Exhibit 1.1
FORM OF GREAT LAKES CAPITAL ACCEPTANCE, LLC SELECTED DEALER AGREEMENT
1,000,000 UNITS OF 8.375% SERIES A CUMULATIVE REDEEMABLE PREFERRED MEMBERSHIP
INTERESTS
September __, 2003
Ladies/Gentlemen:
Great Lakes Capital Acceptance, LLC is an Illinois limited liability
company (the "Company") formed on March 22, 2000. The Company is governed by the
Articles of Organization (the "Articles") and its Amended and Restated Operating
Agreement (the "Operating Agreement") each in the form included as Exhibits to
the Registration Statement described in Section 1(a) hereof (such Articles being
hereinafter referred to as the "Organizational Documents"). Unless otherwise
defined, capitalized terms used herein shall have the same meaning as in the
Registration Statement on Form SB-2.
The Company is offering on a "best efforts" basis a minimum of 40,000
units ($1,000,000) and a maximum of 1,000,000 units ($25,000,000) of its 8.375%
Series A Cumulative Redeemable Preferred Membership Interests (the "Preferred
Units") for a purchase price of $25.00 per Preferred Unit upon the terms and
conditions set forth in the Prospectus, as described in Section 1(a) hereof. The
minimum initial investment is $2,500 (100 Units). The subscribers, each of whom
will be required to enter into a subscription agreement substantially similar to
the form of Subscription Agreement (the "Subscription Agreement") attached as
Exhibit C to the Prospectus, will, upon acceptance of their subscriptions by and
in the discretion of the Company, become preferred members of the Company (the
"Preferred Members").
1. REPRESENTATION AND WARRANTIES OF THE COMPANY. The Company hereby
represents, warrants and agrees with you that:
(a) REGISTRATION STATEMENT AND PROSPECTUS. A registration statement
(File No. ___________) on Form SB-2 with respect to an aggregate of 1,000,000
Preferred Units, has been prepared by the Company pursuant to the Securities Act
of 1933, as amended (the "Act"), and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder and has been filed with the Commission under the Act; one or more
amendments to such registration statement have been or may be so prepared and
filed. As used in this Agreement, the term "Registration Statement" means such
registration statement in the form in which it becomes effective, the term
"Effective Date" means the date upon which the Registration Statement is or was
first declared effective by the Commission and the term "Prospectus" means the
prospectus in the form constituting a part of the Registration Statement as well
as in the form first filed with the Commission pursuant to its Rule 424 after
the Registration Statement becomes effective. The Commission has not issued any
stop order suspending the effectiveness of the Registration
Statement and no proceedings for that purpose have been instituted or are
pending before or threatened by the Commission under the Act.
(b) COMPLIANCE WITH THE ACT. From the time the Registration
Statement becomes effective and at all times subsequent thereto up to and
including the Termination Date (as defined in Section 2(c) hereof):
(i) the Registration Statement, the Prospectus and any
amendments or supplements thereto will contain all statements which are required
to be stated therein by the Act and the Rules and Regulations and will comply in
all material respects with the Act and the Rules and Regulations; and
(ii) neither the Registration Statement nor the Prospectus
nor any amendment or supplement thereto will at any such time 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, in light of the
circumstances under which they were made, not misleading.
(c) NO SUBSEQUENT MATERIAL EVENTS. Subsequent to the respective
dates as of which information is given in the Registration Statement and
Prospectus and prior to the Termination Date, except as contemplated in the
Prospectus or as disclosed in a supplement or amendment thereto or in the
periodic financial statements of the Company, the Company has not and will not
have:
(i) incurred any material liabilities or obligations, direct
or contingent; or
(ii) entered into any material transaction, not in the
ordinary course of business and, except as so disclosed, there has not been and
will not be any material adverse change in the financial position or results of
operations of the Company.
(d) LIMITED LIABILITY COMPANY STATUS. The Company is a limited
liability company duly formed and validly existing under the Illinois Limited
Liability Company Act.
(e) AUTHORIZATION OF AGREEMENT. This Agreement has been duly and
validly authorized, executed and delivered by or on behalf of the Company and
constitutes the valid and binding agreement of the Company enforceable in
accordance with its terms (except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws of the
United States, any state or any political subdivision thereof which affect
creditors' rights generally or by equitable principles relating to the
availability of remedies).
The performance of this Agreement, the consummation of the transactions
contemplated herein and the fulfillment of the terms hereof, do not and will not
result in a breach of any of the terms and provisions of, or constitute a
default under, any statute, indenture, mortgage, deed of trust, voting trust
agreement, note, lease or other agreement or instrument to which the Company is
a party or by which the Company or its property is bound, or under any rule or
regulation or order of any court or other governmental agency or body with
jurisdiction over the Company or any of its assets; and no consent,
approval, authorization or order of any court or governmental agency or body has
been or is required for the performance of this Agreement or for the
consummation of the transactions contemplated hereby (except as have been
obtained under the Act, from the National Association of Securities Dealers,
Inc. (the "NASD") or as may be required under state securities or blue sky laws
in connection with the offer and sale of the Preferred Units or under the laws
of states in which the Company may do business in connection with its
qualification to transact business in such states or as may be required by
subsequent events which may occur).
(f) PENDING ACTIONS. There is no material action, suit or proceeding
pending or, to the knowledge of the Company, threatened, to which the Company is
a party, before or by any court or governmental agency or body which adversely
affects the offering of the Preferred Units.
(g) REQUIRED FILINGS. There are no contracts or other documents
required to be filed by the Act or the Rules and Regulations of the Commission
thereunder as exhibits to the Registration Statement, which have not been so
filed.
(h) FEDERAL INCOME TAX LAWS. The Company has obtained an opinion of
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP stating that, under existing federal income
tax laws and regulations, assuming the Company acts as described in the "U.S.
Federal Income Tax Considerations" section of the Prospectus and that its prior,
current and anticipated methods of operation (as described in the Prospectus and
represented by management).
(i) INDEPENDENT PUBLIC ACCOUNTANTS. To the best of the Company's
knowledge, the accountants who have certified certain financial statements
appearing in the Prospectus are independent public accountants within the
meaning of the Act and the Rules and Regulations.
(j) ESCROW AGREEMENT. The Company has entered into an escrow
agreement (the "Escrow Agreement") with U.S. Bank National Association, a
national banking association (the "Escrow Agent"), in the form included as an
exhibit to the Registration Statement, which provides for the establishment of
an escrow account (the "Escrow Account"). During the period commencing with the
Effective Date and ending on the Termination Date, the Company will deposit
subscribers' funds in the Escrow Account as described in Section 2 below.
(k) SALES LITERATURE. In addition to and apart from the Prospectus,
the Company may use certain supplemental sales material in connection with the
offering of the Preferred Units. This material, prepared by the Company, would
consist of a brochure describing the Company and the objectives of the Company.
This material may also include a brochure, audio-visual materials and tape
presentations highlighting and explaining various features of the Offering, and
the Company's investments and business. These materials shall be hereinafter
referred to collectively as the "sales literature." No person has been
authorized to prepare for, or furnish to, a prospective investor, any sales
literature other than: (i) that described herein; and (ii) so-called "tombstone"
newspaper advertisements/solicitations
of interest, limited to identifying the Offering and the location of sources of
further information. Use of any sales literature is conditioned upon filing with
and, if required, clearance by appropriate regulatory agencies (including,
without limitation, the NASD and any state securities regulator or
commissioner). Such clearance (if provided), however, does not indicate that the
regulatory agency allowing the use of the materials has passed on the merits of
the Offering or the adequacy or accuracy of the sales materials. Except as
described herein, the Company has not authorized the use of other supplemental
literature or sales material in connection with this Offering.
Although it is believed that the information contained in the sales
literature or sales material will not conflict with any of the information set
forth in the Prospectus, the sales literature will not purport to be complete,
and should not be considered as a part of the Prospectus, or as incorporated in
the Prospectus by reference, or as forming the basis of the Offering.
(l) AUTHORIZATION OF THE PREFERRED UNITS. The Company has an
authorized and outstanding capitalization as set forth in the Prospectus. The
sale of the Preferred Units has been duly and validly authorized by the Company,
and when subscriptions for not less than the Preferred Units have been accepted
by the Company as contemplated in the Prospectus and the Preferred Units have
been issued to the respective subscribers, the Preferred Units will represent
ownership in the Company and will conform to the description thereof contained
in the Prospectus.
2. OFFERING AND SALE OF THE PREFERRED UNITS. On the basis of the
representations, warranties and agreements herein contained, and subject to the
terms and conditions herein set forth, the Company hereby appoints you as a
selected dealer ("Selected Dealer") to solicit subscriptions for the Preferred
Units at the subscription price to be paid and otherwise upon the other terms
and conditions set forth in the Prospectus and in the Subscription Agreement,
and you agree to use your best efforts as a Selected Dealer to procure
subscribers for the Preferred Units, during the period commencing with the
Effective Date and ending on the Termination Date (the "Offering Period"). In
the absence of such mutual agreement, the Company shall accept Subscription
Agreements based upon a first-come, first accepted reservation or other similar
method.
(a) SUBSCRIPTION AGREEMENTS AND SUBSCRIBERS' FUNDS. Each person
desiring to purchase Preferred Units through you will be required to complete
and execute the Subscription Agreement and to deliver such document to you,
together with a check payable to the order of "U.S. Bank National Association -
Great Lakes Acceptance Escrow Account # __" in the amount of $25.00 per
Preferred Unit. You shall forward any such Subscription Agreement and check to
the Escrow Agent as soon as practicable, but in any event by the end of the
second business day following receipt by you of the Subscription Agreement and
check. The Company will have representatives available to review the
Subscription Agreement in order to determine whether it wishes to accept the
proposed purchaser as a Preferred Member, it being understood that the Company
reserves the unconditional right to reject the tender of any Subscription
Agreement and check. The Company will
promptly notify you of any rejection, and you shall send the check and the
Subscription Agreement to the Escrow Agent with directions to promptly return
both the Subscription Agreement and check to the rejected subscriber.
Nothing contained in this Section 2 shall be construed to impose upon
the Company the responsibility of assuring that prospective purchasers meet the
suitability standards contained in the Prospectus or to relieve you of the
responsibility of complying with the Rules of the NASD.
(c) TERMINATION OF THE OFFERING. The Offering Period will terminate
on a date on or before one year from the date of the Prospectus (subject to
requalification in certain states, the Company may extend the Offering Period
from time to time, but in no event for longer than two years from the date of
the original Prospectus), subject in any event to the Company's right to
terminate the Offering at any time (the "Termination Date") and the proceeds
will be applied as set forth in the Prospectus.
(d) SELECTED DEALER COMPENSATION.
(i) The Company agrees to pay to you a selling commission of
4% of the sales price for each Preferred Unit sold from the 1,000,000 Preferred
Units offered on a "best efforts" basis, as set forth in the Prospectus under
the caption "Plan of Distribution." Notwithstanding the foregoing, it is
understood and agreed that no commission shall be payable with respect to
particular Preferred Units if the Company rejects a proposed subscriber's
Subscription Agreement, which it may do for any reason or for no reason, as set
forth in the form of Subscription Agreement or if the Company fails to sell at
least 40,000 Preferred Units within one year of the Effective Date of the
Prospectus. In addition, no selling commission shall be payable in connection
with the sale of Preferred Units to employees and associates of the Company and
its Affiliates, or the Selected Dealers.
(ii) All selling commissions payable to you will be paid on a
monthly basis, substantially concurrently with the acceptance of a subscriber by
the Company and confirmation by the Escrow Agent that it holds cleared funds of
the subscriber, in an amount equal to the selling commissions payable with
respect to such Preferred Units; provided however, the Company reserves the
right, at its sole discretion, to change the frequency of the payment of such
commissions to a monthly basis; provided further that in no event will selling
commissions be paid or payable prior to sale by the Company of not less than
40,000 Preferred Units ($1,000,000) and release of funds with respect thereto
from escrow.
3. COVENANTS OF THE COMPANY. The Company covenants and agrees with
you as follows:
(a) REGISTRATION STATEMENT. The Company will use its best efforts to
cause the Registration Statement and any subsequent amendments thereto to become
effective as promptly as possible and will not, at any time after the Effective
Date, file any amendment to the Registration Statement or supplement to the
Prospectus of which you shall not previously have been advised and furnished a
copy at a
reasonable time prior to the proposed filing or to which you shall have
reasonably objected or which is not, to the best of the Company's knowledge in
compliance with the Act and the Rules and Regulations. The Company will prepare
and file with the Commission and will use its best efforts to cause to become
effective as promptly as possible:
(i) any amendments to the Registration Statement or
supplements to the Prospectus which may be required pursuant to the undertakings
in the Registration Statement; and
(ii) upon your reasonable request any amendments to the
Registration Statement or supplements to the Prospectus which, in the opinion of
you or your counsel, may be necessary or advisable in view of the requirements
of the Act and the Rules and Regulations in connection with the offer and sale
of the Preferred Units during the Offering Period.
(b) SEC ORDERS. As soon as the Company is advised or obtains
knowledge thereof, it will advise you of any request made by the Commission for
amending the Registration Statement, supplementing the Prospectus or for
additional information, or of the issuance by the Commission of any stop order
or of any other order preventing or suspending the use of the Prospectus or the
institution of any proceedings for that purpose, and will use its best efforts
to prevent the issuance or any such order and, if any such order is issued, to
obtain the removal thereof as promptly as possible.
(c) BLUE SKY QUALIFICATIONS. The Company will use its best efforts
to qualify the Preferred Units for offering and sale under the securities or
blue sky laws of such jurisdictions as you may reasonably request and to make
such applications, file such documents and furnish such information as may be
reasonably required for that purpose. The Company will, at your request, furnish
you copies of all material documents and correspondence sent to or received from
such jurisdictions and will promptly advise you as soon as the Company obtains
knowledge thereof to the effect that the Preferred Units are qualified for
offering and sale in each such jurisdiction. The Company will promptly advise
you of any request made by the securities administrators of each such
jurisdiction for revising the Registration Statement or the Prospectus or for
additional information or of the issuance by such securities administrators of
any stop order preventing or suspending the use of the Prospectus or of the
institution of any proceedings for that purpose, and will use its best efforts
to prevent the issuance of any such order and if any such order is issued, to
obtain the removal thereof as promptly as possible. The Company will furnish you
with a Blue Sky Survey dated as of the Effective Date, which will be
supplemented to reflect changes or additions to the information disclosed in
such survey.
(d) AMENDMENTS AND SUPPLEMENTS. If at any time when a Prospectus
relating to the Preferred Units is required to be delivered under the Act, any
event shall have occurred to the knowledge of the Company as a result of which
the Prospectus as then amended or supplemented would include any untrue
statement of a material fact, or omit to state a material fact necessary to make
the statements therein not misleading in light of the circumstances existing at
the time it is so required to be delivered to a subscriber, or if it is
necessary at
any time to amend the Registration Statement or supplement the Prospectus
relating to the Preferred Units to comply with the Act, the Company will
promptly notify you thereof and will prepare and file with the Commission an
amendment or supplement which will correct such statement or effect such
compliance.
(e) COPIES OF REGISTRATION STATEMENT. The Company will furnish you
copies of the Registration Statement (only one of which need include all
exhibits), the Prospectus and all amendments and supplements thereto, including
any amendment or supplement prepared after the Effective Date, and such other
information with respect to the Company as you may from time to time reasonably
request, in each case as soon as available and in such quantities as you may
reasonably request.
(f) QUALIFICATION TO TRANSACT BUSINESS. The Company will take all
steps necessary to ensure that at all times the Company will be validly existing
as an Illinois limited liability company and will be qualified to do business in
all jurisdictions in which the conduct of its business requires such
qualification and where such qualification is required under local law.
(g) AUTHORITY TO PERFORM AGREEMENTS. The Company undertakes to
obtain all consents, approvals, authorizations or orders of any court or
governmental agency or body which are required for the performance of this
Agreement and under the Organizational Documents or the consummation of the
transactions contemplated hereby and thereby respectively, or the conducting by
the Company of the business described in the Prospectus.
(h) COPIES OF REPORTS. The Company will use its best efforts to
furnish to you as promptly as shall be practicable the following:
(i) a copy of each report or general communication (whether
financial or otherwise) sent to the Preferred members;
(ii) a copy of each report (whether financial or otherwise)
filed with the Commission; and
(iii) such other information as you may from time to time
reasonably request regarding the financial condition and operations of the
Company.
(i) USE OF PROCEEDS. The Company will apply the proceeds from the
sale of the Preferred Units as stated in the Prospectus or, if less than 40,000
Preferred Units are sold within one year from the effective date of the
Prospectus, the Company shall promptly return all proceeds from the sale of the
Preferred Units, as stated in the Prospectus, with interest, to the subscribers,
each subscriber sharing in the return in the ratio that the number of the
Preferred Units subscribed by such subscriber bears to the total number of the
Preferred Units subscribed by all subscribers.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELECTED
DEALER. You represent, warrant, covenant and agree with the Company as follows:
(a) NASD MEMBER. Selected Dealer is registered as a broker-dealer
with the Commission and is a member of the NASD, and is in good standing with
the Commission and the NASD.
(b) LICENSES. Selected Dealer and each of its employees and
representatives who shall perform any of the services required hereunder to be
performed by Selected Dealer shall be duly authorized and shall have all
licenses, approvals and permits necessary, to perform such services contemplated
by this Agreement, and Selected Dealer is a registered selling Selected Dealer
in the jurisdictions in which the Shares are to be offered for sale and will
remain registered in such jurisdictions in which the Company is relying on such
registration for the sale of the Shares.
(c) ACTIONS OR PEOCEEDINGS. There is not now pending nor, to
Selected Dealer's knowledge, threatened against Selected Dealer any action or
proceeding before the Commission, the NASD, any state securities commission or
any state or federal court concerning Selected Dealer's activities as a
broker-dealer.
(d) COMPLIANCE WITH LAWS. With respect to your participation in the
offer and sale of the Preferred Units in the offering, you agree to comply and
shall comply with any applicable requirements of the Act, the Securities
Exchange Act of 1934, as amended, and the published rules and regulations of the
Commission thereunder, and the applicable state securities or blue sky laws,
and the Rules of the NASD, specifically including, but not in any way limited
to, Rules 2440, 2730, 2740, and 2750 therein. In particular, you agree to handle
any fund you receive for the purchase of Preferred Units in accordance with Rule
15c2-4 promulgated under the Securities Exchange Act of 1934, as amended. You
also agree not to deliver the sales literature (as defined above) to any person
prior to the Effective Date and, after the Effective Date, not to deliver the
sales literature to any person unless the sales literature is accompanied or
preceded by the Prospectus. In addition, you shall, in accordance with
applicable law or as prescribed by any state securities administrator, provide
to any prospective investor copies of any prescribed document that is part of
the Registration Statement.
(e) NO ADDITIONAL INFORMATION. In offering the Preferred Units for
sale, you shall not give or provide any information or make any representation
other than those contained in the Prospectus, the sales literature or any other
document provided to you for such purpose by the Company.
(c) SALES OF PREFERRED UNITS. You shall solicit purchases of the
Preferred Units only in the jurisdictions in which you are legally qualified to
so act and in which the Company has advised you that such solicitations can be
made.
(f) SUBSCRIPTION AGREEMENT. You will submit subscriptions to the
Company only on the form that is included as Exhibit C to the Prospectus. You
understand and acknowledge that the Subscription Agreement must be executed and
initialed by the subscriber as described in the instructions that accompany the
Subscription Agreement.
(g) SUITABILITY. In offering the Preferred Units to any person, you
shall have reasonable grounds to believe (based on such information as the
investment objectives, other investments, financial situation and needs of the
person or any other information known by you after due inquiry) that:
(i) such person has the capability of understanding the
fundamental aspects of the Company;
(ii) such person has apparent understanding of: (A) the
fundamental risks and possible financial hazards of this type of investment; (B)
the lack of liquidity of this investment; and (C) the tax consequences of the
investment; and
(iii) such person has the financial capability to invest in
the Company and you shall maintain records disclosing the basis upon which you
determined the suitability of any persons offered Preferred Units.
Notwithstanding the foregoing, you shall have reasonable grounds to believe that
such person has either: (a) a minimum annual gross income of $45,000 and a
minimum net worth (exclusive of home, home furnishing and automobiles) of
$45,000; or (b) a minimum net worth (determined with the foregoing exclusions)
of $150,000.
Suitability standards are higher in certain states as set forth in the
Subscription Agreement and in Exhibit B to the Prospectus. You shall maintain,
for at least six years, a record of the information obtained to determine that
an investor meets the suitability standards imposed on the offer and sale of the
Preferred Units (both at the time of the initial subscription and at the time of
any additional subscriptions) and a representation of the investor that the
investor is investing for the investor's own account or, in lieu of such
representation, information indicating that the investor for whose account the
investment was made met the suitability standards.
(g) DUE DILIGENCE. Prior to offering the Preferred Units for sale,
you shall have conducted an inquiry such that you have reasonable grounds to
believe, based on information made available to you by the Company through the
Prospectus or other materials, that all material facts are adequately and
accurately disclosed and provide a basis for evaluating the purchase of the
Preferred Units. In determining the adequacy of disclosed facts pursuant to the
foregoing, you may obtain, upon request, additional information on material
facts.
Prior to the sale of the Preferred Units, you shall inform the
prospective purchaser of all pertinent facts relating to the liquidity and
marketability of the Preferred Units during the term of the investment.
5. EXPENSES. The Company agrees with you that, whether or not the
transactions contemplated in this Agreement are consummated, the Company will
pay all fees and expenses incident to the performance of its obligations under
this Agreement, including, but not limited to:
(a) the Commission's registration fee;
(b) expenses of printing the Registration Statement, the Prospectus
and any amendment or supplement thereto and the expense of
furnishing to you copies of the Registration Statement, the Prospectus and any
amendment or supplement thereto as herein provided;
(c) fees and expenses of its and your accountants and counsel in
connection with the Offering contemplated by this Agreement;
(d) fees and expenses incurred in connection with any required
filing with the NASD;
(e) all of your expenses in connection with the Offering, subject to
the limitation that in no event will the total of such expenses and the selling
commissions paid to you exceed _% of the gross proceeds of the Offering; and
(f) expenses of qualifying the Preferred Units for offering and sale
under state blue sky and securities laws, and expenses in connection with the
preparation and printing of the Blue Sky Survey.
6. CONDITIONS OF OBLIGATIONS. Your obligations hereunder shall be
subject to the accuracy of the representations and warranties on the part of the
Company contained in Section 1 hereof, the accuracy of the statements of the
Company made pursuant to the provisions hereof, to the performance by the
Company of its covenants, agreements and obligations contained in Sections 3 and
5 hereof, and to the following additional conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement shall have become effective; no stop order suspending the
effectiveness of the Registration Statement shall have been issued by the
Commission and, to the best knowledge of the Company or you, no proceedings for
that purpose shall have been instituted, threatened or contemplated by the
Commission; and any request by the Commission for additional information (to be
included in the Registration Statement or Prospectus or otherwise) shall have
been complied with to the reasonable satisfaction of you or your counsel.
(b) ACCURACY OF REGISTRATION STATEMENT. You shall not have advised
the Company that the Registration Statement or the Prospectus, or any amendment
or any supplement thereto, in the reasonable opinion of you or your counsel,
contains any untrue statement of 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 therein not misleading.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless you, and each
person, if any, who controls you within the meaning of the Act (collectively,
the "Indemnified Parties"), against any and all loss, liability, claim, damage
and expense whatsoever caused by 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 the omission or alleged
omission there from of 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. Such indemnification shall be subject to
the provisions of Sections 7(b) and (c) of this Agreement.
The Company shall not provide indemnification for any liability or loss
suffered by you, nor shall it provide that you be held harmless for any
liability suffered by the Company unless all of the following conditions are
met: (i) the party seeking indemnification has determined, in good faith, that
its course of conduct, if such course of conduct caused the loss or liability,
was in the best interests of the Company; (ii) the person seeking
indemnification was acting on behalf of or performing services on behalf of the
Company; (iii) such liability or loss was not the result of gross negligence or
willful misconduct on the part of the party seeking indemnification or the
Indemnified Party; and (iv) such indemnification or agreement to be held
harmless is recoverable only out of the assets of the Company and not from the
Preferred members.
In no case shall the Company be liable under this indemnity agreement
with respect to any claim made against any of the Indemnified Parties unless the
Company shall have been notified in writing (in the manner provided in Section
10 hereof) of the nature of the claim within a reasonable time after the
assertion thereof; but the failure to so notify the Company shall not relieve
the Company from any liability which the Company would have incurred otherwise
than on account of this indemnity agreement. The Company shall be entitled to
participate, at its own expense, in the defense of, or if it so elects within a
reasonable time after receipt of such notice, to assume the defense of any claim
or suit for which any of the Indemnified Parties seek indemnification hereunder.
If the Company elects to assume said defense, counsel chosen by it and
reasonably satisfactory to the Indemnified Parties shall conduct such defense.
In the event that the Company elects to assume the defense of any such
suit and retains such counsel, the Company shall not be liable under this
Section 7 to the Indemnified Parties in the suit for any legal or other expenses
subsequently incurred by the Indemnified Parties, and the Indemnified Parties
shall bear the fees and expenses of any additional counsel retained by the
Indemnified Parties unless: (A) the employment of counsel by the Indemnified
Party has been authorized by the Company; or (B) the Company shall not in fact
have employed counsel to assume the defense of such action, in either of which
events such fees and expenses shall be borne by the Company.
The Company may advance amounts to the Indemnified Parties for legal and
other expenses and costs incurred as a result of any legal action for which
indemnification is being sought only if all of the following conditions are
satisfied: (i) the legal action relates to acts or omissions with respect to the
performance of duties or services by one or more Indemnified Parties for or on
behalf of the Company; (ii) the legal action is initiated by a third party who
is not a Stockholder and a court of competent jurisdiction specifically approves
such advancement; and (iii) the Indemnified Parties receiving such advances
undertake to repay the advanced funds to the Company, together with the
applicable legal rate of interest thereon, in cases in which such Indemnified
Parties are thereafter found not to be entitled to indemnification.
Notwithstanding the foregoing provisions of this Section 7, the Company
will not be liable in any such case to the extent that any
loss, liability, claim, damage or expense 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 or on your behalf for use in the preparation of the Registration
Statement (or any amendment thereof) or the Prospectus (or any supplement
thereto). The foregoing indemnity agreement is subject to the further condition
that, insofar as it relates to any untrue statement, alleged untrue statement,
omission or alleged omission made in the Prospectus but eliminated or remedied
in any amendment or supplement thereto, such indemnity agreement shall not inure
to your benefit from whom the person asserting any loss, liability, claim,
damage or expense purchased the Preferred Units which are the subject thereof
(or to the benefit of any person who controls you), if a copy of the Prospectus
as so amended or supplemented was not sent or given to such person at or prior
to the time the subscription of such person was accepted by the Company; but
only if a copy of the Prospectus (as so amended or supplemented) had been
supplied by the Company to you prior to such acceptance. This indemnity
agreement will be in addition to any liability that the Company may otherwise
have.
(b) The indemnification and agreement to hold harmless provided in
subparagraph (a) of this Section 7 is further limited to the extent that no such
indemnification by the Company of you shall be permitted under this Agreement
for or arising out of an alleged violation of federal or state securities laws
unless one or more of the following conditions are met: (i) there has been a
successful adjudication on the merits of each count involving alleged securities
law violations by you and a court of competent jurisdiction has approved
indemnification of the litigation costs; (ii) such claims against you have been
dismissed with prejudice on the merits by a court of competent jurisdiction as
to the particular indemnitee and the court has approved indemnification of the
litigation costs; or (iii) a court of competent jurisdiction approves a
settlement of the claims against you and finds that indemnification of the
settlement and related costs should be made and the court considering the
request has been advised of the position of the Commission and of any state
securities regulatory authority in which securities of the Company were offered
and sold respecting the availability and/or propriety of indemnification for
securities law violations.
(c) You agree to indemnify and hold harmless the Company, and each
person, if any, who controls the Company within the meaning of the Act and any
controlling person of the Company: (i) to the same extent as in the foregoing
indemnity from the Company to you, but only with reference to statements or
omissions based upon the information relating to you furnished in writing by you
or on your behalf for use in the Registration Statement or the Prospectus, or
any amendment or supplement thereto; and (ii) for any violation by you in the
sale of the Preferred Units of any applicable state or federal law or any rule,
regulation or instruction there under, provided that such violation is not
committed in reliance on any violation by the Company of such law, rule,
regulation or instruction. You further agree to indemnify and hold harmless the
Company and any controlling person of the Company against any losses,
liabilities, claims, damages or expenses to which the Company or any such
controlling person may become subject under the securities or blue sky laws of
any jurisdiction insofar as such losses,
liabilities, claims, damages or expenses (or actions, proceedings or
investigations in respect thereof) arise by reason of a sale of the Preferred
Units through your efforts which is effected other than in accordance with the
Blue Sky Survey supplied to you by the Company (a "Non-Permitted Sale"), whether
such Non-Permitted Sale is caused by a sale in a jurisdiction other than those
specified in the Blue Sky Survey, by a sale in a jurisdiction in which you are
not registered to sell the Preferred Units or which results in a sale in a
jurisdiction in excess of the number of Preferred Units permitted to be sold in
such jurisdiction, and will reimburse the Company or any such controlling person
for any legal fees, monetary penalties or other expenses reasonably incurred by
any of them in connection with investigating, curing or defending against any
such losses, liabilities, claims, damages, actions, proceedings or
investigations. This indemnity agreement will be in addition to any liability
that you may otherwise have.
(d) The notice provisions contained in Section 7(a) hereof, relating
to notice to the Company, shall be equally applicable to you if the Company or
any controlling person of the Company seeks indemnification pursuant to Section
7(c) hereof. In addition, you may participate in the defense, or assure the
defense, of any such suit so sought under Section 7(c) hereof and have the same
rights and privileges as the Company enjoys with respect to such suits under
Section 7(a) hereof.
8. TERMINATION OF THIS AGREEMENT. This Agreement may be terminated
by you in the event that the Company shall have materially failed to comply with
any of the material provisions of this Agreement on its part to be performed at
or prior to the Effective Date or if any of the representations, warranties,
covenants or agreements of the Company herein contained shall not have been
materially complied with or satisfied within the times specified.
In any case, this Agreement shall terminate at the close of business on
the Termination Date. Termination of this Agreement pursuant to this Section 8
shall be without liability of any party to any other party other than as
provided in Sections 5 and 7 hereof, which shall survive such termination.
9. REPRESENTATIONS, WARRANTIES, AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement or
contained in certificates of the Company submitted pursuant hereto shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of you or any person who controls you, or by or on behalf of the
Company, and shall survive the Termination Date.
10. NOTICES. All communications hereunder shall be in writing and,
if sent to you, shall be mailed by registered mail or delivered by facsimile and
confirmed in writing to Company, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ (Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇).
11. PARTIES. This Agreement shall inure to the benefit of and be
binding upon you, the Company and the successors and assigns of you and the
Company. This Agreement and the conditions and provisions hereof, are intended
to be and shall be for the sole and exclusive
benefit of the parties hereto and their respective successors and controlling
persons, and for the benefit of no other person, firm or corporation, and the
term "successors and assigns," as used herein, shall not include any purchaser
of Preferred Units as such.
12. APPLICABLE LAW. This Agreement and any disputes relative to the
interpretation or enforcement hereto shall be governed by and construed under
the internal laws, as opposed to the conflicts of laws provisions, of the State
of Illinois.
13. EFFECTIVENESS OF AGREEMENT. This Agreement shall become
effective at 5:00 p.m., Chicago, Illinois time, on the Effective Date, or at
such earlier or later time as you and the Company agree.
14. NO PARTNERSHIP. Nothing contained herein shall constitute you
and the Company an association, partnership, limited liability company,
unincorporated business or other separate entity.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return it to us, whereupon this instrument will
become a binding agreement between you and the Company in accordance with its
terms.
Great Lakes Capital Acceptance, LLC, an Illinois limited liability company
By:
Title:
Accepted as of the date first above written:
By:
Title: