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Exhibit 1.2
VESTIN FUND II, LLC
Up To
$500,000,000
50,000,000 Units of Limited Liability Company Interest
at $10.00 each
SELECTED DEALER AGREEMENT
Ladies and Gentlemen:
VESTIN CAPITAL, INC., as the dealer manager ("Dealer Manager") for
VESTIN FUND II, LLC, a Nevada limited liability company (the "Company") of which
Vestin Mortgage, Inc., a Nevada corporation is the Manager (the "Manager"),
invites you (the "Dealer") to participate in the distribution of units of
limited liability company interest in the Company ("Units") subject to the
following terms of this Selected Dealer Agreement ("Agreement"):
I. Dealer Manager Agreement
The Dealer Manager has entered into an agreement with the Company and
the manager called the Dealer Manager Agreement dated _________, 2000, in the
form to which this Agreement is attached as Exhibit A. By your acceptance of
this Agreement, you will become one of the Dealers referred to in such Dealer
Manager Agreement between the Company, the Manager and the Dealer Manager, you
agree to become subject to all terms and conditions of the Dealer Manager
Agreement, which is incorporated herein by this reference, and will be entitled
and subject to the indemnification provisions contained in such Dealer Manager
Agreement, including the provisions of such Dealer Manager Agreement (Section 4)
wherein the Dealers severally agree to indemnify and hold harmless the Company,
the Manager and Dealer Manager and each officer and director thereof, and each
person, if any, who controls the Company, the Manager and Dealer Manager within
the meaning of the Securities Act of 1933. Except as otherwise specifically
stated herein, all terms used in this Agreement have the meanings provided in
the Dealer Manger Agreement. The Units are offered solely through broker-dealers
who are members of the National Association of Securities Dealers, Inc.
("NASD").
Dealer hereby agrees to use its best efforts to sell the Units for cash
on the terms and conditions stated in the Prospectus. Nothing in this Agreement
shall be deemed or construed to make Dealer an employee, agent, representative
or partner of the Dealer Manager or of the Company or the Manager, and Dealer is
not authorized to act for the Dealer Manager, the Company or the Manager or to
make any representations on their behalf except as set forth in the Prospectus
and such other printed information furnished to Dealer by the Dealer Manager or
the Company to supplement the Prospectus ("supplemental information").
II. Submission of Subscription Agreements
Those persons who purchase Units will be instructed by the Dealer to
make their checks payable to "___________________, as Escrow Agent for VESTIN
FUND II, LLC," during the course of the Minimum Offering and to the Company
after the Minimum Offering has been achieved. Dealer hereby agrees to be bound
by the terms of the Bank Escrow Agreement executed as of ___________________,
2000 by ___________________, as escrow agent, the Dealer Manager and the
Company, a copy of which Dealer hereby acknowledges having received and which is
enclosed. Any Dealer receiving a check not conforming to the foregoing
instructions shall return such check directly to such subscriber not later than
the end of the next business day following its receipt. Checks received by the
Dealer which conform to the foregoing instructions shall be transmitted,
together with a completed and executed Subscription Agreement in the form that
is Exhibit B to the Prospectus, for deposit pursuant to
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one of the methods in this Article II. Transmittal of received investor funds
will be made in accordance with the following procedures:
Where, pursuant to the Dealer's internal supervisory procedures,
internal supervisory review is conducted at the same location at which
subscription documents and checks are received from subscribers, checks
will be transmitted in care of the Dealer Manager by the end of the next
business day following receipt by the Dealer for deposit to the escrow
agent, during the course of the Minimum Offering and to the Company
after the Minimum Offering has been achieved.
Where, pursuant to the Dealer's internal supervisory procedures, final
and internal supervisory review is conducted at a different location,
checks will be transmitted by the end of the next business day following
receipt by the Dealer to the office of the Dealer conducting such final
internal supervisory review (the "Final Review Office"). The Final
Review Office will in turn by the end of the next business day following
receipt by the Final Review Office, transmit such checks for deposit to
the escrow agent during the course of the Minimum Offering and to the
Company after the Minimum Offering has been achieved.
III. Pricing
Units shall be offered to the public at the offering price of $10.00 per
Unit payable in cash. Except as otherwise indicated in the Prospectus or in any
letter or memorandum sent to the Dealer by the Company or Dealer Manager, a
minimum initial purchase of 2,000 Units is required. Additional investments may
be made in cash in minimal increments of at least 2,000 Units. The Units are
nonassessable, and investors will not be required to contribute further sums to
the capital of the Company. Dealer hereby agrees to place any order for the full
purchase price.
IV. Dealers' Commissions
The Dealer's compensation for the offering and sale of Units will be
sales commissions of up to two percent (2%), marketing incentive fees of up to
one half of one percent (0.5%) and reimbursement of accountable expenses of up
to one-half of one percent (0.5%) of the aggregate proceeds generated from the
sale of units by such Dealer. For these purposes, a "sale of Units" shall occur
if and only if a transaction has closed with a purchaser of Units pursuant to
all applicable offering and subscription documents and the Company has
thereafter distributed the commission to the Dealer Manager in connection with
such transaction. The Dealer hereby waives any and all rights to receive payment
of commissions due until such time as the Dealer Manager is in receipt of the
commission from the Manager. The Dealer affirms that the Dealer Manager's
liability for commissions payable is limited solely to the proceeds of
commissions receivable associated therewith.
V. Payment
Payments of selling commissions will be made by the Dealer Manager to
Dealer within 30 days of the receipt by the Dealer Manager of the gross
commission payments from the Company.
VI. Right to Reject Order or Cancel Sales
All orders, whether initial or additional, are subject to acceptance by
and shall only become effective upon confirmation by the Manager; the Company
and the Manager reserve the right to reject any order in whole or in part.
Orders not accompanied by a Subscription Agreement and Signature page and the
required check payment for the Units may be rejected. Issuance and delivery of
the certificates for the Units will be made only after actual receipt of payment
therefor. Subject to the otherwise applicable terms of the Bank Escrow
Agreement, if any check is not paid upon presentment, or if the Company is not
in actual receipt of clearinghouse funds or cash, certified or cashier's check
or the equivalent in payment for the Units within 15 days of sale, the Company
reserves the right to cancel the sale without notice. If an order is rejected,
cancelled or rescinded for any reason, the Dealer agrees to return to the Dealer
Manager any commission theretofore paid with respect to such order.
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VII. Prospectus and Supplemental Information
Dealer is not authorized or permitted to give and will not give, any
information or make any representation concerning the Units except as set forth
in the Prospectus and supplemental information. The Dealer Manager will supply
Dealer with reasonable quantities of the Prospectus, any supplements thereto and
any amended Prospectus, as well as any supplemental information, for delivery to
investors, and Dealer will deliver a copy of the Prospectus and all supplements
thereto and any amended Prospectus to each investor to whom an offer is made
prior to or simultaneously with the first solicitation of an offer to sell the
Units to an investor. The Dealer agrees that it will not send or give any
supplements thereto and any amended Prospectus to that investor unless it has
previously sent or given a Prospectus and all supplements thereto and any
amended Prospectus to the investor or has simultaneously sent or given a
Prospectus and all supplements thereto and any amended Prospectus with such
supplemental information. Dealer agrees that it will not show or give to any
investor or reproduce any material or writing which is supplied to it by the
Dealer Manager and marked "dealer only" or otherwise bearing a legend denoting
that it is not to be used with respect to members of the public. Dealer further
agrees that it will not use in connection with the offer or sale of Units any
materials or writings which have not been previously approved by the Dealer
Manager. Each Dealer agrees, if the Dealer Manger so requests, to furnish a copy
of any revised preliminary Prospectus to each person to whom it has furnished a
copy of any previous preliminary Prospectus, and further agrees that it will
itself mail or otherwise deliver all preliminary and final Prospectuses required
for compliance with the provisions of Rule 15c2-8 under the Securities Exchange
Act of 1934. Regardless of the termination of this Selected Dealer Agreement,
Dealer will deliver a Prospectus in transactions in the Units for a period of 90
days from the effective date of the Registration Statement or such longer period
as may be required by the Securities Exchange Act of 1934. On becoming a Dealer,
and in offering and selling Units, Dealer agrees to comply with all the
applicable requirements under the Securities Act of 1933 and the Securities
Exchange Act of 1934, including, without limitation, the provisions of Rule
15c2-4 of the Securities and Exchange Commission. Notwithstanding the
termination of this Agreement or the payment of any amount to Dealer, Dealer
agrees to pay Dealer' proportionate share of any claim, demand or liability
asserted against Dealer and the other Dealers on the basis that Dealers or any
of them constitute an association, unincorporated business or other separate
entity, including in each case Dealer's proportionate share of any expenses
incurred in defending against any such claim, demand or liability.
VIII. License and Association Membership
Dealer's acceptance of this Agreement constitutes a representation to
the Company, the Manager and Dealer Manager that Dealer is a properly registered
or licensed broker-dealer, duly authorized to sell Units under Federal and state
securities laws and regulations and in all states where it offers or sells
Units, and that it is a member in good standing of the NASD. This Agreement
shall automatically terminate if the Dealer ceases to be a member in good
standing of to NASD, or in the case of a foreign dealer, so to conform. Dealer
agrees to notify the Dealer Manager immediately if Dealer ceases to be a member
in good standing, or in the case of a foreign dealer, so to conform. The Dealer
Manager also hereby agrees to abide by the Conduct Rules of the NASD.
IX. Limitation of Offer
Dealer will offer Units only to persons who meet the financial
qualifications set forth in the Prospectus or in any suitability letter or
memorandum sent to it by the Company or Dealer Manager and will only make offers
to persons in the states in which it is advised in writing that the Units are
qualified for sale or that such qualification is not required. Dealer Manager
will not assume any obligation or responsibility as to the right of Dealer to
sell the Units in any jurisdiction. In offering Units, Dealer will comply with
the provisions of Rule 2810(b)(1), (2) and (3) of the NASD Conduct Rules set
forth in the NASD Manual, attached hereto as Attachment No. 1, as well as all
other applicable rules and regulations relating to suitability of investors,
including without limitation, the provisions of Article III.B. and C. of the
Statement of Policy Regarding Mortgage Programs of the North American Securities
Administrators Association, Inc. Dealer shall provide such certification as
Dealer Manager may reasonably request regarding its compliance with applicable
law.
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X. Termination
Dealer will suspend or terminate its offer and sale of Units upon the
request of the Company or the Dealer Manager at any time and will resume its
offer and sale of Units hereunder upon subsequent request of the Company or the
Dealer Manager. Dealer shall not in any event sell Units after two years after
the effective date of the registration statement covering the Units. Any party
may terminate this Agreement by written notice. Such termination shall be
effective 48 hours after the mailing of such notice. This Agreement is the
entire agreement of the parties and supersedes all prior agreement, if any,
between the parties hereto.
This Agreement may be amended at any time by the Dealer Manager by
written notice to the Dealer, and any such amendment shall be deemed accepted by
Dealer upon placing an order for sale of Units after he has received such
notice.
XI. Notice
All notices will be in writing and will be duly given to the Dealer
Manager when mailed to 0000 Xx Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx
00000, and to Dealer when mailed to the address specified by Dealer herein.
XII. Attorney's Fees and Applicable Law
In any action to enforce the provisions of this Agreement or to secure
damages for its breach, the prevailing party shall recover its costs and
reasonable attorney's fees. This Selected Dealer Agreement shall be construed
under the laws of the State of Nevada and shall take effect when signed by
Dealer and countersigned by the Dealer Manager.
THE DEALER MANAGER
VESTIN CAPITAL, INC.
Attest:
By: By:
------------------------ ------------------------
Name:
------------------------ ------------------------
Title: President
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We have read the foregoing Selected Dealer Agreement and we hereby
accept and agree to the terms and conditions therein set forth. We hereby
represent that the list below of jurisdictions in which we are registered or
licensed as a broker or dealer and are fully authorized to sell securities is
true and correct, and we agree to advise you of any change in such list during
the term of this Selected Dealer Agreement.
1. Identity of Dealer:
Name:
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Type of entity:
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(to be completed by Dealer) (corporation, partnership or
proprietorship)
Organized in the State of:
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(to be completed by Dealer) (State)
Licensed as broker-dealer in the following states:
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(to be completed by Dealer)
Tax I.D. #:
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2. Person to receive notice pursuant to Section XI.
Name:
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Company:
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Address:
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City, State and Zip Code:
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Telephone No.: (___)
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AGREED TO AND ACCEPTED BY THE DEALER:
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(Dealer's Firm Name)
By:
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Signature
Title:
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ATTACHMENT NO. 1
NASD CONDUCT RULES
RULE 2810 - DIRECT PARTICIPATION PROGRAMS
(b) Requirements
(1) Application
no member or person associated with a member shall participate in a
public offering or a direct participation program or a limited
partnership rollup transaction except in accordance with this paragraph
(b).
(2) Suitability
(A) A member or person associated with a number shall not
underwrite or participate in a public offering of a direct
participation program unless standards of suitability have been
established by the program for participants therein and such
standards are fully disclosed in the prospectus and are
consistent with the provisions of subparagraph (B) of this
section.
(B) In recommending to a participant the purchase, sale or
exchange of an interest in a direct participation program, a
member or person associated with a member shall:
(i) have reasonable grounds to believe, on the
basis of information obtained from the participant
concerning his investment objectives, other investments,
financial situation and needs, and any other information
known by the member or associated person, that:
(a) the participant is or will be in a
financial position appropriate to enable him to
realize to a significant extent the benefits
described in the prospectus, including the tax
benefits where they are a significant aspect of
the program;
(b) the participant has a fair market
net worth sufficient to sustain the risks
inherent in the program, including loss of
investment and lack of liquidity; and
(c) the program is otherwise suitable
for the participant; and
(ii) maintain in the files of the member documents
disclosing the basis upon which the determination of suitability
was reached as to each participant.
(C) Notwithstanding the provisions of subparagraph (A) and (B)
hereof, no member shall execute any transaction in a direct
participation program in a discretionary account without prior written
approval of the transaction by the customer.
(D) Subsections 3(a) and 3(b) shall not apply to:
(i) a secondary public offering of or a secondary market
transaction in a unit, depository receipt, or other interest in
a direct participation
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program for which quotations are displayed are displayed on
NASDAQ or which is listed on a registered national securities
exchanges, or
(ii) an initial public offering of a unit, depository
receipt or other interest in a direct participation program for
which an application for inclusion on NASDAQ or listing on a
registered national securities exchange has been approved by
NASDAQ or such exchange and the applicant makes a good faith
representation that it believes such inclusion on NASDAQ or
listing on an exchange will occur within a reasonable period of
time following the formation of the program.
(3) Disclosure
(A) Prior to participating in a public offering of a direct
participation program, a member or person associated with a member shall have
reasonable grounds to believe, based on information made available to him by the
sponsor 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
subparagraph (A) hereof, a member or person associated with a member shall
obtain information on material facts relating at a minimum to the following, if
relevant in view of the nature of the program.
(i) items of compensation;
(ii) physical properties;
(iii) tax aspects;
(iv) financial stability and experience of the sponsor;
(v) the program's conflicts and risk factors; and
(vi) appraisals and other pertinent reports.
(C) For purposes of subsections (a) or (b) hereof, a member or person
associated with a member may rely upon the results of an inquiry conducted by
another member or members, provided that:
(i) the member or person associated with a member has reasonable
grounds to believe that such inquiry was conducted with due care;
(ii) the results of the inquiry were provided to the member or
person associated with a member with the consent of the member or
members conducting or directing the inquiry; and
(iii) no member that participated in the inquiry is a sponsor of
the program or an affiliate of such sponsor.
(D) Prior to executing a purchase transaction in a direct participation
program, a member or person associated with a member shall inform the
prospective participant of all pertinent facts relating to the liquidity and
marketability of the program during the term of the investment; provided,
however, that this subparagraph (b) shall not apply to an initial or secondary
public offering of or a secondary market transaction in a unit, depositary
receipt or other interest in a direct participation program which complies with
subparagraph 2(D).
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