SELECTED DEALER AGREEMENT
This agreement is hereby entered into by and between
("Dealer") and GREAT NATION INVESTMENT CORPORATION ("Underwriter") upon the date
of acceptance by Underwriter as set forth below.
R E C I T A L S:
WHEREAS, CHURCH LOANS & INVESTMENTS TRUST ("Issuer") proposes to make a
public offering and sale of 7,000,000 Certificates of Beneficial Interest ("the
Shares") on a best efforts basis through Underwriter and certain additional
broker dealers who are members of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, Dealer desires to offer the Shares on a best efforts basis;
A G R E E M E N T:
NOW, THEREFORE, Dealer and Underwriter do hereby agree that Dealer may
offer for sale the Shares upon the following terms and conditions:
1. Best Efforts. Dealer agrees to use its best efforts to solicit
and obtain subscriptions to purchase the Shares in accordance with the terms and
conditions set forth herein.
2. Representation and Warranties. Dealer represents and warrants
that (i) it is a member in good standing of the NASD, (ii) is registered as a
broker-dealer under the Securities and Exchange Act of 1934, (iii) is licensed
as a broker-dealer under the law of the state(s) listed below the Dealer's
signature hereunder, (iv) neither Dealer 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 Dealer 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 such state, and (vi) neither Dealer nor
any of its executive officers and directors have been convicted of a felony
involving the purchase or sale of a security within five years prior to the
commencement of the Offering.
3. Duties. Dealer covenants and agrees:
(a) To use its best efforts to procure purchases for the Shares in
accordance with the terms of the Offering as set forth in the Prospectus.
Such purchases shall be at or above the minimum investment in the Shares as
set forth in the Prospectus. Dealer 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 4 in connection with performing the
Dealer'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 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 8, 24, 25 and 36 of Article
Page 1 of 7
III of the NASD rules of Fair Practice, all prospectus delivery
requirements as required by law 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 or investment
advice as an inducement to such advisor to advise the purchase of an
interest 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 the Shares shall not be prohibited;
(c) To sell the Shares only in state(s) and jurisdiction(s) in which
Dealer 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 Dealer by the Underwriter;
(d) To take actions as may be required by law or which it may deem
reasonably necessary in order to ascertain that a purchase of the Shares 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 supply the Underwriter with such written reports of Dealer's
activities relating to the offering of the Shares as the Underwriter may
from time to time reasonably request;
(f) To obtain in connection with the sale of the Shares, the
appropriate payment by the purchaser for the number or amount of the Shares
indicated in the form of a check payable to the Underwriter. Such funds
shall be transmitted to the Underwriter by noon of the next business day
following the day of receipt.
Issuer will mail the Shares to the purchaser after the receipt of
payment. The procedure for the handling of orders shall be subject to
instructions which shall be forwarded from time to time to all members of
the Selling Group. The Underwriter will not accept any order from Dealer
which is placed on a conditional basis or subject to any delay or
contingency prior to execution.
In addition, Dealer will provide the Underwriter with the name,
address and social security or tax identification number of, and the amount
tendered and number of Shares indicated for, by each such participant.
(g) In recommending to a participant the purchase, sale or exchange of
the Shares, Dealer and persons associated with Dealer shall:
(1) 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 Dealer or associated person that:
(a) The participant is, or will be, in an financial position
appropriate to enable the participant to realize to a significant
extent the benefits described in the Prospectus;
(b) An investment in the Issuer is otherwise suitable for
the participant; and
Page 2 of 7
(2) Maintain in the files of the Dealer for a period of six years
documents disclosing the basis upon which the determination of
suitability was reached as to each participant.
Notwithstanding the above, the Underwriter has no duty to determine
the suitability of the investment for a particular investor and nothing
contained herein shall imply to the Underwriter any such duty. Nor shall
the Underwriter be subject to any duty to determine if Dealer has complied
with Dealer's duty to determine the suitability of the investment for a
particular investor.
(h) To comply with and abide by all terms and conditions of the
Prospectus;
(i) To not alter, change or modify in any regards the prospectus or
any sales materials provided by the Underwriter and furthermore, Dealer
understands that if Dealer uses any other sales materials not provided by
the Underwriter, then Dealer does so at Dealer's own risk and peril.
(j) To review the Prospectus and other materials provided by the
Issuer, and to have reasonable grounds to believe, based on information
obtained from the Issuer, through the Prospectus and any other materials
provided, that all material facts are adequately and accurately disclosed
and provide a basis for evaluating the proposed activities of the Issuer.
In determining the adequacy of disclosed facts, Dealer and persons
associated with Dealer shall obtain information of material facts relating
at a minimum to the following, if relevant in view of the nature of the
proposed activities of the Issuer:
(1) Items of compensation;
(2) Physical properties;
(3) Tax aspects;
(4) The Issuer's conflicts and risk factors; and
(5) Appraisals and other financial data.
(k) Prior to the purchase of the Shares, to inform the prospective
participant of all pertinent facts relating to the liquidity and
marketability of the Shares.
(l) To promptly inform the Underwriter if Dealer shall have knowledge
of any material misstatement or material omission in any customer records.
4. Compensation. Dealer shall receive as compensation Selling
Commissions of ____ percent (____%) of the sales price of any Shares sold by the
Dealer to the public in accordance herewith. All Selling Commissions payable to
Dealer under this Agreement shall be paid as hereinafter provided. It is
understood by Dealer that a portion of its commission is being paid to Dealer in
consideration of its efforts to conduct the due diligence determined by the
Dealer to be reasonably necessary and that Dealer will be solely responsible for
such diligence; the Underwriter will have no responsibility or liability
pertaining thereto (although the Underwriter may, in its discretion, reallow a
portion of its
Page 3 of 7
due diligence cost reimbursement to Dealer in connection therewith).
Notwithstanding the foregoing, Dealer will not be entitled to receive
compensation pursuant to this section 4 in the event that (i) the Underwriter or
the Issuer determines that any offer, sale or solicitation by Dealer was made in
violation of the Act, of 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 Underwriter shall not have previously
received from Dealer a confirmed copy of this Agreement; (iii) with respect to
certain subscriptions, the Issuer or the Underwriter, in their sole discretion,
do not accept (in whole or in part) such subscriptions to purchase Shares
obtained by Dealer for any reason, or any Documents for such subscriptions, if
any, fully complete and duly executed, are received by the Underwriter after the
final Closing Date; or (iv) the purchase of Shares is rejected by the Issuer.
Issuer will pay all commissions to the Underwriter and the Underwriter does
hereby agree to remit to Dealer the commissions due Dealer as follows:
Commission checks will be mailed to Dealer by the Underwriter no later
than the 25th of the month in regard to all customer funds received by
Issuer during the first 15 days of the month and no later than the 10th day
of the following month in regard to all customer funds received by Issuer
after the 15th day of the month.
In the event that the Issuer pays the commissions due Dealer directly to
Dealer, then Underwriter is released thereby for the payment of such commissions
actually paid to Dealer by Issuer.
5. Sales Incentive Programs. No sales incentive bonuses shall be
paid directly or indirectly in connection with the offer and sale of the Shares.
6. Terms and Termination. Dealer's obligations under this Agreement
shall commence as of the date of this Agreement or the effective date of the
Prospectus, whichever occurs later, and shall continue (unless otherwise
terminated as provided herein) until Dealer has been notified that the Offering
of the Shares has ceased or has been completed.
Dealer's services, under this Agreement, may be terminated by the
Underwriter, if (i) Dealer fails to comply with any provisions of this
Agreement; (ii) any of Dealer's representations or warranties made herein are
false; or (iii) Dealer ceases to be (a) a member in good standing of the NASD,
(b) registered as a broker-dealer under the Securities Exchange Act of 1934, (c)
licensed as a broker-dealer under the Securities Exchange Act of 1934, or (d)
licensed as a broker-dealer under the state(s) listed on the signature page
hereto; provided, however, that if Dealer ceases to be registered in less than
all the states listed herein, this Agreement may not be terminated by the
Underwriter, but Dealer shall no longer offer or sell the Shares in such states.
Dealer will notify the Underwriter in writing of the occurrence of any of the
foregoing.
Furthermore, either party hereto may terminate this Agreement, with or
without cause, upon ten days prior written notice.
In the event of termination, Dealer shall not be entitled to any
commissions earned after the date of the occurrence giving rise to the
termination or any restitution for the value of its services thereafter
performed.
Page 4 of 7
7. Authority. It is understood that Dealer's relationship with the
Underwriter is as an independent contractor and that nothing herein shall be
construed as creating a partnership, joint venture, or employer and employee
relationship between Dealer and the Underwriter. Dealer is not authorized to
give any information or make any representations or warranties in connection
with the offer and sale of the Shares except as stated in the Prospectus, or any
sales material provided by the Underwriter; and provided further that any such
sales material or advertising may be delivered to a person only if a copy of the
Prospectus is forwarded upon receipt of an indication of interest.
8. Third Party Beneficiary. It is understood that the Issuer intends
to rely, in connection with the Offering on the covenants, representations and
warranties made herein by Dealer to the Underwriter, and that the Issuer is
intended to be a third party beneficiary of such covenants, representations and
warranties.
9. Indemnification. Dealer agrees to indemnify and hold harmless the
Issuer and the Underwriter and their controlling persons, shareholders, officers
and directors for any and all losses, claims, damages, liabilities, and
expenses, including attorney's fees, arising in connection with the offering or
sale of Shares, insofar as such losses, claims, damages, or liabilities (or
action in respect thereof) arise out of, or are based upon any unauthorized
verbal or written representations by Dealer, any untrue statements or alleged
untrue statement of any material fact made by Dealer, or the failure of Dealer
or Underwriter to deliver a copy of the Prospectus to a purchaser of the Shares
procured by Dealer at or prior to the time such person agrees to purchase the
Shares, or for a violation by Dealer of any federal, state (including state Blue
Sky and securities laws and any applicable suitability requirements) or local
statute or common law, or of any court order, or of any rule or regulation of
any governmental unit or agency or the NASD, for the breach of any
representation or warranty made by Dealer herein, or for the failure of Dealer
to properly perform any of its duties described herein, and to reimburse any
legal or other expense reasonably incurred by any of such persons in connection
with investigation or defense of such loss, claim, damage, liability, or action.
Notwithstanding the foregoing, the Underwriter and their Affiliates and any
person acting as a Selected Dealer shall not be indemnified hereunder for any
losses, liabilities or expenses arising from or out of an alleged violation of
federal or state securities laws unless (1) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations as to the particular indemnitee and the court approves
indemnification or the litigation costs, or (2) such claims have been dismissed
with prejudice on the merits by a court of competent jurisdiction as to the
indemnification of the litigation costs, or (3) a court of competent
jurisdiction approves a settlement of the claims against a particular indemnitee
and finds that indemnification of the settlement and related costs should be
made. If any claim for indemnification for federal or state securities law
violation, the party seeking indemnification shall place before the court the
position of the S.E.C. and any other applicable regulatory authority with
respect to the issue of the indemnification for securities law violations.
10. Method and Location of Notices. All communications hereunder,
except as herein otherwise specifically provided, shall be in writing and shall
be mailed, delivered, or telecopied as follows:
Page 5 of 7
To Underwriter at:
0000 Xxxx Xxxxxx, Xxxxxxxx X
Xxxxxxxx, Xxxxx 00000
FAX (000) 000-0000, and
To Dealer at:
___________________________________
___________________________________
FAX _______________________________.
Notice shall be deemed to be given by a party to another (i) if by personal
delivery, on the date of such delivery, (ii) if telecopied, on the date of
transmission, if the receiving party confirms receipt of such notice
telephonically, and (iii) if mailed, three days after delivery to the mails,
postage prepaid, registered mail, return receipt requested, to the addresses
provided in this Section 10.
11. Responsibility for Compliance. Dealer is solely responsible for
Dealer's compliance with all applicable securities laws in regard to the
offering of the Shares and nothing contained herein shall be construed so as to
cause the Underwriter to assume responsibility for Dealer's compliance.
12. Compliance with Underwriting Agreement. Dealer hereby
acknowledges that Dealer has been provided with a copy of the Best Efforts
Underwriting Agreement entered into by and between Underwriter and Issuer in
regard to the offering of the Shares and Dealer does hereby agree to be bound by
the terms and conditions of such agreement as applicable to Dealer. Furthermore,
such Underwriting Agreement shall inure to the benefit of Dealer to the extent
applicable.
13. Miscellaneous.
(a) Any customer account information submitted by the Dealer shall be
considered confidential. The Underwriter shall not use such information as
a source for solicitation purposes or in any other manner that is
inconsistent with the purposes of this Agreement.
(b) No rights or interests created hereunder may be transferred,
conveyed or assigned except with the prior written consent of the
Underwriter.
(c) Notwithstanding the date or dates that this Agreement shall be
actually signed by the parties hereto, Dealer's representations, warranties
and agreements herein shall be effective as if made prior to the
commencement by Dealer of its performance hereunder.
DEALER:
__________________________________
By:_______________________________
Title:____________________________
Dated:_____________________________
Page 6 of 7
States in which Dealer is licensed:
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
UNDERWRITER:
GREAT NATION INVESTMENT CORPORATION
By:________________________________
Xxxxx Xxx Treat
Its President
Date:______________________________
Page 7 of 7
