COMMONWEALTH INCOME & GROWTH FUND III
UNITS OF LIMITED PARTNERSHIP INTEREST
Minimum Investment - 125 Units (50 Units for Qualified Plans)
Agency Agreement
COMMONWEALTH CAPITAL SECURITIES CORP.
0000 Xxxx Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxx 00000
__________, 1997
Dear Sirs:
Commonwealth Income & Growth Fund III is a Pennsylvania limited
partnership (the "Partnership") of which Commonwealth Income & Growth Fund,
Inc., a Pennsylvania corporation, is the sole general partner (the "General
Partner"). The Partnership desires to increase the capital of the Partnership in
the proposed maximum amount of $15,000,000, by the sale of units (the "Units")
evidencing limited partnership interests in the Partnership.
1. Representations and Warranties of the Partnership and the General
Partner. The Partnership and the General Partner, jointly and severally,
represent and warrant to you, for your benefit and for the benefit of each
Participating Broker (as defined below) and each person who controls you or any
Participating Broker within the meaning of Section 15 of the Securities Act of
1933, as amended (which, together with the rules and regulations promulgated
thereunder, is herein referred to as the "Act"), that:
(a) The Partnership has filed with the Securities and Exchange
Commission the "Commission") a registration statement on Form S-1 (No.
333-_____), as amended by such amendments thereto as may have been required to
the date hereof, with respect to the registration of the Units under the Act;
unless the context otherwise requires, such registration statement as amended at
the time it becomes effective under the Act and the amended prospectus in the
form filed or mailed for filing pursuant to Rule 424(b) of the Act are
hereinafter called the "Registration Statement" and "Prospectus," respectively;
except that (A) if the Partnership files a post-effective amendment to the
registration after the declaration of the effectiveness of such post-effective
amendment, refer to the registration statement as amended by such
post-effective amendment thereto and the term "Prospectus" shall refer to the
amended prospectus then on file with the Commission, and (B) if the
prospectus, including any sticker supplement thereto not theretofore
consolidated into a post-effective amendment, filed by the Partnership
pursuant to either Rule 424(b) or (c) of the rules and regulations of the
Commission under the Act (the "Regulations"), shall differ from the
prospectus on file at the time the Registration Statement or any
post-effective amendment thereto shall have become effective, the term
"Prospectus" shall refer to the prospectus, including any such sticker
supplement, filed pursuant to either Rule 424(b) or (c), as the case may be,
from and after the date on which it shall have been filed. The Partnership
will not at any time after the Registration Statement initially becomes
effective file any amendment to the Registration Statement or any amendment
or supplement to the Prospectus to which you shall reasonably object in
writing or which shall be reasonably disapproved by your counsel.
(b) The Registration Statement and the Prospectus, when effective or
filed with the Commission, as the case may be, conformed or will conform in all
material respects to the requirements of the Act, and did not and will not
contain an 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 not
misleading; provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Partnership by you expressly for
use therein;
(c) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, neither the Partnership nor the
General Partner has experienced nor, prior to the Closing Date (as hereinafter
defined) or each Subsequent Closing Date (as hereinafter defined) will any of
them experience any material adverse change or any development involving a
prospective material adverse change in or affecting the general affairs,
management, financial position, properties or results of operations of the
Partnership or the General Partner, respectively, otherwise than as set forth in
the Prospectus; and neither the Partnership nor the General Partner has entered
into any material transactions other than as described in the Prospectus; and
the capitalization, indebtedness, assets, properties, material liabilities and
business of the Partnership and the General Partner conform to the descriptions
thereof contained in the Prospectus;
(d) The Partnership is a duly formed and validly existing limited
partnership under the laws of the Commonwealth of Pennsylvania, with power and
authority to conduct its business, and own its properties, all as described in
the Prospectus and in the form of Limited Partnership Agreement attached as
Appendix I to the Prospectus (the "Partnership Agreement"); and the Partnership
has been, or will be, duly qualified to do business as a foreign limited
partnership under the laws of each jurisdiction in which its ownership or
leasing of properties or the conduct of its business requires such
qualification, except that, in states that do not provide for the qualification
of foreign limited partnerships, the Partnership Agreement or a certificate
containing all required information shall be filed in such offices in such
states as are appropriate in the circumstances;
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(e) The General Partner is a duly formed and validly existing
corporation under the laws of the Commonwealth of Pennsylvania, with power and
authority to conduct its business and own its properties, all as described in
the Prospectus and the Partnership Agreement; and the General Partner has been,
or will be, duly qualified to do business as a foreign corporation under the
laws of each jurisdiction in which its ownership or leasing of properties or the
conduct of its business requires such qualification;
(f) The execution, delivery and performance by the Partnership and
the General Partner of this Agreement and the Partnership Agreement and the
consummation of the transactions herein and therein contemplated will not result
in a breach or violation of any of the terms or provisions of, or constitute a
default under any statute, indenture, mortgage, deed of trust, loan agreement,
or other agreement or instrument to which the Partnership or the General Partner
are a party or by which the Partnership or the General Partner are bound, or any
order, rule or regulation of any court, governmental agency, or body having
jurisdiction over the Partnership or the General Partner or any of their
affiliates, or any of their properties; and no consent, approval, authorization,
or order of any court, governmental agency, or body is required for the
consummation by the Partnership or the General Partner of the transactions
contemplated by this Agreement, except such as may be required under the Act or
state securities or Blue Sky laws in connection with the sale of the Units
through you;
(g) The Partnership and the General Partner have full legal right,
power and authority to enter into this Agreement and to perform the transactions
contemplated hereby, and this Agreement is enforceable against the Partnership
and the General Partner in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors, rights and by the exercise of judicial
discretion in accordance with general principles applicable to equitable and
similar remedies and to the extent that the enforceability of the indemnity or
contribution provisions contained in this Agreement may be limited under
applicable securities laws;
(h) There are no legal or governmental proceedings pending to which
the Partnership or the General Partner or any of their affiliates is a party or
of which any property of the Partnership or the General Partner or any of their
affiliates is the subject which is reasonably expected to have a material
adverse effect individually or in the aggregate on the financial position or
results of operations of the Partnership, the General Partner, Commonwealth of
Delaware, Inc. or Commonwealth Capital Corp.; and, to the best of their
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(i) The respective financial statements contained in the
Registration Statement and the Prospectus fairly present the financial condition
of the Partnership, the General Partner and Commonwealth Capital Corp. as of the
dates specified and since such dates there have been no material adverse changes
to their businesses or assets; such financial statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the
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periods involved; Ernst & Xxxxx, who have certified such financial statements of
the Partnership, the General Partner and Commonwealth Capital Corp., are
independent public accountants as required by the Act;
(j) The Partnership is exempt from the provisions of the Investment
Company Act of 1940, as amended, and the Investment Advisors Act of 1940, as
amended;
(k) There are no contracts or other documents which are required to
be filed as exhibits to the Registration Statement which have not been so filed;
(1) The General Partner has, at all times used its best efforts to
maintain, in the aggregate, a net worth sufficient for classification of the
Partnership as a partnership for federal income tax purposes under the current
interpretations of the Internal Revenue Code of 1986, as amended ("Code"), and
regulations promulgated thereunder, and, in any event, will at all such times
have a net worth computed in accordance with generally accepted accounting
principles equal to at least $100,000;
(m) The Prospectus does not contain any statement with respect to
the allowance of any deduction, the exclusion of any income or the securing of
any other tax benefit which the General Partner knows or has reason to know is
incorrect in any material respect and does not include any assumption, which is
stated therein to be the basis for any such statement, which the General Partner
knows or has reason to believe is incorrect or unreasonable in any material
respect;
(n) Upon payment for and sale of the Units as contemplated by the
Prospectus, each of the Units will represent a validly authorized and duly
issued interest in the Partnership and such Units will conform to the
description contained in the Prospectus and the holders thereof will be entitled
to all of the rights and benefits as well as limited liability of a limited
partner under the Partnership Agreement and the Pennsylvania Revised Uniform
Limited Partnership Act, all as described in the Prospectus;
(o) Neither the General Partner, nor any affiliate thereof, has
received, or is entitled to receive, directly or indirectly, any commitment fee,
finder's fee or similar fee from any person other than as described in the
Prospectus, in connection with the acquisition of or commitment for equipment by
the Partnership;
(p) All actions required to be taken by the Partnership and the
General Partner as a condition to the subscription for and the sale of Units
have been, or prior to the Closing Date and each Subsequent Closing Date, if
any, referred to below, shall have been taken.
2. Offering and Sale of Units--Closing Date and Subsequent Closing
Dates.
(a) On the basis of the representations, warranties and covenants
herein contained, but subject to the terms and conditions herein set forth,
you are hereby appointed the exclusive selling agent of
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the Partnership during the term herein specified (the "Offering Period") for the
purpose of finding subscribers for the Units for the account of the Partnership
through a public offering. Subject to the performance by the General Partner and
the Partnership of all of their obligations to be performed hereunder, and to
the completeness and accuracy of all the representations and warranties
contained herein, you hereby accept such agency and agree on the terms and
conditions herein set forth to use your best efforts during the Offering Period
to find subscribers for the Units at a public offering price of $20 per Unit (or
such lesser amount as a result of lower selling commissions on certain quantity
purchases, as described in the Prospectus), each subscriber being required to
subscribe for at least one hundred twenty-five (125) Units other than Qualified
Plans, as defined in the Prospectus, for whom the minimum subscription shall be
fifty (50) Units. Your agency hereunder, which is subject to the conditions of
Section 6 hereof, shall continue, unless terminated earlier pursuant to the
terms of this Agreement or upon the sale of all of the Units offered hereby,
until the date which is twelve months after the Effective Date, as such term is
defined in Section 9 (the "Minimum Offering Date"), unless subscriptions for at
least 75,000 Units are received by such date, in which case the General Partner
may extend the Offering Period, as provided in the Prospectus and subject to
regulatory approval where required, until such date not more than twenty-four
months after the Effective Date as may be agreed upon in writing by you. and the
Partnership (such date being hereinafter referred to as the "Offering
Termination Date"); provided, however, that if no such agreement is reached, the
Minimum Offering Date shall be the Offering Termination Date.
(b) Each person desiring to purchase Units will be required to
complete and execute a Subscription Agreement substantially in the form included
as Appendix III to the Prospectus and to return such Subscription Agreement to
you or to any Participating Broker, together with all documents, if any,
required under state securities laws. You or such Participating Broker may, in
your discretion and in accordance with applicable law, execute a Subscription
Agreement on behalf of a subscriber. You or such Participating Broker shall
ascertain that each Subscription Agreement of a prospective purchaser of Units
has been completed and executed properly and shall then promptly forward such
Subscription Agreement together with a check payable to the order of
"Commonwealth Income & Growth Fund III, PNC BANK, N.A., Escrow Agent" in the
amount of the purchase price of such Units, and any other relevant documents,
to PNC Bank, Philadelphia, Pennsylvania (the "Escrow Agent") by the end of the
next business day following receipt or, if final internal supervisory review is
conducted at a different location, to such final review office by the end of
such next business day, which in turn will transmit same to the Escrow Agent by
the end of the next business day following its receipt thereof. Until the
Closing Date (as defined below), the Escrow Agent will deposit the checks in an
escrow account in accordance with an escrow agreement made by you and the
Partnership with the Escrow Agent and invested, at the direction of the
Partnership as provided in the Prospectus. Prior to the Closing Date, the
General Partner and the Partnership will have no right to obtain such funds
from the Escrow Agent. Until the Closing Date, any check received by you or a
Participating Dealer which is made payable to anyone other than the Escrow
Agent shall be returned to the subscriber who submitted the check and not
accepted. You will submit to the Partnership all Subscription Agreements
received by you as soon as practicable.
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(c) Until the Closing Date, the Escrow Agent will forward any
Subscription Agreements and any accompanying documents received by it to the
General Partner. The General Partner, on receipt of the Subscription
Agreements, will determine as soon as practicable (but in no event more than
30 days after receipt) whether it expects to accept the proposed purchaser as
a Limited Partner in the Partnership. The General Partner reserves the right
to reject the tender of any and all Subscription Agreements. Should the General
Partner determine that it will accept the tender of a Subscription Agreement,
the General Partner will promptly advise you or the appropriate Participating
Broker of such action. Should the General Partner determine to reject the
tender of a Subscription Agreement, it will promptly notify you or the
appropriate Participating Broker (and, if the General Partner elects, the
prospective purchaser) in writing of such determination and will promptly
return the tendered Subscription greement directly to you, the appropriate
Participating Broker or the prospective purchaser and, until the Closing Date,
direct the Escrow Agent to return, and thereafter itself will return, the
purchase price of the Units (plus any interest earned thereon prior to the
Closing Date) directly to the prospective purchaser.
(d) In the event the offering is commenced and subscriptions for at
least 75,000 Units shall not have been received by the Minimum Offering Date,
all funds received from subscribers (if any) shall be returned in full, together
with any interest actually earned thereon and without deduction by you of any
escrow or other fee or expenses. Your agency and this Agreement shall terminate
without obligation on your part or on the part of the General Partner or the
Partnership, except as provided in Sections 4 and 7 hereof.
(e) If by the Minimum Offering Date at least 75,000 Units shall have
been subscribed for, then you shall notify the General Partner of the aggregate
number of Units for which you have received subscriptions, and payment of the
purchase price for the Units for which you have found subscribers shall then be
made at the offices of Blank, Rome, Xxxxxxx & XxXxxxxx, or at such other place
as shall be agreed upon between you and the Partnership, at 10:00 a.m.,
Philadelphia, Pennsylvania time, on the fifth full business day after the day on
which you so notify the General Partner of the number of Units subscribed for,
or such other day and time (not later than 10 business days after giving notice
to the General Partner) as shall be agreed upon between you and the Partnership
but not later than 30 days after receiving subscriptions for the minimum number
of Units. The time for delivery and payment for Units is herein referred to as
the "Closing Date."
(f) If less than all the Units shall have been subscribed and paid
for at the Closing Date, then, at periodic intervals in accordance with the
Partnership Agreement, to be mutually agreed upon by you and the Partnership
during the Offering Period but no less often than monthly, there shall be
subsequent closings for the payment to the Partnership of the purchase price of
additional Units sold by you ("Subsequent Closing Date(s)") until the offering
Termination Date. Five days prior to each Subsequent Closing Date you shall
notify the General Partner of the aggregate number of additional Units for which
you have received subscriptions. Payment of the purchase price for the
additional Units for which you have found subscribers shall be made at the
offices of Blank, Rome,
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Xxxxxxx & XxXxxxxx, or at such other place as shall be agreed upon between you
and the Partnership, at 10:00 a.m., Philadelphia, Pennsylvania time, on each
Subsequent Closing Date.
(g) Subject to subscriptions for at least 75,000 Units being
received and accepted by the Minimum Offering Date, for the services of you and
of the Participating Brokers in soliciting and obtaining purchasers of Units
the Partnership agrees to (i) pay to you, or to you for the benefit of such
Participating Brokers, an 8% selling commission for each Unit sold by the
Partnership through the efforts of you or such Participating Broker and (ii)
pay to you a 1% Dealer Manager Fee for each Unit sold by the Partnership,
except that in connection with sales of at least $250,020 to any one
"investor," the selling commissions and Dealer Manager Fee payable will be
reduced (as will be the purchase price for all Units purchased by the investor)
in accordance with the following schedule:
Total Amount
Invested Selling Commission Dealer Manager
by Investor Per Unit Fee Per Unit
------------ ------------------ --------------
up to $ 250,000 8% 1%
250,020 to 350,000 7% 1%
350,020 to 500,000 6% 1%
500,020 to 750,000 6% 1%
750,020 to 1,000,000 5% 1%
1,000,020 or more 4% 1%
Subscriptions may be combined for the purpose of determining the total
selling commissions and Dealer Manager Fees payable in the case of subscriptions
made by any investor who, subsequent to his initial subscription for Units,
subscribes for additional Units. Any request for combining subscriptions will be
subject to verification by the General Partner that all of such subscriptions
were made by a single investor. The selling commission payable with respect to
any subsequent subscription for Units will equal the commission determined from
the schedule set forth above as if all subscriptions had been made
simultaneously, less the commissions applicable to all prior subscriptions for
Units by such investor.
The purchase price for Units shall be as provided in the Prospectus. For
purposes of determining the purchase price, Units purchased by an individual and
his or her spouse or children under the age of 18, or purchases by a trustee or
fiduciary purchasing for a single trust or fiduciary account shall be treated as
a single purchase. Commissions shall be paid to you by bank check at the Closing
Date or at any Subsequent Closing Date, as the case may be.
(h) Subscriptions for Units may also be solicited by certain
dealers selected by you (the "Participating Brokers") and sales by
Participating Brokers shall be made under a Participating Broker Agreement in
the form customarily used by you when acting as underwriter. Each such
Participating
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Broker shall be a member in good standing of the National Association of
Securities Dealers, Inc. ("NASD").
(i) Neither you, the Partnership, the General Partner, nor any
Participating Broker participating in the offering of the Units shall, directly
or indirectly, pay or award any finder's fees, commissions or other
compensation to any person engaged by a potential investor for investment
advice as an inducement to such adviser to advise the purchase of Units;
provided, however, that normal sales commissions payable to a registered
broker-dealer or other properly licensed person for selling Units shall not
be prohibited hereby.
3. Covenants of the Partnership and the General Partner. The Partnership
and the General Partner jointly and severally agree that:
(a) The General Partner and the Partnership will use their
reasonable best efforts to cause the Registration Statement to become effective
and will notify you immediately and confirm in writing (i) when the Registration
Statement and any amendment thereto shall have become effective or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for additional
information, (iii) of the happening of any event which makes untrue any
statement of a material fact made in the Registration Statement or the
Prospectus, or which requires the making of a change in the Registration
Statement or the Prospectus, in order to make any material statement therein not
misleading; and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the initiation
of any proceedings for that purpose, or of the suspension of the qualification
of the Units for offering or sale in any jurisdiction, or of the institution of
any proceedings for such purpose; and the General Partner and the Partnership
will make every reasonable effort to prevent the issuance by the Commission or
any governmental agency pursuant to the securities laws of any jurisdiction of
any stop order and, if such stop order shall at any time be issued, to obtain
the lifting thereof at the earliest possible moment;
(b) The Partnership will deliver to you, as soon as available, two
signed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits) and will also deliver to you such number
of conformed copies of the Registration Statement as originally filed and of
each subsequent amendment thereto (including exhibits) as you may reasonably
request;
(c) The General Partner and the Partnership will use their
reasonable best efforts, in cooperation with you, to take such action to qualify
the Units for offering and sale under the securities laws of such jurisdictions
as may be mutually agreed upon by you and the Partnership and to comply with
such laws so as to permit the continuance of sales and dealings in such
jurisdictions for as long as may be necessary to complete the distribution;
provided that in connection therewith neither the General Partner nor the
Partnership shall be required to qualify as a foreign corporation or
partnership, respectively, or to file a general consent to service of process in
any jurisdiction;
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(d) As promptly as possible following the designation of
jurisdictions in accordance with Section 3(c) above, the Partnership will
deliver to you a Blue Sky Memorandum with respect to applicable securities
registration or exemption requirements of each such designated jurisdiction with
respect to the offering and sale of Units by a broker-dealer registered under
the laws of such jurisdiction and will supplement such Memorandum from time to
time as necessary to reflect the effective qualification or exemption of the
offering or sale of such jurisdiction, and the applicable securities
registration or exemption requirements of additional jurisdictions designated in
accordance with Section 3(b) above from time to time.
(e) The General Partner and the Partnership will deliver promptly to
you, as soon as the Registration Statement becomes effective and thereafter from
time to time during the period when the Prospectus is required to be delivered
under the Act, such number of copies of the Prospectus (as amended or
supplemented), as you may reasonably request; and the General Partner and the
Partnership consent to the use of the Prospectus and any amendments or
supplements thereto by you and by any dealers selected by you for the purposes
contemplated by the Act;
(f) During the period when the Prospectus is required to be
delivered under the Act, the General Partner and the Partnership will comply, so
far as they are reasonably able and at the Partnership's reasonable expense,
with all requirements imposed upon them by the Act, as now and hereafter
amended, so far as necessary to permit the continuance of sales of or dealing in
the Units during such period in accordance with the provisions of this Agreement
and of the Prospectus;
(g) If any event relating to or affecting the General Partner, the
Partnership or Partnership assets or properties shall occur as a result of which
it is necessary, in the reasonable opinion of your counsel, to amend or
supplement the Prospectus in order to make the Prospectus not misleading in the
light of the circumstances existing at the time it is delivered to a subscriber,
the General Partner and the Partnership will forthwith prepare and furnish to
you, without expense to you, a reasonable number of copies of an amendment or
amendments of, or a supplement or supplements to, the Prospectus (in form and
substance reasonably satisfactory to your counsel) which will amend or
supplement the Prospectus so that, as amended or supplemented, it will not
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a subscriber,
not misleading. For the purposes of this subsection, the General Partner and the
Partnership will furnish such information with respect to themselves and any
Partnership properties as you may from time to time reasonably request;
(h) The Partnership will make generally available to holders of
Units as soon as practicable, but not later than 120 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Section 11(a) of the Act, which need not be certified by
independent public accountants unless required by the Act) covering the 12-month
period commencing on the first day of the calendar quarter following the
effective date of the Registration Statement;
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(i) The Partnership will employ Ernst & Young or some other firm of
independent certified public accountants having a comparable national reputation
for the purpose of auditing and reporting on the financial statements of the
Partnership;
(j) The Partnership will, so long as any Units or Interests remain
outstanding, furnish directly to you the following:
(A) As soon as practicable after the end of each fiscal year, one
copy of the Partnership's annual report, including therein the
accountants' report, the balance sheet, the related statement of profit
and loss and changes in financial position;
(B) as soon as practicable after the end of each of the first three
quarterly periods of each fiscal year, one copy of a balance sheet of the
Partnership as at the end of such period, setting forth in reasonable
detail its financial position, together with related statements of profit
and loss, none of which statements need be audited, but shall be certified
as correct by the General Partner of the Partnership;
(C) copies of any report, application or documents which the
Partnership shall file with the Commission; and
(D) as soon as the same shall be sent to holders of Units, each
communication which shall be sent to the holders of the Units, including
any other annual or interim reports of the Partnership and all other
notices and reports required by the Partnership Agreement or described in
the Prospectus;
(k) The Partnership will not, at any time either before or after the
Registration Statement becomes effective, file any amendment to the Registration
Statement or any amendment or supplement to the Prospectus to which you shall
reasonably object in writing or which shall be reasonably disapproved by your
counsel promptly after notice thereof; will deliver to you, from time to time,
all supplemental sales materials (whether designated solely for "broker-dealer"
or internal use or otherwise) proposed to be used or delivered by the
Partnership in connection with the offering of Units, prior to the use or
delivery to third parties of such material, and it will not use or deliver any
such material to which you shall reasonably object or which shall be reasonably
disapproved by your counsel;
(l) Prior to filing with the Commission any reports on Form SR, the
Partnership will furnish a copy thereof to you and receive and consider your
comments thereon, and deliver promptly to you a signed copy of each report on
Form SR filed by the Partnership with the Commission;
(m) The General Partner and the Partnership agree to execute or
cause to be executed all such certificates and other documents conforming to the
Partnership Agreement and to
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do or cause to be done all such filing, recording, publishing and other acts as
may be appropriate to comply with the requirements of law for the formation and
operation of a limited partnership in the Commonwealth of Pennsylvania and the
qualification of the Partnership and the General Partner to do business in each
jurisdiction in which the Partnership's ownership or leasing of property or the
conduct of its business as described in the Prospectus requires such
qualification; provided, however, that in states that do not provide for the
qualification of foreign limited partnerships, the General Partner and
Partnership shall take such action as is necessary to permit such ownership or
leasing of property or the conduct of their respective businesses as described
in the Prospectus under the laws of such jurisdiction; and
(n) The Partnership shall apply the proceeds of the offering and
sale of the Units in the manner provided for in the Prospectus.
4. Payments of Fees and Expenses. The Partnership, and the General
Partner, jointly and severally, agree with you to pay or cause to be paid:
(a) the registration fee in connection with the registration of the
Units under the Act;
(b) the filing fees and expenses in connection with the
qualification of the Units for offering and sale under state securities laws as
provided in Section 3(c) hereof;
(c) the filing fees and expenses incident to securing any required
review by the NASD of the terms of sale of the Units;
(d) the fees, disbursements and expenses of the accountants and
counsel for the Partnership in connection with the registration of the Units
under the Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary Prospectus
and the Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to you;
(e) the cost of printing and delivery to you of copies of the
Registration Statement and all amendments thereto, of the Prospectus and any
supplements or amendments thereto, and of the Subscription Agreement;
(f) the cost of mailing and reproducing this Agreement, any
agreements between you and any Participating Brokers, any Blue Sky surveys, all
sales materials, and any other documents in connection with the offer, purchase
and sale of Units;
(g) the costs and charges of any depositary, escrow agent, transfer
agent or registrar; and
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(h) all other costs and expenses incident to the performance of the
obligations of the Partnership and the General Partner under this Agreement
which are not otherwise specifically provided for in this Section.
Notwithstanding the foregoing, the General Partner agrees to pay or cause
to be paid all Organization and Offering Expenses.
5. Covenants of Selling Agent. (a) You, as exclusive selling agent,
acknowledge your obligations under Rule 2810 of the NASD Rules of Conduct.
Without limiting the foregoing, you shall, in recommending the purchase of
Units to any person, have reasonable grounds to believe, on the basis of
information obtained from such person concerning his investment objectives,
financial situation and needs and any other information known to you, that
the investment is suitable for such person and that such person is in a
financial position and has sufficient net worth to benefit from, and sustain
the risks of, such investment; and you further acknowledge that prior to
executing a transaction, you will have informed the prospective purchaser of
all pertinent facts relating to the liquidity and marketability of the Units;
and you further agree to maintain in your files and make available for a
period of at least six years documentation concerning the basis upon which
you determined the suitability of such investment for each potential
purchaser; and you further agree that you will not execute any purchase of
Units for a discretionary account without prior written approval of the
customer; and
(b) Insofar as the distribution of the offering is within your
control and not the Partnership's, you agree that the distribution of the
offering will comply with the Act and the securities laws (including applicable
suitability standards) of the jurisdictions in which you offer the Units.
6. Conditions of Your Obligations. Your obligations hereunder shall be
subject, in your discretion, to the conditions (i) that all representations and
warranties and other statements of the Partnership and the General Partner
contained in this Agreement are at and as of the Effective Date, the Closing
Date and each Subsequent Closing Date true and correct and (ii) that the
Partnership and the General Partner shall have performed all of their
obligations hereunder to be performed on the Effective Date, the Closing Date
and each Subsequent Closing Date. In addition, your obligations shall be subject
to the following conditions:
(a) The Registration Statement shall have become effective, and you
shall, have received notice thereof, not later than 10:00 a.m., eastern standard
time, on the date of this Agreement, or at such other time and date as you may
agree; at the Closing Date and each Subsequent Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the commission and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
-12-
(b) The United States shall not have become engaged in hostilities
which resulted in the declaration, on or after the date of this Agreement, of a
national emergency or war the effect of which in your reasonable judgment makes
it impracticable or inadvisable to proceed with the public offering of the Units
in the manner contemplated in the Prospectus;
(c) No domestic or international event or act shall have materially
disrupted, or in the reasonable exercise of your opinion will in the immediate
future materially disrupt, securities markets; trading on the New York Stock
Exchange, the American Stock Exchange or the NASD's automated quotation system
("NASDAQ") shall not have been suspended; minimum prices for trading shall not
have been fixed, and maximum ranges for prices for securities shall not have
been required on the New York Stock Exchange, the American Stock Exchange or
NASDAQ; no banking moratorium shall have been declared by a state or federal
authority; and there shall have been no other development having a materially
adverse impact on the Partnership or the General Partner;
(d) The Partnership shall have furnished or caused to be furnished
to you at the Effective Date, the Closing Date, and each Subsequent Closing
Date, if any, certificates of the Partnership and the General Partner,
reasonably satisfactory to you, as to the accuracy of the representations and
warranties of the Partnership and the General Partner herein at and as of the
Effective Date, the Closing Date and each Subsequent Closing Date, if any, as
the case may be, and as to the performance by the Partnership and the General
Partner of all of their obligations hereunder to be performed at or prior to the
Effective Date, the Closing Date and each Subsequent Closing Date, as the case
may be.
7. Indemnification. (a) The Partnership and the General Partner jointly
and severally agree to indemnify you and hold you harmless against any losses,
claims, damages or liabilities, joint or several, to which you may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement thereto
(including any supplemental sales literature
-13-
furnished to you), or arise out of or are based upon the omission or alleged
omissions to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading or arise out of or are
based upon any misrepresentation or breach of warranty or any alleged
misrepresentation or breach of warranty set forth in section 1 of this
Agreement, or arise out of or are based upon the failure of by any of the
Partnership or the General Partner (including their affiliates to the extent
required) to comply with sections 1 and 3 of this Agreement; and the Partnership
and the General Partner shall reimburse you for any legal or other expenses
reasonably incurred by you in connection with investigating or defending any
such action or claim; provided, however, that the Partnership and the General
Partner shall not be liable in any case to the extent that (i) any loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omissions or alleged omission made in the
Registration Statement, the Prospectus, or any such amendment or supplement
thereto (including any supplemental sales literature furnished to you) in
reliance upon and in conformity with written information furnished by you
expressly for use therein or (ii) if such statement or omission was contained in
any Prospectus and corrected in a later Prospectus or Supplement and you failed
to deliver or provide a copy of the later Prospectus or Supplement at or prior
to the confirmation of the sale of Units.
(b) You agree to indemnify and hold harmless the Partnership and the
General Partner against any losses, claims, damages or liabilities (whether
joint or several) to which the Partnership or the General Partner may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of your failure to comply
with your covenants contained in section 5 of this Agreement, or arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, the Prospectus, or any amendment
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, the Prospectus, or any such amendment or supplement thereto in
reliance upon and in conformity with written information furnished by you
expressly for use therein.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under this section 7 except to the extent
that the indemnifying party was prejudiced by such failure to notify. In case
any such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying part
shall be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such
-14-
subsection for any legal expenses of other counsel or any other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
(d) If the indemnification provided for in this section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referenced therein other than by
reason of the provisions thereto, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Partnership on the one hand and you on the other from the offering of the Units.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law or is not allowed because the indemnified party
failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Partnership and the General
Partner on the one hand and you on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Partnership on the one
hand and you on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Partnership bear to the total underwriting commissions received by you. 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 omissions or
alleged omission to state a material fact relates to information supplied by the
General Partner on the one hand or you on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement of omission. The General Partner and you agree to that it would
not be just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referenced above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referenced above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The obligations of the Partnership and the General Partner under
this section 7 shall be in addition to any liability, whether joint or several,
which the Partnership and the General Partner may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
you within the meaning of the Act; and your obligations under this section 7
shall be in addition to any liability which you may otherwise have and shall
extend, upon the same terms and conditions, to the Partnership and the General
Partner and to each person, if any, who controls them within the meaning of the
Act.
-15-
(f) Notwithstanding the above, any person acting as a broker-dealer
shall not be indemnified by the Partnership for any losses, liabilities or
expenses arising from or out of an alleged violation of federal or state
securities laws unless (i) there has been a successful adjudication on the
merits of each count involving alleged securities laws violations as to the
particular indemnitee and court approval of indemnification of litigation costs,
or (ii) such claims have been dismissed with prejudice on the merits by a court
of competent jurisdiction as to the particular indemnitee and the court has
approved the indemnification of litigation costs or (iii) a court of competent
jurisdiction approves a settlement of the claims against a particular indemnitee
and indemnification of settlement and related costs. In any claim for
indemnification for federal or state securities law violations, the party
seeking indemnification shall place before the court the position of the
Securities and Exchange Commission, the Massachusetts Securities Division, the
Pennsylvania Securities Commission and other applicable state securities
commissions with respect to the issue of indemnification for securities law
violations.
8. Survival of Agreement. The respective indemnities, agreements,
representations, warranties and other statements of the Partnership and the
General Partner and you as set forth in this Agreement or made by or on behalf
of them and you pursuant to this Agreement shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or an behalf of you or any controlling person of you or the
Partnership or the General Partner and shall survive the Closing Date and each
Subsequent Closing Date.
9. Effective Date of This Agreement. This Agreement shall become effective
(the "Effective Date") upon the execution of this Agreement.
10. Post-Effective Amendment. The Partnership and the General Partner
represent and warrant to you that if, on the Minimum Offering Date,
subscriptions for at least 75,000 Units shall not have been received, they will
file a post-effective amendment to the Registration Statement de-registering all
of the Units and if, at the Offering Termination Date, subscriptions for all
750,000 of the Units shall not have been received, they will file a
post-effective amendment to the Registration Statement deregistering the unsold
Units and, in either case, will terminate any additional offering of Units and
warrant to you that they will file all reports required by the Regulations with
regard to sales of the Units and use of the proceeds therefrom.
11. Notice. All statements, requests, notices, and agreements hereunder
shall be in writing (or by telegram if promptly confirmed in writing) and, if to
you, shall be sufficient in all respects when delivered or sent by registered
mail or Federal Express (or similar nationally recognized overnight mail
service) to you at Commonwealth Capital Securities Corp., 0000 Xxxx Xxxxxxxxxx
Xxxx, Xxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxxxxxx X. XxxXxxxxxx; and, if to
the Partnership, shall be sufficient in all respects if delivered or sent by
registered mail or Federal Express (or similar nationally recognized overnight
mail service) to the Partnership at 0000 Xxxx Xxxxxxxxxx Xxxx, Xxxxxx,
Xxxxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxxxxx.
-16-
12. Binding Agreements. This Agreement shall be binding upon and inure
solely to your benefit, the benefit of the Partnership and, to the extent
provided in sections 7 and 8 hereof, the General Partner, each person who
controls the Partnership or you and their respective heirs, executors,
administrators, successors and assigns; and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Units shall be deemed a successor or assign by reason merely of such purchase.
All representations, warranties and covenants made by the Partnership or the
General Partner shall inure to the benefit of any Participating Broker engaged
by you to assist in the sale of the Units pursuant to the terms of a
Participating Broker Agreement substantially in the form of Exhibit B hereto.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Pennsylvania.
14. Exclusive Jurisdiction. Any disputes arising out of or related to
this Agreement shall be subject to the exclusive jurisdiction of the Court of
Common Pleas of Pennsylvania in the County of Delaware or the Federal
District Court for the Eastern District of Pennsylvania.
15. Counterparts. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us four counterparts hereof; and upon the acceptance hereof by you,
this letter and such acceptance hereof shall constitute a binding agreement
among the parties hereto.
Very truly yours,
COMMONWEALTH INCOME & GROWTH
FUND III, a Pennsylvania limited partnership
By: COMMONWEALTH INCOME & GROWTH
FUND, INC., a Pennsylvania corporation,
General Partner
By:
-------------------------------
Xxxxxx X. Xxxxxxxxxxx,
President
COMMONWEALTH INCOME & GROWTH
FUND, INC., a Pennsylvania corporation
By:
-------------------------------
Xxxxxx X. Xxxxxxxxxxx,
President
-17-
Confirmed and Accepted
as of the date hereof
at ____________________:
COMMONWEALTH CAPITAL
SECURITIES CORP.
By:
------------------------
-18-
PARTICIPATING BROKER AGREEMENT
COMMONWEALTH INCOME & GROWTH FUND III
LIMITED PARTNERSHIP
THIS PARTICIPATING BROKER AGREEMENT (the "Agreement") is made and entered
into as of the day indicated on Exhibit A attached hereto and by this
reference incorporated herein, between Commonwealth Capital Securities Corp.,
a Pennsylvania corporation (the "Dealer Manager"), and the Participating
Broker (the "Participating Broker") identified in Exhibit A hereto.
WHEREAS COMMONWEALTH INCOME & GROWTH FUND III, is a limited partnership
(the "Partnership") duly organized under the Revised Uniform Limited
Partnership Act (1986) as enacted in the Commonwealth of Pennsylvania; and
WHEREAS, COMMONWEALTH INCOME & GROWTH FUND, INC., a Pennsylvania
corporation is serving as the general partner (the "General Partner") of the
Partnership; and
WHEREAS, the Partnership proposes to offer and sell up to 750,000 Units
of limited partnership interest in the Partnership ("Units") to the general
public, pursuant to a public offering (the "Offering") of the Units which
shall be registered with the Securities and Exchange Commission ("SEC"); and
WHEREAS, the Dealer Manager, which has heretofore entered into an agency
agreement with the Partnership pursuant to which it has been designated the
Dealer Manager to sell and manage the sale by others of the Units pursuant to
the terms of such agreement and the Offering (the "Agency Agreement"), is a
corporation incorporated in and presently in good standing in the
Commonwealth of Pennsylvania, and is presently registered with the
Pennsylvania Securities Commission and with the National Association of
Securities Dealers, Inc. ("NASD") as a securities broker-dealer qualified to
offer and sell to members of the public securities of the type represented by
the Units; and
WHEREAS, the Participating Broker is an entity, as designated in Exhibit
A hereto, organized and presently in good standing in the state or states
designated in Exhibit A hereto, presently registered as a broker-dealer with
the NASD, and presently licensed by the appropriate regulatory agency of each
state in which it will offer and sell the Units as a securities broker-dealer
qualified to offer and sell to members of the public securities of the type
represented by the Units; and
WHEREAS, the Partnership has filed with the SEC a registration statement
on Form S-1, including a preliminary or final prospectus, for the
registration of the Units under the Securities Act of 1933, as amended (the
"Securities Act") (such registration statement, as it may be amended, and the
prospectus and exhibits on file with the SEC at the time the registration
statement becomes effective, including any post-effective amendments or
supplements to such registration statement or prospectus after the effective
date of registration, being herein respectively referred to as the
"Registration Statement" and the "Prospectus"); and
WHEREAS, the offer and sale of the Units shall be made pursuant to the
terms and conditions of the Registration Statement and the Prospectus and,
further, pursuant to the terms and conditions of all applicable securities
laws of all states in which the Units are offered and sold; and
-1-
WHEREAS, the Dealer Manager desires to retain the Participating Broker
to use its best efforts to sell the Units, and the Participating Broker is
willing and desires to serve as a broker for the Dealer Manager for the sale
of the Units upon the following terms and conditions;
NOW THEREFORE, in consideration of the premises and terms and conditions
thereof, it is agreed between the Dealer Manager and the Participating Broker
as follows.
1. Engagement.
(a) Subject to the terms and conditions herein set forth, the Dealer
Manager hereby engages the Participating Broker and the Participating Broker
hereby agrees and covenants to use its best efforts to sell for the account
of the Partnership a portion of the Units described in the Registration
Statement, as specified on Exhibit A hereto. The Participating Broker hereby
accepts such engagement and covenants, warrants and agrees to sell the Units
according to all of the terms and conditions of the Registration Statement,
all applicable state and federal laws, including the Securities Act and any and
all regulations and rules pertaining thereto,
heretofore or hereafter issued by the SEC and the NASD, including but not
limited to NASD's Rules of Fair Practice.
(b) The Participating Broker shall use its best efforts, promptly
following receipt of written notice from the Dealer Manager of the effective
date of the Registration Statement, to sell the Units in such quantities and
for the account of such Partnership as shall be agreed between the
Participating Broker and Dealer Manager and specified on Exhibit A hereto,
and to such persons and according to all such terms as are contained in the
Registration Statement and the Prospectus. The Participating Broker shall
comply with all requirements set forth in the Registration Statement and
Prospectus. The Participating Broker understands and will advise potential
investors that all sales of the Units will be for Units of limited
partnership interest in COMMONWEALTH INCOME & GROWTH FUND III. The
Participating Broker shall use and distribute, in connection with the offer
and sale of the Units, only the Prospectus and such sales materials and
advertising as shall conform in all respects to any restrictions of local law
and the applicable requirements of the Securities Act and which has been
approved in writing by the General Partner or the Dealer Manager. The
Participating Broker will make a record of its distribution of each
preliminary prospectus, and when furnished with copies of any revised
preliminary prospectus, Participating Broker will, upon the request of the
Dealer Manager, promptly forward copies thereof to each person to whom
Participating Broker has theretofore distributed a preliminary prospectus.
The Dealer Manager reserves the right to establish such additional procedures
as it may deem necessary to ensure compliance with the requirements of the
Registration Statement, and the Participating Broker shall comply with all such
additional procedures to the extent that it has received written notice thereof.
(c) The Participating Broker shall be permitted to accept subscriptions
for the Units (the "Subscription(s)") by telephone from residents of those
states identified on Schedule A attached hereto and made a part hereof
provided that (1) the registered representative and branch manager of the
Participating Broker execute the subscription agreement attached as Appendix
III to the Prospectus (the "Subscription Agreement") on behalf of any
investor who subscribes for Units by telephone; and (2) the Participating
Broker does not charge any additional fees, including but not limited to,
fees relating to the opening of an account with the Participating Broker, to
any investor who telephonically or orally subscribes for Units. It is
understood and agreed between the Dealer Manager and the Participating Broker
that the Dealer Manager may, in its discretion, change, modify, add to or
delete from the list of states identified on Schedule A. Any such
modification shall be effective three (3) days from the date written notice
to the Participating Broker has been mailed by the Dealer Manager. The
Participating Broker shall not execute a Subscription Agreement on behalf of
any investor who subscribes for Units by telephone unless such investor has
specifically authorized the registered representative and the branch manager
of the Participating Broker to execute the Subscription Agreement on behalf
of such investor and has made or agreed to make full payment for all Units
covered by such Subscription Agreement. Notwithstanding anything contained
herein to the contrary, the Participating Broker shall have no authority to
make representations on behalf of an investor or to initial representations
contained in the Subscription Agreement on behalf of an investor. In
connection with telephonic or other oral Subscriptions for Units, the
Participating Broker represents and warrants as follows: (i) that a
Prospectus was delivered to the investor before the investor made a decision
to invest; (ii) that
-2-
the investor meets the suitability requirements set forth in the Prospectus;
and (iii) that, in compliance with Appendix F to Article 3, Section 34 of the
NASD's Rules of Fair Practice, the Participating Broker has reasonable
grounds to believe and does believe that the investment in the Partnership is
suitable for the investor, based upon information supplied by the investor to
such Participating Broker.
(d) Notwithstanding anything to the contrary contained in Section 2 of
this Agreement, in the event that the Dealer Manager pays any commission to
the Participating Broker for sale of one or more Units, including, but not
limited to, those Units sold pursuant to a telephonic or other oral
Subscription therefore, where representatives of the Participating Broker
execute the Subscription Agreement relating to such Units, and the
Subscription is rescinded as to one or more of the Units covered by such
Subscription, the Dealer Manager shall decrease the next payment of
commission or other compensation otherwise payable to the Participating
Broker by the Dealer Manager under this Agreement by an amount equal to the
commissions rate established in Section 2 and Exhibit A of this Agreement,
multiplied by the number of Units as to which the Subscription is rescinded.
In the event that no payment of commissions or other compensation is due to
the Participating Broker after such withdrawal occurs, the Participating
Broker shall pay the amount specified in the preceding sentence to the Dealer
Manager within ten (10) days following mailing of notice to the Participating
Broker by the Dealer Manager stating the amount owed as a result of rescinded
Subscriptions.
(e) All monies received for purchase of any of the Units shall be
forwarded by the Participating Broker to the Dealer Manager for delivery to
PNC Bank (the "Escrow Agent") or, if final internal supervisory review is
conducted at a different location, to such final review office by the end of
such next business day, which in turn will transmit same to the Escrow Agent
by the end of the next business day following its receipt thereof, where such
monies will be deposited in an escrow account established by the Partnership
solely for such Subscriptions ("Escrow Account") until such time (if any)
that such monies are deliverable to the Partnership pursuant to the escrow
agreement between the Partnership and the Escrow Agent ("Escrow Agreement"),
except the Participating Broker shall return any check not made payable to
"PNC Bank, Escrow Agent" directly to the Subscriber who submitted the check.
After such time that monies are deliverable to the Partnership, the
Participating Broker may accept checks made payable to either the Partnership
or the Escrow Agent. Subscriptions will be executed as described in the
Registration Statement or as directed by the Dealer Manager. The monies
shall be deposited or transmitted by the Participating Broker to the Dealer
Manager no later than the close of business of the next business day after
receipt of the Subscription documents by the Participating Broker; provided,
however, that if the Participating Broker maintains a branch office, the
branch office shall transmit the Subscription documents and check to the
Participating Broker by the close of business on the first business day
following their receipt by the branch office and the Participating Broker
shall review the Subscription documents and check to ensure their proper
execution and form and, if they are acceptable, transmit the check to the
Dealer Manager by the close of business on the first business day after their
receipt by the Participating Broker. Pursuant to the terms of the Agency
Agreement, the Dealer Manager will transmit the check or monies to the Escrow
Agent by no later than the close of business on the next business day after
the check is received from the Participating Broker, unless a final
supervisory review is being conducted as set forth above, in which instance
the final review office will transmit the same to the Escrow Agent by the end
of the next business day following receipt thereof.
(f) During the term of this Agreement, the Dealer Manager shall have
authority to take such action as it may deem advisable in respect to all
matters pertaining to the performance of the Participating Broker under this
Agreement.
(g) The Units shall be offered and sold by the Participating Broker only
where the Units may be legally offered and sold, and only to such persons in
such states who shall be legally qualified to purchase the Units. The Dealer
Manager shall give the Participating Broker written notice at the time of
effectiveness of those states in which the offering and sale of Units may be
made, and shall amend such notice thereafter as additional states are added;
no Units shall be offered or sold in any other states.
(h) The Participating Broker shall have no obligation under this
Agreement to purchase any of the Units for its own account.
-3-
(i) The Participating Broker will use every reasonable effort to assure
that Units are sold only to investors who:
(1) meet the investor suitability standards, including the minimum
income and net worth standard established by the Partnership, and minimum
purchase requirements set forth in the Registration Statement;
(2) can reasonably benefit from investment in the Partnership based
on the prospective investor's overall investment objectives and portfolio
structure;
(3) is able to bear the economic risk of the investment based on
the prospective investor's overall financial situation; and
(4) has apparent understanding of: (a) the fundamental risks of
the investment; (b) the risk that the prospective investor may lose the
entire investment; (c) the lack of liquidity of the Units; (d) the
restrictions on transferability of the Units; (e) the background and
qualifications of the General Partner; and (f) the tax consequences of an
investment in the Units.
(j) The Participating Broker will make the determinations required to be
made by it pursuant to Section 1(i) based on information it has obtained
from a prospective investor, including, at a minimum, but not limited to, the
prospective investor's age, investment objectives, investment experience,
income, net worth, financial situation, other investments of the prospective
investor, as well as any other pertinent factors deemed by the Participating
Broker to be relevant.
(k) In addition to the complying with the provisions of Section 1(i)
above, and not in limitation of any other obligations of the Participating
Broker to determine suitability imposed by state or federal law, the
Participating Broker agrees that it will comply fully with all of the
provisions of Rule 2810 of the NASD's Rules of Conduct, including specifically
the following provisions:
(1) The Participating Broker shall have reasonable grounds to
believe and shall believe, based upon information provided by the investor
concerning the investor's other investments, financial situation and needs,
and upon any other information known by the Participating Broker, that (a)
each investor to whom the Participating Broker sells Units is or will be in a
financial position appropriate to enable the investor to realize to a
significant extent the benefits (including tax benefits) of an investment in
the Units, (b) each investor to whom the Participating Broker sells Units has
a net worth sufficient to sustain the risks inherent in an investment in the
Units (including potential loss and lack of liquidity), and (c) the Units
otherwise are or will be suitable investment for each investor to whom it
sells Units, and the Participating Broker shall maintain files disclosing the
basis upon which the determination of suitability was made;
(2) The Participating Broker shall not execute any transaction
involving the purchase of Units in a discretionary account without prior
written approval of the transaction by the investor;
(3) The Participating Broker shall have reasonable grounds to
believe and shall believe, based upon the information made available to it,
that all material facts are adequately and accurately disclosed in the
Registration Statement and provide a basis for evaluating the Units;
(4) In making the determination set forth in subparagraph (3)
above, the Participating Broker shall evaluate items of compensation,
physical properties, tax aspects, financial stability and experience of the
sponsor, conflicts of interest and risk factors, appraisals, as well as any
other information deemed pertinent by it;
(5) If the Participating Broker relies upon the results of any
inquiry conducted by another member of the NASD with respect to the
obligations set forth in Section 1(k)(3) or (4) above, the Participating
Broker shall have reasonable grounds to believe and shall believe that such
inquiry was conducted with due care, that the member or members conducting or
directing the inquiry consented to the disclosure of the results of the
inquiry and that the person who participated in or conducted the inquiry is
not a sponsor or an affiliate of the sponsor of the Partnership; and
(6) Prior to executing a purchase transaction in the Units, the
Participating Broker shall have informed the prospective investor of all
pertinent facts relating to the liquidity and marketability of the Units.
-4-
(l) The Participating Xxxxxx agrees that it will comply with Sections
2420, 2730, 2740 and 2750 of the NASD's Rules of Conduct.
(m) The Participating Broker agrees to retain in its files, for a period
of at least 6 years, information which will establish that each purchaser of
Units falls within the permitted class of investors.
(n) The Participating Broker shall not, directly or indirectly, pay or
award any finder's fees, commissions or other compensation to any persons
engaged by a potential Limited Partner for investment advice as an inducement
to such advisor to advise the potential investor to purchase Units in the
Partnership.
(o) The Participating Broker either (i) shall not purchase Units for its
own account or (ii) shall hold for investment any Units purchased for its own
account.
(p) The Participating Broker hereby confirms that it is familiar with
Securities Act Release No. 4968 and Rule 15c2-8 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), relating to the distribution of
preliminary and final prospectuses, and confirms that it has and will comply
therewith.
(q) The Participating Broker represents and warrants that it is (i) an
entity, as designated in Exhibit A hereto, organized and presently in good
standing in the state or states designated in Exhibit A hereto, (ii) duly
registered as a broker-dealer under the provisions of the Exchange Act, and
the regulations promulgated thereunder, (iii) a member in good standing of
NASD; (iv) presently licensed by the appropriate regulatory agency of each
state in which it will offer and sell the Units as a securities broker-dealer
qualified to offer and sell to members of the public securities of the type
represented by the Units; and (v) neither Participating Broker nor any of
Participating Broker's officers, directors or agents is the subject of any
federal or state administrative or judicial proceeding or order which would
disqualify it from participating in offerings registered under the
Securities Act.
2. Compensation of Participating Broker.
The Dealer Manager shall pay the Participating Broker, as compensation
for all services to be rendered by the Participating Broker hereunder, a
commission equal to 8.0% on sales of Units by such Participating Broker, as
set forth in Exhibit A hereto, subject to reduction as specified in the
Prospectus. The Dealer Manager, in its sole discretion, may reallow to the
Participating Broker from its Dealer Manager fee, up to an additional 1.0% on
sales of Units by such Participating Broker, based on such factors as the
number of Units sold by the Participating Broker, bona fide due diligence
expenses incurred by the Participating Broker. Such commission rates shall
remain in effect during the term of this Agreement unless otherwise changed
by a written agreement between the parties hereto. A sale of Units shall be
deemed to be completed only after a Partnership receives a properly completed
Subscription Agreement for Units of such Partnership from the Participating
Broker evidencing the fact that the investor had received a final Prospectus
for a period of not less than five full business days, together with payment
of the full purchase price of each purchased Unit of such Partnership from a
buyer who satisfies each of the terms and conditions of the Registration
Statement and Prospectus, and only after such Subscription Agreement has been
accepted in writing by the General Partner of the Partnership. Such
compensation shall be payable to the Participating Broker by the Dealer
Manager after such acceptance of the subscription agreement; provided,
however, that compensation or commissions shall not be paid by the Dealer
Manager (i) other than from funds received as compensation or commissions
from the Partnership for the sale of Units; (ii) until such time as
Subscriptions for a minimum of 75,000 Units of such Partnership ($1,500,000)
have been received and approved by the General Partner, and deposited into
the Escrow Account provided for in Section 1(e) hereof; (iii) until any and
all compensation or commissions payable by such Partnership to the Dealer
Manager have been received by the Dealer Manager; and (iv) the commission
payable to any broker-dealer or salesman exceeds the amount allowed by any
regulatory agency. The Partnership (and the Dealer Manager) may pay reduced
commissions or may eliminate commissions on certain sales of Units in
accordance with, and on the terms set forth in, the following five paragraphs
(including the following table) of this Section 2, which reduction or
elimination of commissions will not, however, change the net proceeds to the
Partnership.
A registered principal or representative of the Dealer Manager or a
Participating Broker, when purchasing on its own behalf, may purchase Units
net of all or a portion of the 8% selling commission. In connection with
-5-
purchases of certain minimum numbers of Units, the amount of commissions
otherwise payable to the Dealer Manager or a Participating Broker, shall be
reduced in accordance with the following schedule:
Dollar Amount Reallowed Commissions
of Units Purchase Price on Sales/Unit
Purchased Per Unit Percent
$ 1,000 - $ 250,000 $20.00 8.0%
$ 250,020 - $ 350,000 $19.80 7.0%
$ 350,020 - $ 500,000 $19.60 6.0%
$ 500,020 - $ 750,000 $19.40 6.0%
$ 750,020 - $1,000,000 $19.20 5.0%
$ 1,000,020 or more $19.00 4.0%
Subscriptions for Units of COMMONWEALTH INCOME & GROWTH FUND III may not
be combined in determining the volume discount to which an investor may be
entitled. Any such reduction in commissions will be credited to the
purchaser as defined below ("Purchaser"), by reducing the total purchase
price otherwise payable by the Purchaser.
Subscriptions may be combined for the purpose of determining the volume
discounts in the case of Subscriptions made by any Purchaser, provided all
such units are purchased through the same Participating Broker or through the
Dealer Manager. The volume discount will be prorated among the separate
Subscribers considered to be a single Purchaser.
Any request to combine more than one Subscription must be made in writing
in a form satisfactory to the General Partner and must set forth the basis
for such request. Any such request will be subject to verification by the
Dealer Manager that all of such Subscriptions were made by a single
Purchaser. If a Purchaser does not reduce the per Unit purchase price,
the excess purchase price over the discounted purchase price will be returned
to the actual separate Subscribers for Units.
For purposes of such volume discounts, Purchaser is defined as: (i) an
individual, his or her spouse, and their children under the age of 21, who
purchase the Units for his or her or their own accounts, and all pension or
trust funds established by each such individual; (ii) a corporation,
partnership, association, joint-stock company, trust fund, or any organized
group of persons, whether incorporated or not (provided that the entities
described in this clause (ii) must have been in existence for at least six
months before purchasing the Units and must have formed such group for a
purpose other than to purchase the Units at a discount); (iii) an employee's
trust, pension, profit-sharing, or other employee benefit plan that qualifies
under Section 401 of the Internal Revenue Code of 1986, as amended; and (iv)
all pension, trust, or other funds are maintained by a given bank. In
addition, the General Partner, in its sole discretion, may aggregate and
combine separate subscriptions for Units received during the Offering from
(i) the Dealer Manager or the same Participating Broker; (ii) investors whose
accounts are managed by a single investment adviser registered under the
Investment Advisers Act of 1940; (iii) investors over whose accounts a
designated bank, insurance company, trust company, or other entity exercises
discretionary investment responsibility or (iv) a single corporation,
partnership, trust association, or other organized group of persons, whether
incorporated or not, and whether such subscriptions are by or for the benefit
of such corporation, partnership, trust association, or group.
3. Association with Other Dealers.
It is expressly understood between the Dealer Manager and the
Participating Broker that the Dealer Manager may cooperate with other
broker-dealers who are registered as broker-dealers with the NASD and duly
licensed by the appropriate regulatory agency of each state in which they
will offer and sell the Units of the Partnership. Such other participating
broker-dealers may be engaged by the Dealer Manager as brokers on terms and
conditions identical or similar to this Agreement and shall receive such
rates of commission as are agreed to
-6-
between the Dealer Manager and the respective other participating
broker-dealers and as are in accordance with the terms of the Registration
Statement. The Participating Broker understands that, to that extent, such
other participating broker-dealers shall compete with the Participating
Broker in the sale of the Units. If the participating broker-dealers,
including the Participating Broker, among themselves, should be deemed to
constitute a partnership for Federal income tax purposes, then Participating
Broker hereby elects to be excluded from the application of Subchapter K,
Chapter 1, Subtitle A of the Internal Revenue Code of 1986 and agrees not to
take any position inconsistent with that election. Participating Broker
further hereby authorizes the Dealer Manager, in its discretion, to execute
and file on behalf of the Participating Broker such evidence of that election
as may be required by the Internal Revenue Service.
4. Conditions of the Participating Xxxxxx's Obligations.
The Participating Broker's obligations hereunder are subject, during the
term of this Agreement and the Offering, to: (a) the performance by the
Dealer Manager of its obligations hereunder; and (b) the conditions that:
(i) the Registration Statement shall become and remain effective; and (ii) no
stop order shall have been issued suspending the effectiveness of the
Offering.
5. Conditions to the Dealer Manager's Obligations.
The obligations of the Dealer Manager hereunder are subject, during the
term of this Agreement and the Offering, to the conditions that: (a) at the
effective date of the Registration Statement and thereafter during the term
of this Agreement while any Units remain unsold, the Registration Statement
shall remain in full force and effect authorizing the offer and sale of the
Units; (b) no stop order suspending the effectiveness of the Offering or
other order restraining the offer or sale of the Units shall have been issued
nor proceedings therefor initiated or threatened by any state regulatory
agency or the SEC; and (c) the Participating Broker shall have satisfactorily
performed all of its obligations hereunder.
6. Covenants of the Dealer Manager.
The Dealer Manager covenants, warrants and represents, during the
term of this Agreement, that:
(a) It shall use its best efforts to cause the Partnerships to maintain
the effectiveness of the Registration Statement and to file such applications
or amendments to the Registration Statement as may be reasonably necessary
for that purpose.
(b) It shall advise the Participating Broker whenever and as soon as it
receives or learns of any order issued by the SEC, any state regulatory
agency or any other regulatory agency which suspends the effectiveness of the
Registration Statement or prevents the use of the Prospectus or which
otherwise prevents or suspends the offering or sale of the Units, or receives
notice of any proceedings regarding any such order.
(c) It shall use its best efforts to prevent the issuance of any order
described herein at Section 6 (b) hereof and to obtain the lifting of any
such order if issued.
(d) It shall give the Participating Broker written notice when the
Registration Statement becomes effective and shall deliver to the
Participating Broker such number of copies of the Prospectus, and any
supplements and amendments thereto, which are finally approved by the SEC, as
the Participating Broker may reasonably request for sale of the Units.
(e) It shall promptly notify the Participating Broker of any
post-effective amendments or supplements to the Registration Statement or
Prospectus, and shall furnish the Participating Broker with copies of any
revised Prospectus and/or supplements and amendments to the Prospectus.
(f) To the extent to which the Dealer Manager has knowledge, it shall
keep the Participating Broker fully informed of any material development to
which either Partnership is a party or which concerns the business and
condition of either Partnership.
-7-
(g) In conjunction with the Partnership on whose behalf Units are being
offered, it shall use its best efforts to cause, at or prior to the time the
Registration Statement becomes effective, the qualification of the Units for
offering and sale under the securities laws of such states as that
Partnership shall elect.
7. Payment of Costs and Expenses.
The Participating Broker shall pay all costs and expenses incident to the
performance of its obligations under this Agreement, including:
(a) All expenses incident to the preparation, printing and filing of all
advertising originated by it related to the sale of the Units; and
(b) All other costs and expenses incurred in connection with its sales
efforts related to the sales of the Units which are not expressly assumed by
the Partnership in its Agency Agreement with the Dealer Manager.
8. Indemnification.
(a) The Participating Broker agrees to indemnify, defend and hold
harmless the Partnership, the General Partner, the General Partner's
affiliates and its officers, directors, employees and agents, including the
Dealer Manager, against all losses, claims, demands, liabilities and
expenses, joint or several, including reasonable legal and other expenses
incurred in defending such claims or liabilities, whether or not resulting in
any liability to the Partnership, the General Partner, its affiliates and its
officers, directors, employees or agents, which they or any of them may incur
arising out of any offer or sale by the Participating Broker, or any person
acting on its behalf, of any Units pursuant to this Agreement if such loss,
claim, demand, liability, or expense arises out of or is based upon (i) an
untrue statement or alleged untrue statement of a material fact, or any
omission or alleged omission of a material fact, other than a statement,
omission, or alleged omission by the Participating Broker which is also, as
the case may be, contained in or omitted from the Prospectus or the
Registration Statement, as filed and in effect with the SEC, or in the
amendment or supplement thereto and which statement or omission was not based
on information supplied to the Partnership or the Dealer Manager by such
Participating Broker, or (ii) the breach by the Participating Broker, or any
person acting on its behalf, of any of the terms and conditions of this
Agreement. This indemnity provision shall survive the termination of this
Agreement.
(b) In the Agency Agreement, the General Partner has agreed that it will
indemnify and hold harmless the Dealer Manager and Participating Broker
against any losses, claims, damages or liabilities, joint or several, to
which they may become subject insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
(i) a breach of any covenant or obligation of the General Partner in the
Agency Agreement or any representation or warranty of the General Partner in
the Agency Agreement or in the certificates provided pursuant to Paragraph
6(f) of the Agency Agreement, or (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus or any omission or
alleged omission to state therein a material fact necessary to make the
statements therein not misleading; and will reimburse the Dealer Manager and
Participating Broker for any legal or other expenses reasonably incurred by
it in connection with investigating or defending against such loss, claim,
damage, liability or action; provided, however, that it shall 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 ommission or alleged omission made in the Prospectus in reliance
upon and in conformity with information supplied with respect to the Dealer
Manager or Participating Broker or any other agent which may offer and sell
the Units, or their affiliates, in writing, expressly for use therein. This
indemnity agreement is in addition to any liability which the General Partner
may otherwise have.
(c) No indemnifying party shall be liable under Sections 8(a) and 8(b)
above unless the party to be indemnified shall have notified such
indemnifying party in writing promptly after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon the party to be indemnified, but failure to notify an indemnifying party
of any such claim shall not relieve it from any liabilities which it may have
to the indemnified party against whom action is brought other than on account
of its indemnity agreement contained in Sections 8(a) and 8(b) above. In the
cases of any such claim, if the party to be indemnified notified the
indemnifying party of the commencement thereof as aforesaid, the indemnifying
party shall be entitled to participate at its own expense in the defense of
such claim. If it so elects, in accordance with arrangements satisfactory to
any other indemnifying party or parties similarly notified, the indemnifying
party has the option to assume the defense of the claim, with counsel who
shall be satisfactory to such indemnified party and all other indemnified
parties who are defendants in such action; and after notice from the
indemnifying party of its election so to assume the defense thereof and the
retaining of such counsel by the indemnifying party, the indemnifying party
shall not be liable to such indemnified party under Sections 8(a)
-8-
and 8(b) above for any legal or other expenses, other than for the reasonable
costs of investigation, subsequently incurred by such indemnified party in
connection with the defense thereof, including but not limited to any legal
expenses the indemnified party will incur if the indemnified party elects, at
its option, to retain additional counsel to participate in the defense.
No indemnifying party shall be liable to indemnify any person for any
settlement of any action effected without the consent of such indemnifying
party.
(d) In order to provide for just and equitable contribution in
circumstance in which the indemnification provided in Sections 8(a), (b) and
(c) is for any reason other than the terms thereof held to be unavailable,
the parties entitled to indemnification by the terms hereof shall be entitled
to contribution for liabilities and expenses (including the reasonable costs
of investigation but after deducting any contribution received by such
parties from any other person) in such proportion as is appropriate to
reflect the relative benefits received by such parties from the offering of
the Units. If, however, the allocation provided by the preceding sentence is
not permitted by applicable law, then such contribution shall be in such
proportion as is appropriate to reflect such relative benefits and also the
relative fault of such parties in connection with the misstatement or
omissions which result in such losses, claims, damages or liabilities, as
well as other equitable considerations. The parties agree that it would not
be just and equitable if contribution were determined by pro rata allocation
or by any other method which does not take into account the equitable
considerations referred to above, and that no person guilty of such
fraudulent misrepresentation shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. Each party
who may seek contribution under this Section 8(d) shall, promptly after
receipt of notice of commencement of any action, suit or proceeding against
such party in respect of which a claim for contribution may be made against
another party or parties under this Section 8(d), give written notice of the
commencement of such action, suit or proceeding to the other party or parties
from whom such contribution may be sought, but the omission so to notify such
contributing party or parties shall not relieve the party or parties from
whom contribution may be sought from any other obligation it or they may have
otherwise than on account of this Section 8(d).
9. Term of Agreement.
This Agreement shall become effective at 8:00 a.m. (Eastern Standard
Time) of the first full business day following the day on which the
Registration Statement becomes effective, or if later, the date on which this
Agreement is executed by the Dealer Manager and the Participating Broker.
The Participating Broker and the Dealer Manager may each prevent this
Agreement from becoming effective, without liability to the other, by written
notice before the time this Agreement would otherwise become effective.
After this Agreement becomes effective, either party may terminate it at any
time for any reason by giving thirty (30) days written notice to the other
party; provided, however, that this Agreement shall in any event
automatically terminate at the first occurrence of any of the following
events: (a) the Registration Statement for offer and sale of the Units shall
cease to be effective; (b) the Partnerships shall be terminated; or (c) the
Participating Broker's license or registration to act as a broker-dealer
shall be revoked or suspended by any federal, self-regulatory or state agency
and such revocation or suspension is not cured within ten (10) days from the
date of such occurrence. In any event, this Agreement shall be deemed
suspended during any period for which such license is revoked or suspended.
10. Notices.
All notices and communications hereunder shall be in writing and shall be
deemed to have been given and delivered when deposited in the United States
mail, postage prepaid, registered or certified mail, to the applicable
address set forth below.
If sent to the Dealer Manager:
Commonwealth Capital Securities Corp.
0000 Xxxx Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxx 00000
Attention: President
If sent to the Participating Broker: to the person whose name and
address are identified in Exhibit A hereto.
-9-
11. Successors.
This agreement shall be binding upon and inure to the benefit of the
parties hereto, and shall not be assigned or transferred by the Participating
Broker by operation of law or otherwise.
12. Miscellaneous
(a) This Agreement shall be construed in accordance with the applicable
laws of the Commonwealth of Pennsylvania.
(b) Exclusive Jurisdiction. Any disputes arising out of or related to
this Agreement shall be subject to the exclusive jurisdiction of the Court of
Common Pleas of Pennsylvania in the County of Delaware or the Federal
District Court for the Eastern District of Pennsylvania.
(c) Nothing in this Agreement shall constitute the Participating Broker
as in association with or in partnership with the Dealer Manager. Instead,
the Participating Broker is an independent contractor, and this Agreement
shall only authorize the Participating Broker to sell the Units according to
the terms as expressly set forth herein; provided, further, that the
Participating Broker shall not in any event have any authority to act except
according to the terms expressly set forth herein. The Dealer Manager is
under no obligation to the Participating Broker except for the obligations
assumed hereby or in any written communication from the Dealer Manager in
connection with this offering. Further, the Participating Broker shall have
no independent authority to appoint any person or other entity as an agent or
sub-agent.
(d) This Agreement, including Exhibit A and Schedule A hereto, embodies
the entire understanding between the parties to the Agreement, and no
variation, modification or amendment to this Agreement shall be deemed valid
or effective unless it is in writing and signed by other parties hereto.
(e) If any provision of this Agreement shall be deemed void, invalid or
ineffective for any reason, the remainder of the Agreement shall remain in
full force and effect.
(f) This Agreement may be executed in counterpart copies, each of which
shall be deemed an original but all of which together shall constitute one
and the same instrument comprising this Agreement.
(g) All representations, warranties and covenants made by Participating
Broker and/or Dealer Manager contained herein or in certificates delivered
pursuant hereto, and the indemnity agreements contained herein, shall remain
operative and in force and effect regardless of any investigation made by or
on behalf of a party hereto, and shall survive the completion of the sale of
the Units.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year indicated on Exhibit A hereto.
PARTICIPATING BROKER: DEALER MANAGER:
Commonwealth Capital Securities Corp.
--------------------------------
(Name of Participating Broker)
By: By:
----------------------------- ----------------------------------
Print Name: Print Name:
------------------- -------------------------
Title: Title:
------------------------ -----------------------------
Witness: Witness:
------------------------ -----------------------------
-10-
EXHIBIT A
TO
PARTICIPATING BROKER AGREEMENT
OF
COMMONWEALTH INCOME & GROWTH
FUND III
This Exhibit A is attached to and made a part of that certain
Participating Broker Agreement, dated as of the _____ day of ___________,
19___, by and between COMMONWEALTH CAPITAL SECURITIES CORP., as Dealer
Manager, and ____________________________, as Participating Broker.
1. Date of Agreement:
----------------------------------------------------
2. Identity of Participating Broker:
Name:
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Firm NASD (CRD) No.
---------------------------------------------------
Type of Entity:
-------------------------------------------------------
(To be completed by Participating Broker, i.e. Corporation,
Partnership or Sole Proprietorship)
State Organized In:
----------------------------------------------------
(To be completed by Participating Broker)
Qualified To Do Business and in Good Standing in the Following
Jurisdictions (including your state organization) (Note: Qualification
to do business in any jurisdiction is generally a requirement im-posed by
the secretary of state or other authority of jurisdictions in which you do
business, and is not related to your holding a license as a securities
broker-dealer in such jurisdictions. Questions con-cerning this matter
should be directed to you or your legal counsel):
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(To be completed by Participating Broker)
Licensed as Broker-Dealer in the following states:
-----------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(To be completed by Participating Broker)
3. Schedule of Maximum Commissions Payable to participating broker (see
Section 2 of Agreement):
Number of Units
Purchased In Sales Price As a Percentage
Individual Order To Subscriber of the Sales Price (1) Dollar Amount
50 or more $20.00 8.0% $80.00
(1) Subject to reduction as set forth in Section 2 of the Participating
Broker Agreement
-1-
4. Name and Address for Notice Purposes (see Paragraph 10 of Agreement):
Name:
--------------------------------------------------------------------
Title:
--------------------------------------------------------------------
Company:
-----------------------------------------------------------------
Address:
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City, State & Zip Code:
-------------------------------------------------
Telephone Number (including area code):
----------------------------------
5. Please complete the following for our records:
(a) Please name those individuals who hold the following positions:
President:
----------------------------------------------------------
Due Diligence Officer:
----------------------------------------------
Marketing Director:
------------------------------------------------
In-House Editor:
----------------------------------------------------
(b) Does your company hold national or regional conferences? Yes No
-- --
If so, when?
-------------------------------------------------------
Who is the coordinator?
---------------------------------------------
(c) How many representatives are registered with your broker-dealer?
----
PLEASE ENCLOSE A CURRENT LIST. ALL INFORMATION WILL BE HELD IN
CONFIDENCE.
(d) Does your firm publish a newsletter? Yes No
---------- ----------
(e) Does your firm have regular internal mailings, or bulk package
mailings to representatives?
Yes No
----------- ----------
-2-
