign this Agreement or any of its rights,
powers, duties or obligations hereunder without the express prior
written consent of the Company, which shall not be unreasonably
withheld; provided that the Underwriter may assign its rights, powers,
duties or obligations hereunder to an affiliate of the Underwriter or
pursuant to a sale of all or substantially all of the Underwriter's
assets without the prior written consent of the Company.
(e) The Underwriter shall take such additional action as is reasonably
requested by the Company in order to carry out the purposes of this
Agreement.
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ARTICLE VI.
CONDITIONS
Section 6.01 Conditions of the Underwriter's Obligations. The obligation of
the Underwriter to sell the Certificates on a best efforts basis as provided
herein shall be subject to the accuracy of the representations and warranties of
the Company, to the performance by the Company of its obligations hereunder, and
to the satisfaction of the following additional conditions:
(a) The Registration Statement shall have become effective not later than
4:00 p.m. Minneapolis, Minnesota time on the date of this Agreement,
or such later date or time as shall be consented to in writing by the
Underwriter (the "Effective Date"), and no stop order suspending the
effectiveness thereof shall have been issued and no proceedings for
that purpose shall have been initiated or, to the knowledge of the
Company, or the Underwriter, threatened by the Commission or any state
securities commission or similar regulatory body. Any request of the
Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to the satisfaction of the Underwriter and the
Underwriter's counsel.
(b) The Underwriter shall not have advised the Company that the
Registration Statement or Prospectus, or any amendment thereof or
supplement thereto, contains any untrue statement of a fact which is
material or omits to state a fact which is material and is required to
be stated therein or is necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
(c) Subsequent to the Effective Date and prior to termination of the
offering, there shall not have occurred any change, or any development
involving a prospective change, which materially and adversely affects
the Company's condition (financial or otherwise), earnings,
operations, properties, business or business prospects from that set
forth in the Registration Statement or Prospectus, and which, in the
Underwriter's sole judgment, is material and adverse and that makes
it, in the Underwriter's sole judgment, impracticable or inadvisable
to proceed with the offering of the Certificates as contemplated by
the Prospectus and this Agreement.
(d) All corporate proceedings and other legal matters in connection with
this Agreement, the form of Registration Statement and the Prospectus,
and the registration, authorization, issue, sale and delivery of the
Certificates shall have been reasonably satisfactory to the
Underwriter's counsel, and the Underwriter's counsel shall have been
furnished with such papers and information as it may reasonably have
requested to enable it to pass upon the matters referred to in this
Section.
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(e) At the time of execution of this Agreement, the Underwriter shall have
received from Boulay, Heutmaker, Xxxxxx and Company, P.L.L.P. a letter
dated the date of such execution, in form and substance satisfactory
to the Underwriter, to the effect that they are independent
accountants with respect to the Company within the meaning of the
Securities Act and the applicable published instructions, and the
Rules and Regulations thereunder, and further stating in effect that
in their opinion, the audited financial statements included in the
Registration Statement and Prospectus covered by their report included
therein comply as to form in all material respects with the applicable
requirements of the Securities Act, the published instructions and the
Rule and Regulations.
(f) Xxxxxxxx & Xxxxxxxxx, P.A. shall have delivered to the Underwriter a
Blue Sky Memorandum reasonably satisfactory to the Underwriter
confirming that all requisite actions for the offer and sale of the
Certificates in all jurisdictions requested by the Underwriter have
been taken.
(g) The Company shall have furnished to the Underwriter such additional
certificates, documents and evidence as the Underwriter shall
reasonably request.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to the Underwriter and the Underwriter's counsel. All statements contained in
any certificate, letter or other document delivered pursuant hereto by, or on
behalf of, the Company shall be deemed to constitute representations and
warranties of the Company.
The Underwriter may waive in writing the performance of any one or more of
the conditions specified in this Section or extend the time for their
performance.
If any of the conditions specified in this Section shall not have been
fulfilled when and as required by this Agreement to be fulfilled and if the
fulfillment of said condition has not been waived by the Underwriter, this
Agreement and all obligations of the Underwriter hereunder may be canceled at,
or at any time prior to, the Effective Date by the Underwriter. Any such
cancellation shall be without liability of the Underwriter to the Company and
shall not relieve the Company of its obligations under Article VII hereof.
Notice of such cancellation shall be given to the Company as specified in
Section 8.03.
ARTICLE VII.
INDEMNIFICATION AND CONTRIBUTION
Section 7.01 Company's Indemnification of Underwriter. The Company hereby
agrees to indemnify and hold harmless the Underwriter, and each person, if any,
who controls the Underwriter within the meaning of Section 15 of the Securities
Act, against any losses, claims, damages or liabilities, joint or several, to
which the Underwriter or each such controlling person may become subject under
the Securities Act, the Exchange Act, common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of, or are based upon, (i) any breach of any representation, warranty, agreement
or covenant of the Company contained in this Agreement; (ii) any untrue
statement or alleged untrue statement of a
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material fact contained in the Registration Statement or any amendment thereof
or supplement thereto, or the omission or alleged omission to state in the
Registration Statement or any amendment thereof or supplement thereto a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; (iii) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, if used prior to the Effective Date of the Registration Statement,
or in the Prospectus (as amended or as supplemented), or the omission or alleged
omission to state therein a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; or (iv) any untrue statement or alleged untrue statement of a
material fact contained in any application or other statement executed by the
Company or based upon written information furnished by the Company filed in any
jurisdiction in order to qualify the Certificates under, or exempt the
Certificates or the sale thereof from qualification under, the securities laws
of such jurisdiction, or the omission or alleged omission to state in such
application or statement a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company will reimburse the Underwriter
and each such controlling person for any legal or other expenses incurred by the
Underwriter or controlling person in connection with investigating or defending
against any such loss, claim, damage, liability or action. However, the Company
will not be liable in any such case to the extent that 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 reliance upon
and in conformity with written information furnished to the Company by the
Underwriter specifically for use in the preparation of the Registration
Statement or any such post-effective amendment thereof, any such Preliminary
Prospectus, or the Prospectus, or any such amendment thereof or supplement
thereto, or in any application or other statement executed by the Company or the
Underwriter filed in any jurisdiction in order to qualify the Certificates
under, or exempt the Certificates or the sale thereof from qualification under,
the securities laws of such jurisdiction. This indemnity agreement is in
addition to any liability which the Company may otherwise have.
Section 7.02 Underwriter's Indemnification of the Company. The Underwriter
agrees to indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the Registration Statement, and each person who
controls the Company within the meaning of Section 15 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, the Exchange Act, common law or otherwise, insofar as such
losses,claims, damages or liabilities (or actions in respect thereof) arise out
of, or are based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof
or supplement thereto, or the omission or alleged omission to state in the
Registration Statement or any amendment thereof or supplement thereto, a
material fact required to be stated therein or necessary to make the statements
therein not misleading; (ii) any untrue statement or alleged untrue statement of
a material fact contained in any Preliminary Prospectus, if used prior to the
Effective Date of the Registration Statement, or in the Prospectus (as amended
or as supplemented), or the omission or alleged omission to state therein a
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; or (iii) any untrue statement or alleged untrue statement of a
material fact contained in any application or other statement executed by the
Company or by the Underwriter and filed in any
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jurisdiction in order to qualify the Certificates under, or exempt the
Certificates or the sale thereof from qualification under, the securities laws
of such jurisdiction, or the omission or alleged omission to state in such
application or statement a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, 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, or on behalf of, the Underwriter
specifically for use in the preparation of the Registration Statement or any
such post-effective amendment thereof, any such Preliminary Prospectus, or the
Prospectus or any such amendment thereof or supplement thereto, or in any
application or other statement executed by the Company or by the Underwriter and
filed in any jurisdiction. The Underwriter 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 against any
such loss, claim, damage, liability or action. This indemnity agreement is in
addition to any liability which the Underwriter may otherwise have.
Section 7.03 Notice of Indemnification Claim. Promptly after receipt by an
indemnified party under Section 7.01 or 7.02 of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against any indemnifying party under Section 7.01 or 7.02, notify in
writing the indemnifying party of the commencement thereof. Failure to so notify
the indemnifying party will relieve it from any liability under Section 7.01 or
7.02 as to the particular item for which indemnification is then being sought,
but not from any other liability which it may have to any indemnified party. In
case any such action is brought against any indemnified party, and the
indemnified party notifies an indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, to assume the defense thereof, with counsel who shall
be reasonably satisfactory to such indemnified party. After notice from the
indemnifying party to such indemnified party of the indemnifying party's
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under Section 7.01 or 7.02 for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided,
however, that 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 or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select as separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties, in which event the fees and expenses of such separate counsel shall be
borne by the indemnifying party. Any such indemnifying party shall not be liable
to any such indemnified party on account of any settlement of any claim or
action effected without the consent of such indemnifying party.
Section 7.04 Contribution. In order to provide for just and equitable
contribution in any action in which the Underwriter or the Company (or any
person who controls the Underwriter or the Company within the meaning of Section
15 of the Securities Act) makes claim for indemnification pursuant to Section
7.01 or 7.02 hereof, but such indemnification is unavailable or insufficient to
hold harmless and indemnify a party under Section 7.01 or 7.02, as applicable,
then each indemnifying party shall contribute to the amount paid or payable by
such
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indemnified party as a result of the losses, claims, damages or liabilities
referred to in Section 7.01 or 7.02, as applicable, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriter on the other from the offering of the Securities
hereunder or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in such clause (i) but also the relative
fault of the Company on the one hand and the Underwriter on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriter on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Securities (before deducting
expenses) received by the Company bear to the total commissions received by the
Underwriter. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriter agree that it
would not be just and equitable if contributions pursuant to this Section 7.04
were to be determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to in the first sentence of this Section 7.04. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this Section 7.04 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending against any action or claim
which is the subject of this Section 7.04. Notwithstanding the provisions of
this Section, the Underwriter shall not be required to contribute any amount in
excess of the amount by which the total price at which the Securities
distributed to the public were offered to the public exceeds the amount of any
damages that the Underwriter has 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 meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation.
Section 7.05 Notice of Contribution Claim. Promptly after receipt by a
party to this Agreement of notice of the commencement of any action, suit or
proceeding, such person will, if a claim for contribution in respect thereof is
to be made against another party (the "Contributing Party"), notify the
Contributing Party of the commencement thereof, but the failure to so notify the
Contributing Party will not relieve the Contributing Party from any liability
which it may have to any party other than under Section 7.04. Any notice given
pursuant to Section 7.03 hereof shall be deemed to be like notice under this
Section 7.05. In case any such action, suit or proceeding is brought against any
party, and such person notifies a Contributing Party of the commencement
thereof, the Contributing Party will be entitled to participate therein with the
notifying party and any other Contributing Party similarly notified.
Section 7.06 Reimbursement. In addition to its other obligations under
Section 7.01 and 7.04 hereof, the Company agrees that, as an interim measure
during the pendency of any claim, action, investigation, inquiry or other
proceeding described in Section 7.01, it will reimburse the Underwriter on a
monthly basis for all legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other
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proceeding, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Company's obligation to reimburse the
Underwriter for such expenses and the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Underwriter shall promptly return such payment to the Company.
Section 7.07 Arbitration. It is agreed that any controversy rising out of
the operation of the interim reimbursement arrangements set forth in Section
7.06 hereof, including the amounts of any requested reimbursement payments and
the method of determining such amounts, shall be settled by arbitration
conducted pursuant to the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for arbitration or
a written notice of intention to arbitrate, therein electing the arbitration
tribunal. If the party demanding arbitration does not make such designation of
an arbitration tribunal in such demand or notice, then the party responding to
said demand or notice is authorized to do so. Any such arbitration will be
limited to the operation of the interim reimbursement provisions contained in
Section 7.06 hereof and will not resolve the ultimate propriety or
enforceability of the obligation to indemnify for expenses which is created by
the provisions of Section 7.01 and 7.02 hereof or the obligation to contribute
to expenses which is created by the provisions of Section 7.04 hereof.
ARTICLE VIII.
TERM AND TERMINATION
Section 8.01 Effective Date of this Agreement. This Agreement shall become
effective on the Effective Date immediately after the time at which the
Registration Statement shall become effective under the Securities Act.
Section 8.02 Termination Prior to Effective Date. This Agreement may be
terminated by the Underwriter, at its option, by giving notice to the Company,
if (i) the Company shall have failed, refused, or been unable, at or prior to
the Effective Date, to perform any agreement on its part to be performed
hereunder; (ii) any other condition of the Underwriter's obligations hereunder
is not fulfilled or waived by the Underwriter; (iii) a banking moratorium shall
have been declared by federal, New York or Minnesota authorities; (iv) there
shall have been such a serious, unusual and material change in general economic,
monetary, political or
financial conditions, or the effect of international conditions on the financial
markets in the United States shall be such as, in the judgment of the
Underwriter, makes it inadvisable to proceed with the delivery of the
Certificates; (v) the enactment, publication, decree or other promulgation of
any federal or state statute, regulation, rule or order of any court or other
governmental authority which, in the judgment of the Underwriter, materially and
adversely affects or will materially and adversely affect the business or
operations of the Company; or (vi) there shall be a material outbreak of
hostilities or material escalation and deterioration in the political and
military situation between the United States and any foreign power, or a formal
declaration of war by the United States of America shall have occurred. Any such
termination shall be without liability of any party to any other party, except
as provided in Sections 7.01, 7.02 and 7.04 hereof; provided, however, that the
Company shall remain obligated
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to pay costs and expenses of the Company and the Agent (but only to the extent
of actual accountable out-of-pocket expenses) to the extent provided in Section
2.02 hereof.
Section 8.03 Notice of Termination. If the Underwriter elects to prevent
this Agreement from becoming effective or to terminate this Agreement as
provided in Section 8.02, it shall notify the Company and the Company's counsel
promptly by telephone or transmitted by any standard form of telecommunication,
confirmed by letter sent to the address specified in Section 9.02 hereof. If the
Company shall elect to prevent this Agreement from becoming effective, it shall
notify the Underwriter promptly by telephone or transmitted by any standard form
of telecommunication, confirmed by letter sent to the addresses specified in
Section 9.02 hereof.
Section 8.04 Termination After Effective Date. The Company or the
Underwriter may terminate this Agreement at any time subsequent to the Effective
Date as provided below, and in such case, the Underwriter will be paid fees and
commissions accrued up to the date of such termination plus its expenses accrued
as of such date within thirty (30) days of such termination:
(a) The Company will have the ability to terminate this Agreement by
notice to the Underwriter upon the occurrence of any of the following:
(i) any of the circumstances described in clauses (iii) through (vi)
of Section 8.02;
(ii) the Company has given the Underwriter notice of the Underwriter's
default in any material term of this Agreement, or material non-
compliance with any representation or warranty of the Underwriter
contained herein, and such default or non-compliance is not cured
within 30 days of such notice; or
(iii) termination of the Offering by the Company.
(b) The Underwriter will have the ability to terminate this Agreement by
notice to the Company upon the occurrence of any of the following:
(i) any of the circumstances described in clauses (iii) through (vi) of
Section 8.02;
(ii) the Underwriter has given the Company notice of the Company's default
in any material term of this Agreement, or material non-compliance
with any representation or warranty of the Underwriter contained
herein, and such default or non-compliance is not cured within thirty
(30) days of such notice; or
(iii) termination of the Offering by the Company.
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ARTICLE IX.
MISCELLANEOUS
Section 9.01 Survival. The respective indemnity and contribution agreements
of the Company and the Underwriter contained in the representations, warranties,
covenants, and agreements of the Company set forth in Article IV hereof, shall
remain operative and in full force and effect, regardless of any investigation
made by, or on behalf of, the Underwriter, the Company, any of its officers and
directors, or any controlling person referred to in Article VII and shall
survive the sale of the Certificates. The aforesaid indemnity and contribution
agreements shall also survive any termination or cancellation of this Agreement.
Any successor of any party or of any such controlling person, or any legal
representative of such controlling person, as the case may be, shall be entitled
to the benefit of the respective indemnity and contribution agreements.
Section 9.02 Notices. All notices or communications hereunder, except as
herein otherwise specifically provided, shall be in writing and shall be mailed,
delivered or transmitted by any standard form of telecommunication, as follows:
If to the Underwriter, to: American Investors Group, Inc.
00000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Tel. (000) 000-0000 x 000
If to the Company, to: American Church Mortgage Company
00000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Tel. (000) 000-0000 x 000
In either case
with a copy to: Winthrop & Xxxxxxxxx, P.A.
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Tel. (000) 000-0000
Section 9.03 Successors and Assigns; Transfer. This Agreement shall inure
to the benefit of and be binding upon the Underwriter and the Company and their
respective successors and assigns, and the officers, directors and controlling
persons referred to in Article VII. Nothing expressed in this Agreement is
intended or shall be construed to give any person or corporation, other than the
parties hereto, their respective successors and assigns, and the controlling
persons, officers and directors referred to in Article VII, any legal or
equitable right, remedy or claim under, or in respect of, this Agreement or any
provision herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole
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and exclusive benefit of the parties hereto and their respective executors,
administrators, successors, assigns and such controlling persons, officers and
directors, and for the benefit of no other person or corporation. No purchaser
of any Certificates shall be construed a successor, assign or third party
beneficiary of this Agreement merely by reason of such purchase. Except as
provided in Section 5.02(d), neither party may assign its rights and obligations
under this Agreement without the written consent of the other party.
Section 9.04 Cumulative Remedies. Unless otherwise expressly provided
herein, the remedies of the parties provided for herein shall be cumulative and
concurrent, and may be pursued singularly, successively or together, at the sole
discretion of the party for whose benefit such remedy is provided, and may be
exercised as often as occasion therefor shall arise
Section 9.05 Attorneys' Fees. In the event of any action to enforce or
interpret this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees and costs, whether or not such action proceeds to
judgment.
Section 9.06 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement constitutes the entire agreement of the parties hereto
with respect to the matters addressed herein and supersedes all prior or
contemporaneous contracts, promises, representations, warranties and statements,
whether written or oral, with respect to such matters.
Section 9.07 Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota, without regard
to conflict of law principles.
Section 9.08 Confidentiality. The Company agrees to keep confidential all
non-public information concerning the marketing, selling and administration of
the Certificates, except as disclosure may be required by law. The Underwriter
agrees to keep confidential all non-public information supplied to it by the
Company, including without limitation, all non-public information obtained
during any due diligence investigation of the Company.
Section 9.09 Rights to Investor Lists. The Offering will produce a list of
investors that purchase Certificates, a list of prospects that respond to
advertisements but do not purchase any Certificates and a list of former
investors whose Certificates have been repaid by the Company. Both the Company
and the Underwriter shall be able to use these lists for their own business
purposes as long as doing so does not interfere with the marketing, sale or
administration of the Certificates.
Section 9.10 Waiver: Subsequent Modification. Except as expressly provided
herein, no delay or omission by any party in insisting upon the strict
observance or performance of any provision of this Agreement, or in exercising
any right or remedy, shall be construed as a waiver or relinquishment of such
provision, nor shall it impair such right or remedy, and no waiver by any party
or any failure or refusal of the other party to comply with its obligations
under this Agreement shall be deemed a waiver of any other or subsequent failure
or refusal to so comply by such other party. No waiver or modification of the
terms hereof shall be valid unless in writing and signed by the party to be
charged, and then only to the extent therein set forth.
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Section 9.11 Severability. If any term or provision of this Agreement or
application thereof to any person or circumstance shall, to any extent, be found
by a court of competent jurisdiction to be invalid or unenforceable, the
remainder of this Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term or provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.
Section 9.12 Joint Preparation. The preparation of this Agreement has been
a joint effort of the parties and the resulting document shall not, solely as a
matter of judicial construction, be construed more severely against one of the
parties than the other.
Section 9.13 Captions. The title of this Agreement and the headings of the
various articles, section and subsections have been inserted only for the
purpose of convenience, are not part of this Agreement and shall not be deemed
in any manner to modify, explain, expand or restrict any of the provisions of
this Agreement.
Section 9.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
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IN WITNESS WHEREOF, this Distribution Agreement is hereby entered into by
the undersigned parties as of the date first set forth above.
THE COMPANY: AMERICAN CHURCH MORTGAGE COMPANY
By: /s/ Xxxxxx X. Xxxxx, President
--------------------------------
Xxxxxx X. Xxxxx, President
THE UNDERWRITER: AMERICAN INVESTORS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxx, President
--------------------------------
Xxxxxx X. Xxxxx, President
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EXHIBIT A
COMPENSATION TO THE UNDERWRITER
Compensation for Sale of Certificates: The Company shall pay the Underwriter a
commission and an underwriter's management fee upon each sale of a Certificate,
and a commission upon each renewal of a Certificate, based on the principal
amount of the Certificates sold or renewed in the Offering as follows:
(a) upon an original issuance, the commission shall be 3% plus an
additional 1% underwriter's management fee on the sale; and
(b) upon a renewal, the commission shall be 1.5% ; no underwriter's
management fee shall be paid upon a renewal.
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