EXHIBIT 10.3
Form of Selected Dealer Agreement between
Registrant, Sales Agent and Selected Dealers
SELECTED DEALER AGREEMENT
Xxxxxxx Xxxxxxx Securities
000 Xxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
The undersigned understands that AeroCentury Fund IV,
Inc., a California corporation (the "Company"), proposed to make
a public offering and sale of up to $10,000,000 of 10% Secured
Promissory Notes ("Notes"), each Note with a principal face
amount of $1,000, on a best efforts basis through Xxxxxxx Xxxxxxx
Securities (the "Sales Agent") and certain additional broker
dealers (the "Selected Dealers") who are members of the National
Association of Securities Dealers, Inc. (the "NASD"). The Sales
Agent has advised the undersigned that in connection therewith,
the Company has filed with the Securities and Exchange Commission
(the "SEC"), a registration statement on Form SB-2 and has filed
or expects to file one or more amendments thereto. As used
herein, "Registration Statement" refers to Registration Statement
No. 333-22239 as declared effective by the SEC on _____,
and "Prospectus" refers to the final prospectus constituting Part
I of such Registration Statement, and in the event of any
supplement or amendment to such Registration Statement or
Prospectus after the Registration Statement has become effective,
the terms "Registration Statement" and "Prospectus" shall mean
such Registration Statement or Prospectus as so supplemented or
amended. Certain terms used herein which begin with initial
capital letters are defined in the Prospectus and shall have the
same meanings given therein. Upon the terms and conditions set
forth herein, the undersigned agrees to use its best efforts to
solicit and obtain subscriptions to purchase Notes at a price of
$1,000 per Note in accordance with the following terms and
conditions.
The undersigned hereby makes the following agreements,
representations, and warranties to the Company and the Sales
Agent which agreements, representations and warranties are made
by the undersigned severally and not jointly with the other
Selected Dealers:
1. Representation and Warranties. The undersigned
represents and warrants that (i) it is a member in good standing
of the NASD, (ii) it is registered as a broker-dealer under the
Securities and Exchange Act of 1934, (iii) it is licensed as a
broker-dealer under the law of the state(s) listed below the
undersigned's signature hereunder, (iv) neither the undersigned
nor any of its executive officers and directors are currently
subject to any administrative order or judgment in any state
which prohibits the use of any exemption from registration in
connection with the purchase or sale of securities, (v) neither
the undersigned nor any of its executive officers and directors
are subject to any order, judgment or decree of any court of
competent jurisdiction temporarily or preliminarily restraining
or enjoining, or subject to any order, judgment or decree of any
court of competent jurisdiction entered within the last five
years permanently restraining or enjoining such person from
engaging in or continuing any conduct or practice in connection
with the purchase or sale of any security or commodity or
involving the making of any false filing with any state and (vi)
neither the undersigned nor any of its executive officers and
directors has been convicted of a felony involving the purchase
or sale of a security within five years prior to the commencement
of the Offering.
2. Duties. The undersigned agrees that its duties
under this Agreement include the following:
(a) To use its best efforts to procure purchase(s)
for Notes at a price of $1,000 per Note in accordance with the
terms of the Offering as set forth in the Prospectus. The minimum
investment in Notes is set forth in the Prospectus. The
undersigned shall not be entitled to solicit the services of
other broker-dealers or pass through or reallow any portion of
the compensation set forth in Section 3 in connection with
performing the undersigned's service hereunder;
(b) To at all times comply with all applicable
provisions of the Securities Act of 1933, as amended (the "Act"),
the Securities Exchange Act of 1934 and the rules and regulations
of the Commission thereunder, state blue sky securities laws and
the rules of the NASD, including, without limitation, Sections
2730, 2740, 2420 and 2750 of the NASD Conduct Rules, all
prospectus delivery requirements, and the prohibition against the
direct or indirect payment or awarding of any finder's fees,
commissions, or other compensation to any person engaged by a
potential investor for investment advice as an inducement to such
advisor to advise the purchase of interests in a particular
program; provided, however, that the payment of the normal sales
commissions payable to a registered broker-dealer or other
properly licensed person for selling Notes shall not be
prohibited;
(c) To sell Notes only in state(s) and
jurisdiction(s) in which the undersigned is licensed as a
broker-dealer, and only in state(s) and jurisdiction(s) and in
such amounts for which Blue Sky clearance has been obtained as
indicated to the undersigned by the Sales Agent;
(d) To take such actions as may be required by law
or which it may deem reasonably necessary in order to ascertain
that a purchase of the Notes is suitable for a prospective
purchaser, and maintain a record thereof for a period of at least
six years, or such other period as required by law;
(e) To confirm through diligent inquiry that each
prospective purchaser is a citizen of the United States in the
manner described in the Prospectus prior to submitting his
subscription payment and related documentation to the Escrow
Agents, and maintain a record of the basis upon which such
determination was made;
(f) To supply the Sales Agent and the Company with
such written reports of the undersigned's activities relating to
the offering of Notes as the Sale Agent or the Company may from
time to time reasonably request;
(g) To deliver a current copy of the Prospectus
and any amendments or supplements thereto, to each prospective
purchaser prior to accepting a subscription from such purchaser;
(h) To obtain each of the following in connection
with the sale of the Notes and to transmit the same to the Escrow
Agents, within the time periods specified below:
(i) A fully completed Subscription
Agreement, executed by the prospective purchaser, if required by
applicable state law or otherwise requested by the Company; and
(ii) Appropriate payment by the purchaser
for the number of Notes subscribed for, either in the form of a
check payable to "First Security Bank/AeroCentury Fund IV
Escrow Account" or by wire transfer of funds from the account of
the purchaser into the above-referenced escrow account (the
account number will be provided upon request of the Company).
(n) To promptly inform the Sales Agent and the
Company if the undersigned shall have knowledge of any material
misstatement or omission to state a material fact in any
Subscription Agreement; and
(o) Promptly upon the written request of the Sales
Agent, (i) account to the Sales Agent for each copy of the
Prospectus delivered to the undersigned hereunder and to return
to the Sales Agent all copies of the Prospectus then in the
undersigned's possession, and (ii) at the Sales Agent's request,
deliver to the Sales Agent a certificate from the undersigned
dated as of the date requested by the Sales Agent to the effect
that the undersigned's representations and warranties in this
agreement are true and correct, as if made on and as of the date
of such certificate; and that the undersigned complied with all
the agreements and covenants and satisfied all conditions on its
part to be performed or satisfied at or prior to the date of such
certificate and further representing that the undersigned has
made offers to sell Notes to, or solicit offers to buy Notes
from, or otherwise negotiated in respect thereof with, only
persons who (i) the undersigned reasonably believed were able to
satisfy the investor suitability standards set forth in the
Prospectus and (ii) either (a) have an account with the
undersigned in which there has been at least one securities
transaction effected by the undersigned during the preceding
three years, or (b) with respect to whom the initial contact with
the undersigned occurred prior to the date on which the
undersigned was first aware of the Offering and with respect to
whom (based on information with such person, the nature of our
contacts with such person, and other information available to the
undersigned) the undersigned has a reasonable basis for knowing
such person's net worth, investment objectives, investment
experience and sophistication.
3. Compensation. The undersigned shall receive from the
Escrow Agent (through the Sales Agent) as compensation Selling
Commissions of 6.0% of the sales price of any Notes sold by it to
the public in accordance herewith. In addition, in the Sales
Agent's sole discretion, up to 2.0% of the sales price for any
Notes may be reallowed by the Sales Agent to the undersigned for
due diligence and selling efforts. Notwithstanding the above, no
Sales Commissions and no expense allowance or reimbursement shall
be paid with respect to any Notes sold hereunder until the
occurrence of a Closing Date following the sale of such Notes.
Subject to the previous sentence, all Selling Commissions and
other compensation is being paid to the undersigned in
consideration of its efforts to conduct the due diligence
determined by the undersigned to be reasonably necessary and that
the undersigned will be solely responsible for such diligence;
the Sales Agent will have no responsibility or liability
pertaining thereto (although the Sales Agent may, in its
discretion, reallow a portion of its due diligence cost
reimbursement to the undersigned in connection therewith).
Notwithstanding the foregoing, the undersigned will not be
entitled to receive compensation pursuant to this Section 3 in
the event that (i) the Sales Agent or the Company determines that
any offer, sale or solicitation by the undersigned was made in
violation of the Act, or any of the regulations thereunder, of
the securities or "blue sky" laws of any jurisdiction or the
NASD, or of any covenant or representation made hereunder, (ii)
if the Sales Agent shall not have previously received from the
undersigned a confirmed copy of this Agreement, or (iii) with
respect to certain subscriptions, the Company or the Sales Agent,
in their sole discretion do not accept (in whole or in part) such
subscriptions to purchase Notes obtained by the undersigned for
any reason, or any Subscription Documents for such subscriptions,
if any, fully completed and duly executed, are received by the
Sales Agent after the final Closing Date.
4. Sales Incentive Programs. No sales incentive
bonuses shall be paid directly or indirectly in connection with
the offer and sale of the Notes.
5. Terms and Termination. The undersigned's obligation
under this Agreement shall commence as of the date of this
Agreement or the effective date of the Registration Statement,
