EXHIBIT 1.2
WESTERN AMERICAN SECURITIES CORPORATION
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
SOLICITING DEALER AGREEMENT
_____________, 2000
Re: REEF MILLENNIUM ENERGY FUND
Ladies and Gentlemen:
We have entered into a Dealer Manager Agreement (the "Dealer Manager
Agreement") with Reef Partners LLC, a Nevada limited liability company ("Reef
Partners"), the proposed Managing General Partner of Reef Millennium Energy
Fund, a series of limited partnerships to be formed under the laws of Nevada
(individually a "partnership" and sometimes collectively the "Partnership"),
under which we have agreed to use our best efforts to place with qualified
investors pre-formation partnership interests in the Partnership ("Units").
Reef Partners and the Partnership are offering up to $100,000,000 of Units
consisting of 5,000 Units at a price of $20,000 per Unit with fractional
Units available as described in the Partnership's Prospectus (the
"Prospectus"), a copy of which has previously been furnished to you.
In connection with the performance of our obligations under the
Dealer Manager Agreement, we are authorized to engage you as a soliciting
dealer for the offer and sale of Units, and to pay you all or a portion of
our commissions and fees for Units sold by you, all as is more fully set
forth herein. In further consideration of your participation in the offering
and sale of the Units, and as an inducement to you to become a soliciting
dealer, Reef Partners, by its execution of this Agreement, agrees to extend
to you certain of the benefits provided to us in the Dealer Manager
Agreement, and to indemnify you against certain civil liabilities under the
Securities Act of 1933, as amended (the "Act"). Unless the context otherwise
requires, all of the capitalized terms used herein shall have the meaning
given to such terms in the Dealer Manager Agreement or in the Prospectus. You
are hereby invited to become a soliciting dealer and, as such, to use your
best efforts to procure purchasers of Units in accordance with the terms and
provisions of this Agreement.
1. REPRESENTATIONS AND WARRANTIES OF REEF PARTNERS.
All of the representations and warranties contained in Section 2 of
the Dealer Manager Agreement are incorporated herein by this reference and
given to you by Reef Partners as though fully set forth herein.
2. OFFERING AND SALE OF UNITS.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth,
we hereby appoint you as a soliciting dealer during the Offering Periods to
offer to potential investors in the Partnership in accordance with the terms
of the Prospectus up to 5,000 Units, and you agree to use your best efforts
as soliciting dealer, promptly following the Effective Date, to offer and
sell such number of Units to potential investors at the price and in
accordance with the terms stated in the Prospectus.
(b) All sales of Units will be conditioned upon acceptance by Reef
Partners of the Subscription Documents of each subscriber for Units,
consisting of the Subscription Agreement, duly executed by each such
subscriber and accompanied by payment of the purchase price for the Units
subscribed for by each such subscriber. Reef Partners shall have the right,
in its sole discretion, to reject the Subscription of any potential purchaser
of Units.
SOLICITING DEALER AGREEMENT - Page 1
(c) The offering of Units by you will be made to potential investors
solely in the states in which you are registered to sell and listed in
Exhibit A to this Agreement.
(d) The Units will be offered and sold by you only to persons who
warrant or represent that they or their beneficiaries meet the financial
suitability requirements as set forth in the Prospectus and such other
conditions as may be required by the states in which the Units are offered or
sold.
(e) Subject to the terms and conditions herein set forth, we agree
that we shall pay to you commissions equal to 6% of the Partnership
Subscriptions of subscribers whose Subscriptions were obtained by you in your
capacity as soliciting dealer pursuant to this Agreement, such commissions to
be paid within three (3) business days of the dates upon which commissions
are paid to us pursuant to the Dealer Manager Agreement. Prior to the time a
partnership has been formed and funded, the Managing General Partner may
advance funds for payment of sales commissions and selling expenses for Units
which have been accepted and cleared from its own funds.
(f) Notwithstanding the provisions of Section 2(e) of this
Agreement, you understand and agree that no commissions, fees or other
compensation shall be payable to us or to you if Reef Partners has not
received and accepted Subscriptions aggregating at least $1,000,000 for each
partnership by the Termination Date for such partnership.
3. SUBSCRIPTION PAYMENTS.
(a) Payments received by us or you for Subscriptions shall be made
payable to "Bank One as Escrow Agent for Millennium Energy Fund __, L.P."
(b) You shall transfer all such funds to us by noon of the next
business day after their receipt by you so that we may transfer them to the
Escrow Agent by noon of the next business day after their receipt by us for
deposit in escrow in accordance with the Prospectus. In the event that the
Minimum Offering is not achieved on or before the Termination Date for a
Partnership, all funds held in the Escrow Account shall, within 10 days after
the Termination Date for such Partnership, be returned directly to the
respective subscribers, together with a pro rata share of any interest earned
thereon. In the event the Minimum Offering is achieved on or before the
Termination Date, all funds held in the Escrow Account attributable to
subscribers whose Subscriptions are rejected by Reef Partners, together with
any interest earned thereon, as well as any interest earned on the funds of
subscribers whose Subscriptions are accepted by Reef Partners, shall, within
10 days after the filing of the Certificate, be returned or disbursed, as the
case may be, to such subscribers.
4. SUITABILITY.
(a) As a soliciting dealer, you are aware of the suitability
standards, as set forth in the Prospectus, that an offeree must meet and
represent. As such, you will make reasonable inquiry to assure that there is
compliance with such standards.
(b) In recommending the purchase of Units in the Partnership, you
shall:
(1) Have reasonable grounds to believe, on the basis of
information obtained from the offeree concerning his investment
objectives, other investments, financial situation and needs, and any
other information known by you or any associated person, that:
(i) the offeree is or will be in a financial
position appropriate to enable him to realize to
a significant extent the benefits described in
the Prospectus;
SOLICITING DEALER AGREEMENT - Page 2
(ii) the offeree has a fair market net worth
sufficient to sustain the risks inherent in the
program, including loss of investment and lack
of liquidity;
(iii) the program is otherwise suitable for the
offeree; and
(2) Maintain in your file documents disclosing the basis upon
which the determination of suitability was reached as to each offeree.
(c) Notwithstanding the provisions of subsection (b) above, you
shall not execute any transaction of Units of the Partnership in any
discretionary account without prior written approval of the transaction by
the offeree.
(d) Prior to executing a purchase transaction of Units of the
Partnership, you shall inform the offeree of all the pertinent facts relating
to the liquidity and marketability of the Units during the term of the
Partnership.
5. DISCLOSURE.
(a) Prior to participating in the offering, you shall have
reasonable grounds to believe, based on information made available to you by
Reef Partners through a prospectus or other materials, that all material
facts are adequately and accurately disclosed and provide a basis for
evaluating the program.
(b) In determining the adequacy of disclosed facts pursuant to
subsection (a) hereof, you shall obtain information on material facts
relating at a minimum to the following, if relevant in view of the nature of
program:
(1) items of compensation;
(2) physical properties;
(3) tax aspects;
(4) financial stability and experience of Reef Partners;
(5) the program's conflicts and risk factors; and
(6) appraisals and other pertinent reports.
(c) For the purpose of subsections (a) or (b) hereof, you may rely
upon the results of an inquiry conducted by another NASD member or members,
provided that:
(1) the member or persons associated with a member has
reasonable grounds to believe that such inquiry was conducted with
due care;
(2) the results of the inquiry were provided to you with
the consent of the member or members conducting or directing the
inquiry; and
(3) no member that participated in the inquiry is a
sponsor of the program or an affiliate of such sponsor.
6. COVENANTS AND UNDERTAKINGS OF THE SOLICITING DEALER.
(a) You agree to comply with all of the covenants applicable
to us in Section 6 of the Dealer Manager Agreement.
(b) You expressly represent and undertake that you will fully
comply with Sections 8, 24, 25 and 36 of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc.
SOLICITING DEALER AGREEMENT - Page 3
7. CLOSING CONDITIONS.
Your obligation to deliver Subscription Documents to Reef Partners
for acceptance by it is subject to the satisfaction on or before each Closing
Date of the conditions set forth in Section 9 of the Dealer Manager
Agreement. If any condition to your obligations hereunder shall not have been
fulfilled when it is required by this Agreement to be fulfilled, you may
waive any such condition which has not been fulfilled, extend the time for
its fulfillment or terminate this Agreement. In the event that you elect to
terminate this Agreement, all Subscription Documents, Subscription funds
held, checks and other documents and instruments delivered to you for the
purchase of the Units shall be returned to the subscribers together with
their pro rata share of any interest earned on Subscription funds,
accompanied by a notice from you of the cancellation and termination of the
offering of the Units.
8. INDEMNIFICATION.
(a) Subject to the conditions set forth below, Reef Partners and
Western American Securities Corporation agree to indemnify and hold harmless
you, each of your officers, directors and employees and each person, if any,
who controls you within the meaning of Section 15 of the Act, against any and
all loss, liability, claim, damage and expense whatsoever (including but not
limited to any and all expenses whatsoever reasonably incurred in
investigating, preparing for, defending against or settling an litigation,
commenced or threatened, or any claim whatsoever) arising out of or based
upon:
(i) any alleged untrue statement of a material fact
contained in the Prospectus as from time to time
amended or supplemented or the omission or alleged
omission therefrom a material fact required to be
stated therein or necessary to make the statements
therein, in the light of the circumstances under
which they were made, not misleading, unless such
statement or omission was made in reliance upon and
in conformity with written information furnished to
Reef Partners with respect to you, by you or on your
behalf expressly for use in the Prospectus or any
amendment or supplement thereof; and
(ii) the failure or alleged failure of Western American
Securities Corporation or Reef Partners to comply
with requirements of federal and state securities law.
If any action is brought against you or any such officer, director,
employee or controlling person in respect of which indemnity may be sought
against Reef Partners pursuant to the foregoing paragraph, you or such
officer, director, employee or controlling person shall promptly notify Reef
Partners in writing of the institution of such action and Reef Partners shall
assume the defense of such action, including the employment of counsel
(reasonably satisfactory to you or such officer, director, employee or
controlling person) and payment of expenses. You or any such officer,
director, employee or controlling person shall have the right to employ
personal counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of you or such officer, director, employee or
controlling person unless the employment of such counsel shall have been
authorized in writing on behalf of Reef Partners in connection with the
defense of such action or Reef Partners shall not have employed such counsel
to have charge of the defense of such action or such indemnified party or
parties shall have reasonably concluded that there may be defenses available
to it or them which are different from or additional to those available to
Reef Partners (in which case Reef Partners shall not have the right to direct
the defense of such action on behalf of the indemnified party or parties), in
any of which events the reasonable fees and expenses of not more than one
additional counsel for you and such officers, directors, employees and
controlling person (which firm shall be designated in writing by you) shall
be borne by Reef Partners. Anything in this paragraph to the contrary
notwithstanding, Reef Partners shall not be liable for any settlement of any
such claim or action effected without its written consent, which shall not be
withheld unreasonably. The indemnity agreement contained in this Section 8(a)
and the warranties and representations contained in this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of you or any such
SOLICITING DEALER AGREEMENT - Page 4
officer, director, employee or controlling person, and shall survive any
termination of this Agreement. You agree promptly to notify Reef Partners of
the assertion of any claim or of the commencement of any litigation or
proceedings against you or Reef Partners or the Partnership in connection
with the issuance and sale of the Units or in connection with the Prospectus.
(b) You agree to indemnify and hold harmless, Western American
Securities Corporation, Reef Partners, the Partnership and each of the
officers and directors of Reef Partners and each other person, if any, who
controls Reef Partners or the Partnership within the meaning of Section 15 of
the Act to the same extent as the foregoing indemnity from Reef Partners to
you but only with respect to:
(i) the statements or omissions, if any, made in the
Prospectus or any amendment or supplement thereof in
reliance upon, and in conformity with, written
information furnished with respect to you, by you or
on your behalf expressly for use in such Prospectus
or any amendment or supplement thereof; and
(ii) the failure or alleged failure of you to comply
with the requirements of federal or state
securities law. In case any action shall be
commenced based on such Prospectus or amendment or
supplement thereof and in respect of which
indemnity may be sought against you, you shall have
the rights and duties given to Reef Partners and
each other person so indemnified shall have the
rights and duties given to you by the provisions of
the second paragraph of Section 8(a) above. The
indemnity agreements contained in this Section
8(b) shall remain in full force and effect
regardless of any investigation made by or on
behalf of any person indemnified herein, and
shall survive any termination of this Agreement.
Reef Partners agrees promptly to notify you of the
assertion of any claim, or of the commencement of
any litigation or proceeding against Reef
Partners or the Partnership or any officer or
director of Reef Partners or any person who controls
the Partnership within the meaning of Section 15
of the Act, in connection with the issuance and
sale of the Units or in connection with the
Prospectus.
9. REPRESENTATIONS AND AGREEMENT TO SURVIVE.
Except as the context otherwise requires, all representations,
warranties and agreements contained in this Agreement shall remain operative and
in full force and effect and shall survive the Closing Dates.
10. EFFECTIVE DATE, TERM AND TERMINATION OF THIS AGREEMENT.
(a) This Agreement shall become effective on the Effective Date. We,
you or Reef Partners may elect to prevent this Agreement from becoming
effective without liability of any party to any other party, except as
provided in subsection (c) of this Section 10, by giving notice of such
election to the other parties hereto before the time this Agreement otherwise
would become effective.
(b) You shall have the right to terminate this Agreement at any time
during each Offering Period if any representation or warranties hereunder
shall be found to have been incorrect or misleading or Reef Partners shall
fail, refuse or be unable to perform any of its agreements hereunder or to
fulfill any condition of your obligations hereunder of if the Prospectus
shall have been amended or supplemented despite your objection to such
amendment or supplement; or
(i) if all trading on the New York Stock Exchange or the
American Stock Exchange (in this Section collectively
called "Exchange") shall have been suspended, or
minimum or maximum prices for trading generally shall
have been required on the Exchange by Exchange or by
order of the Securities and Exchange Commission or
any other governmental authority having jurisdiction;
or
SOLICITING DEALER AGREEMENT - Page 5
(ii) if the United States shall have become involved in a
war or major hostilities; or
(iii) if a banking moratorium has been declared by a state
or federal authority; or
(iv) if Reef Partners or its properties shall have
sustained a material or substantial loss by fire,
flood, accident, earthquake or other calamity or
malicious act which, whether or not said loss shall
have been insured, will in your opinion make it
inadvisable to proceed with the offering and sale of
the Units; or if there shall have been such change in
the condition or prospects of the Partnership or Reef
Partners or in the levels of the prime interest rate
or long-term mortgage rate or in the condition of
securities markets generally as in your judgment
would make it inadvisable to proceed with the
offering and sale of the Units.
(c) If for any reason this Agreement shall not become effective or
the offering hereunder is terminated, Reef Partners shall not have any
liability to you except for such liabilities, if any, as may exist or
thereafter arise under Section 8 hereof.
11. NOTICES.
(a) All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to you shall be
mailed, delivered or telegraphed and confirmed to you at the address on the
signature page of this agreement; if sent to us or Reef Partners and/or the
Partnership shall be mailed, delivered, telegraphed and confirmed to us or
Reef Partners and/or the Partnership at 0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxx 00000.
(b) Notice shall be deemed to be given by you to us or Reef Partners
or the Partnership or by us, Reef Partners or the Partnership to you as of
the third business day after the same is mailed or telegraphed as provided in
Section 10 (a) above.
12. PARTIES.
This Agreement shall inure solely to the benefit of and shall be
binding upon you, us and, to the extent provided herein, Reef Partners and
the respective successors and assigns of such parties. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person or corporation, other than the parties hereto and their respective
successors and assigns and the controlling persons, officers, directors and
employees, any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of the parties hereto and their respective successors
and assigns and said controlling persons and said officers, and directors and
employees, and for the benefit of no other person or corporation. No
purchaser of any of the Units from you or us shall be construed a successor
or assign by reason merely of such purchase.
13. CONSTRUCTION.
This Agreement shall be construed in accordance with the laws of the
State of Texas.
If the foregoing correctly sets forth the understanding between us,
please so indicate in the space provided below for that purpose, whereupon
this letter shall constitute a binding agreement between us.
Very truly yours,
SOLICITING DEALER AGREEMENT - Page 6
WESTERN AMERICAN SECURITIES CORPORATION
By:____________________________________
Name:____________________________
Title:___________________________
Address: 0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
ACCEPTED AS OF THE DATE
FIRST ABOVE WRITTEN.
_________________________________
[Name of Soliciting Dealer]
By:___________________________________
Name:________________________
Title:_______________________
Address:______________________________
______________________________
______________________________
Reef Partners xxxxxx agrees to be bound by the terms and provisions
contained in this Agreement which are applicable to it including the
indemnification provisions of Section 8.
REEF PARTNERS LLC
By:____________________________________
Name:____________________________
Title:___________________________
SOLICITING DEALER AGREEMENT - Page 7
