Exhibit No. 4.1
SUBSCRIPTION LETTER
-------------------
Genesis Financial Group Total Offering: $10,000,000
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000 Type of Investment Retail
Offered: Installment
Sales
Contracts
and Corporate
Guarantees
Price Per Contract: Variable
Total Investment: $____________
Commencement Date
of Offering: January __, 1996
Investment Option: _____ 20%
_____ 25%
Gentlemen:
This letter is furnished to Genesis Financial Group, a Virginia
corporation, ("Corporation"), in connection with the investment by the
undersigned on this date in the amount shown above for the acquisition of one or
more Retail Installment Sales Contracts ("Contracts") generated by Mr. Car Man,
Inc. ("MCMI") during the course of its normal business operations of selling
used vehicles, together with the Corporation's guarantee ("Guarantee") of the
contractual obligations under each Contract sold, which Contracts have been
purchased at a discount by the Corporation. In conjunction herewith, the
undersigned hereby delivers his check, payable to the Corporation, in the amount
equal to the total investment shown above. Since the Corporation's Guarantee
pertains to each Contract sold hereunder, future reference to the term
"Contract" shall be deemed to incorporate the underlying Guarantee which
securities are sold as a unit.
The undersigned hereby understands that the Contracts have been registered
under the Securities Act of 1933 ("1933 Act") and that the Corporation reserves
the right, in its sole discretion, to reject any subscription at any time.
Contemporaneously with the offering of its Contracts, the Corporation will also
offer for sale to selected investors its corporate promissory notes ("Notes").
Although the Corporation does not currently intend to sell more than
$2,000,000.00 in Contracts to investors, the Corporation reserves the right to
sell up to $10,000,000.00 in Contracts, as well as up to $10,000,000.00 in
Notes. In no event, however, will more than $10,000,000.00 in the aggregate of
Contracts and Notes be
1
sold to Investors. If not sooner terminated by the Corporation, this offering
will terminate on the second anniversary date of the Effective Date of the
Registration Statement. The undersigned understands there is no minimum
offering amount required to be received before the Corporation may fully utilize
the undersigned's funds. In conjunction with the offering, the undersigned
agrees to execute the Power of Attorney form delivered with this Letter.
Nature, Type And Return On Investment
-------------------------------------
The undersigned understands that the Corporation is in the business of
purchasing at a discount some or all of the Contracts generated by MCMI from
time to time as they arise. Accordingly, the number of Contracts assigned to a
particular investor will vary depending on his total investment, the value of
the Contracts allocated to his account, and the investment option selected by an
investor hereinabove. The 20% and 25% investment options offered to investors
represent an annual return on investment. The Corporation intends to pass
through to investors part or all of each customer's monthly payments under the
Contracts to satisfy the Corporation's obligations to its investors purchasing
Contracts. In the event a customer should default, the Corporation is obligated
to replace the defaulted contract with a new Contract having similar terms and
conditions. Until a replacement Contract is substituted for a defaulted
Contract, the Corporation will guarantee that all payments due and owing to an
Investor will be made on a timely basis. The Corporation intends to use its
capital reserves and other sources of revenue, including funds generated from
the sale of its Notes and customer payments on Contracts purchased from MCMI and
retained by the Corporation, to satisfy such obligations. The investment
options, return rates and the Corporation's obligations to replace defaulted
Contracts and guarantee payments are more particularly detailed in the
Prospectus to which reference is hereby made.
The undersigned acknowledges that he will receive a return of principal and
interest on a monthly basis corresponding with the monthly payments set forth
under the Contracts assigned to his account. The actual purchase price for a
Contract is based upon the original face value of the Contract, the interest
rate, the amortization schedule and the discounted purchase price paid to MCMI
by the Corporation. Reference is made to the Prospectus for a more detailed
discussion of how the purchase price for and investment return on a Contract is
calculated. The portion of the undersigned's investment attributable to a
particular Contract will be calculated in advance to correlate with the
investment option selected.
The Corporation will attempt to maintain at all times a portfolio of valid
and current Contracts for each investor to the extent of the investor's actual
outstanding investment in the Corporation. The undersigned understands that the
Corporation
2
assumes the risk of any default under a Contract and will replace any defaulting
Contract with a new Contract of comparable value. Further, the undersigned
acknowledges and understands that the success of the Corporation's business
depends upon the creation by MCMI of new sale transactions on a continual basis
and that his investment hereunder will correlate with the availability of
identifiable and executed Contracts. The Corporation undertakes to notify and
submit a copy to the undersigned of each new Contract assigned to the
undersigned's account. The undersigned understands that the Corporation will
cover the monthly payments on any defaulting Contract until such time that a new
Contract is substituted therefor. However, the undersigned will not be entitled
to receive any sum in excess of his stated return. In addition, the Corporation
reserves the right at any time and from time to time to return an investor's
funds without penalty.
Indenture
---------
The Contracts and Notes offered by the Corporation will be issued pursuant
to and subject to the terms of that certain Indenture agreement executed by the
Corporation in conjunction with this offering. The Indenture is required under
the Trust Indenture Act of 1939 and imposes additional obligations on the
Corporation in issuing the Contracts and Notes and servicing its debt
obligations thereunder. A copy of the Indenture will be provided to each
investor to which document reference is hereby made.
Delivery Of Original Documents
------------------------------
Once a Contract has been assigned to a particular investor's portfolio,
that Contract will remain in that investor's portfolio until the investor's
rights in that Contract are terminated or unless there is a default thereunder
at which time the Corporation will replace such Contract with a comparable one
as soon as possible. In the interim, the Corporation will continue any monthly
payments attributable to any such defaulting Contract until it is so replaced.
All original Contracts will be delivered to an investor as they are assigned.
Receipt And Review Of Information
---------------------------------
The undersigned acknowledges receipt of the Corporation's Prospectus filed
with the Securities And Exchange Commission, a copy of the form Contract used by
MCMI, a copy of the Indenture and a Subscriber Information Schedule
("Schedule"). In addition, the undersigned hereby acknowledges that he, or his
investment advisor, has had the opportunity to ask questions of the
Corporation's and XXXX's officers and receive and review all information and
documentation requested pertaining to the officers, the Corporation and MCMI.
The undersigned represents that he and/or his investment advisor: (i) is
familiar with the financial condition of the Corporation and MCMI and the
proposed business activities of the
3
Corporation and MCMI; (ii) has discussed with the officers the current and
proposed activities of the Corporation and MCMI including, without limitation,
the selling operations of MCMI; (iii) has discussed with the officers of the
Corporation the method and manner for handling and safeguarding the Contracts
and Titles; and (iv) has conducted, to his sole satisfaction, all investigations
and inquiries pertaining to the Corporation, MCMI and the officers thereof that
he deemed necessary and expedient in making his investment decision.
Accordingly, the undersigned believes that the Contracts are securities of the
kind he wishes to purchase and hold for investment and that the nature and
amount of his investment are consistent with his investment program.
The undersigned further understands that the Corporation, or an affiliate
thereof, will act as the collection agency for all Contracts.
Acknowledgement Of Certain Facts
--------------------------------
The undersigned hereby expressly acknowledges that he is aware of the
following facts;
(i) In addition to the risks summarized herein, there are other
substantial risks involved in investing in the Corporation and, therefore, the
risks set forth hereunder are not intended to be complete or relied upon by the
undersigned as a basis for making an investment in the Corporation;
(ii) Neither the Securities And Exchange Commission nor any state agency
has passed upon the adequacy of this offering or upon the accuracy of any
information or documentation provided to him or made any finding or
determination as to the fairness of an investment in the Corporation. Any
representation to the contrary is a criminal offense;
(iii) He should only invest in the Corporation based upon his particular
circumstances and should confer with and rely on his own investment and tax
advisors as to the substantial risks inherent in an investment in the
Corporation. He acknowledges that he has carefully read and completed, where
necessary, in its entirety the Prospectus, Schedule, Indenture and this Letter
and that neither the Corporation, its officers, nor any other party has made any
representation or warranty with respect to the Corporation, MCMI, the officers
thereof or the business conducted thereby except as otherwise specifically set
forth herein and in the Prospectus;
(iv) The Corporation and MCMI have provided him with an opportunity to
meet and confer with the officers thereof regarding all aspects of the
transactions contemplated by the Corporation including the creation and
assignment of the Contracts and will afford him the opportunity to obtain any
additional information, to
4
the extent that the Corporation and MCMI possesses such information or can
acquire it without unreasonable effort or expense; and
(v) This offering will continue for a period of two years.
Representations Of Investors And Risks
--------------------------------------
The undersigned understands that an investment in the Corporation involves
a high degree of risk. To induce the Corporation to issue and sell the
Contracts to the undersigned, the undersigned hereby warrants, represents and
covenants to the Corporation as follows:
(i) The undersigned can bear the economic risk of an investment in the
Corporation and the acquisition of the subscribed for Contracts for an
indefinite period of time;
(ii) The undersigned has sufficient available financial resources to
provide adequately for his current needs, including possible personal
contingencies, and can bear the economic risk of a complete loss of his
investment hereunder without materially affecting his financial condition;
(iii) The undersigned has been furnished with all materials, documents and
information relating to the Corporation, MCMI and their activities, the offering
of the Contracts and anything set forth in this Letter and the Prospectus which
he has requested and the undersigned has been afforded the opportunity to obtain
any additional information necessary to verify the accuracy of any
representations or information set forth in said documents;
(iv) The Corporation, MCMI and their officers have answered all inquiries
that the undersigned has put to them concerning the Corporation, MCMI and their
activities and any other matters relating to the Corporation, MCMI and the
offering as well as with respect to the creation and assignment of the Contracts
and the safeguarding and disposition of the Contracts and Titles;
(v) The undersigned has not been furnished any offering literature other
than this Letter, the Prospectus, the Indenture and the form Contract and in
making his investment decision has relied only on the information contained
therein and his own investigations into the suitability of the investment, the
projected rate of return and the proposed business to be conducted by the
Corporation and MCMI. The undersigned is familiar with the methods and
procedures of the proposed business operations contemplated by the Corporation
and MCMI. The undersigned has carefully reviewed and understands this Letter,
the Prospectus, the Indenture and the form Contract and the risks of, and other
considerations relating to, an investment in the Corporation. Furthermore, as
set forth above, no representations or warranties
5
have been made to the undersigned, or to his advisors, by the Corporation, MCMI,
their officers or any other person with respect to the proposed business of the
Corporation or MCMI, the financial condition of the Corporation or MCMI, and/or
the economic, tax or other aspects or consequences of a purchase of the
Contracts, and the undersigned has not relied upon any information concerning
this offering, written or oral, other than contained in this Letter, the
Prospectus, the Indenture, the form Contract and the information obtained
through his own investigations. The undersigned acknowledges that the officers
have answered all questions presented by the undersigned and/or his investment
advisor and provided all information requested pertaining to the past operating
history and financial condition of the Corporation and MCMI;
(vi) The undersigned has been represented by such legal counsel, tax
advisors, accountants and others selected by the undersigned as he has found
necessary to consult concerning this transaction and to review and evaluate the
tax, economic and other ramifications of an investment in the Corporation. No
representation, warranty or advice of any kind is made by the Corporation, the
officers or any other person with respect to any consequences relating to the
business of the Corporation or an investment in the Corporation, except to the
extent otherwise set forth in the Prospectus. (Please note that the provisions
of the federal securities laws, in the view of the Commission, are not subject
to disclaimer or waiver);
(vii) The undersigned, if a corporation, partnership, trust or other form
of business entity, is authorized and otherwise duly qualified to purchase and
hold the Contracts, and such entity has the principal place of business as set
forth in the signature page hereof and such entity has not been formed for the
specific purpose of acquiring the Contracts;
(viii) The undersigned understands that the Contracts have been registered
under the 1933 Act;
(ix) All the information which the undersigned has furnished to the
Corporation with respect to his financial position and business experience is
correct and complete as of the date of this Letter and, if there should be any
material change in such information prior to the consummation of this offering,
the undersigned will immediately furnish such revised or corrected information
to the Corporation;
(x) The undersigned hereby acknowledges that no state regulatory
authority has passed upon the adequacy or merits of this offering and has
expressed no opinion as to the quality of the Contracts offered xxxxxxxxx; and
(xi) The undersigned hereby acknowledges that all financial and related
projections pertaining to the Corporation and MCMI are
6
merely predictions which are dependent upon various assumptions including, but
not limited to, the cost of maintaining inventory, the cost of overhead, market
conditions, competition and general economic factors.
The undersigned acknowledges that his right to purchase the Contracts
hereunder is not transferable or assignable by him.
If the undersigned is more than one person, the obligations of the
undersigned shall be joint and several and the representations and warranties
herein contained shall be deemed to be made by, and be binding upon, each such
person and his heirs, executors, administrators, successors and assigns.
Indemnification
---------------
The undersigned agrees to indemnify and hold harmless the Corporation
against any and all liabilities, losses, costs, damages, fees (including
attorney's fees) and other expenses which the Corporation may sustain or incur
by reason of the undersigned's breach of any representation or warranty
contained herein; or by reason of any action improperly taken by the undersigned
relating to the sale of the Contracts.
Date of Execution:
__________________ ____________________________________________
Signature
Date of Execution:
__________________ ____________________________________________
Signature
____________________________________________
Printed or Typewritten Name
____________________________________________
Printed or Typewritten Name
____________________________________________
Street Address
____________________________________________
City, State, Zip Code
____________________________________________
Telephone
7
____________________________________________
Social Security Number or
Tax ID Number
The investments purchased hereunder shall be held as follows:
____________________________________________
____________________________________________
____________________________________________
____________________________________________
____________________________________________
8
SUBSCRIPTION LETTER
-------------------
Genesis Financial Group Total Offering: $10,000,000
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000 Type of Investment 3 1/2 Year
Offered: Promissory
Notes
Initial Minimum
Investment: $10,000.00
Total Investment: $____________
Commencement Date
of Offering: January __, 1996
Gentlemen:
This letter is furnished to Genesis Financial Group, a Virginia
corporation, ("Corporation"), in connection with the investment by the
undersigned on this date in the amount shown above for the acquisition of one or
more unsecured corporate promissory notes amortized over a three and one-half (3
1/2) year period at 18% per annum. In conjunction herewith, the undersigned
hereby delivers his check, payable to the Corporation, in the amount equal to
the total investment shown above.
The undersigned hereby understands that the Notes have been registered
under the Securities Act of 1933 ("1933 Act") and that the Corporation reserves
the right, in its sole discretion, to reject any subscription at any time.
Contemporaneously with the offering of its Notes, the Corporation will also
offer for sale to investors Installment Sales Contracts ("Contracts") generated
by and purchased from its Affiliate, Mr. Car Man, Inc. Although the Corporation
does not currently intend to sell more than $8,000,000.00 in Notes to investors,
the Corporation reserves the right to sell up to $10,000,000.00 in Notes, as
well as up to $10,000,000.00 in Contracts. In no event, however, will more than
$10,000,000.00 in the aggregate of Notes and Contracts be sold to investors. If
not sooner terminated by the Corporation, this offering will terminate on the
second anniversary date of the Effective Date of the Registration Statement.
The undersigned understands there is no minimum offering amount required to be
received before the Corporation may fully utilize the undersigned's funds. In
conjunction with the offering, the undersigned agrees to execute the Power of
Attorney form delivered with this Letter.
Nature, Type And Return On Investment
-------------------------------------
The undersigned understands that the Corporation is in the business of
purchasing at a discount some or all of the Retail Installment Sales Contracts
("Contracts") generated by its affiliate, Mr. Car Man, Inc. ("MCMI"), from time
to time as they arise during the course of its normal business operations of
selling used vehicles.
The initial minimum investment is one Note for $10,000.00. Thereafter, the
undersigned may purchase additional Notes in increments of $2,500.00. Interest
shall accrue at the rate of 18% per annum, and the Notes shall be amortized on a
3 1/2 year basis. Principal and interest shall be payable on a monthly basis as
provided for in the Notes.
The undersigned acknowledges and understands that the Notes are unsecured
and that the success of the Corporation's business depends upon the creation by
MCMI of new sale transactions on a continual basis. The Corporation reserves
the right at any time and from time to time to prepay, in whole or in part, any
Note without penalty.
Indenture
---------
The Notes and Contracts offered by the Corporation will be issued pursuant
to and subject to the terms of that certain Indenture agreement executed by the
Corporation in conjunction with this offering. The Indenture is required under
the Trust Indenture Act of 1939 and imposes additional obligations on the
Corporation in issuing the Notes and Contracts and servicing its debt
obligations thereunder. A copy of the Indenture will be provided to each
investor to which document reference is hereby made.
Receipt And Review Of Information
---------------------------------
The undersigned acknowledges receipt of the Corporation's Prospectus filed
with the Securities And Exchange Commission, a copy of the form Note, a copy of
the Indenture, and a Subscriber Information Schedule ("Schedule"). In addition,
the undersigned hereby acknowledges that he, or his investment advisor, has had
the opportunity to ask questions of the Corporation's and XXXX's officers and
receive and review all information and documentation requested pertaining to the
officers, the Corporation and MCMI. The undersigned represents that he and/or
his investment advisor: (i) is familiar with the financial condition of the
Corporation and MCMI and the proposed business activities of the Corporation and
MCMI; (ii) has discussed with the officers the current and proposed activities
of the Corporation and MCMI including, without limitation, the selling
operations of MCMI; and (iii) has conducted, to his sole satisfaction, all
investigations and
2
inquiries pertaining to the Corporation, XXXX and the officers thereof that he
deemed necessary and expedient in making his investment decision. Accordingly,
the undersigned believes that the Notes are securities of the kind he wishes to
purchase and hold for investment and that the nature and amount of his
investment are consistent with his investment program.
Acknowledgement Of Certain Facts
--------------------------------
The undersigned hereby expressly acknowledges that he is aware of the
following facts;
(i) In addition to the risks summarized herein, there are other substantial
risks involved in investing in the Corporation and, therefore, the risks set
forth hereunder are not intended to be complete or relied upon by the
undersigned as a basis for making an investment in the Corporation;
(ii) Neither the Securities And Exchange Commission nor any state agency
has passed upon the adequacy of this offering or upon the accuracy of any
information or documentation provided to him or made any finding or
determination as to the fairness of an investment in the Corporation. Any
representation to the contrary is a criminal offense;
(iii) He should only invest in the Corporation based upon his particular
circumstances and should confer with and rely on his own investment and tax
advisors as to the substantial risks inherent in an investment in the
Corporation. He acknowledges that he has carefully read and completed, where
necessary, in its entirety the Prospectus, Schedule, Indenture and this Letter
and that neither the Corporation, its officers, nor any other party has made any
representation or warranty with respect to the Corporation, MCMI, the officers
thereof or the business conducted thereby except as otherwise specifically set
forth herein and in the Prospectus;
(iv) The Corporation and MCMI have provided him with an opportunity to meet
and confer with the officers thereof regarding all aspects of the transactions
contemplated by the Corporation including the creation of the Contracts and will
afford him the opportunity to obtain any additional information, to the extent
that the Corporation and MCMI possesses such information or can acquire it
without unreasonable effort or expense; and
(v) This offering will continue for a period of two years.
3
Representations Of Investors And Risks
--------------------------------------
The undersigned understands that an investment in the Corporation involves
a high degree of risk. To induce the Corporation to issue and sell the Notes to
the undersigned, the undersigned hereby warrants, represents and covenants to
the Corporation as follows:
(i) The undersigned can bear the economic risk of an investment in the
Corporation and the acquisition of the subscribed for Notes for an indefinite
period of time;
(ii) The undersigned has sufficient available financial resources to
provide adequately for his current needs, including possible personal
contingencies, and can bear the economic risk of a complete loss of his
investment hereunder without materially affecting his financial condition;
(iii) The undersigned has been furnished with all materials, documents and
information relating to the Corporation, MCMI and their activities, the offering
of the Notes and anything set forth in this Letter and the Prospectus which he
has requested and the undersigned has been afforded the opportunity to obtain
any additional information necessary to verify the accuracy of any
representations or information set forth in said documents;
(iv) The Corporation, MCMI and their officers have answered all inquiries
that the undersigned has put to them concerning the Corporation, MCMI and their
activities and any other matters relating to the Corporation, MCMI and the
offering;
(v) The undersigned has not been furnished any offering literature other
than this Letter, the Prospectus, the Indenture and the form Note and in making
his investment decision has relied only on the information contained therein and
his own investigations into the suitability of the investment, the projected
rate of return and the proposed business to the conducted by the Corporation and
MCMI. The undersigned is familiar with the methods and procedures of the
proposed business operations contemplated by the Corporation and MCMI. The
undersigned has carefully reviewed and understands this Letter, the Prospectus,
the Indenture and the form Note and the risks of, and other considerations
relating to, an investment in the Corporation. Furthermore, as set forth above,
no representations or warranties have been made to the undersigned, or to his
advisors, by the Corporation, MCMI, their officers or any other person with
respect to the proposed business of the Corporation or MCMI, the financial
condition of the Corporation or MCMI, and/or the economic, tax or other aspects
or consequences of a purchase of the Notes, and the undersigned has not relied
upon any information concerning this offering, written or oral, other than
contained in this Letter, the
4
Prospectus, the Indenture, the form Note and the information obtained through
his own investigations. The undersigned acknowledges that the officers have
answered all questions presented by the undersigned and/or his investment
advisor and provided all information requested pertaining to the past operating
history and financial condition of the Corporation and MCMI;
(vi) The undersigned has been represented by such legal counsel, tax
advisors, accountants and others selected by the undersigned as he has found
necessary to consult concerning this transaction and to review and evaluate the
tax, economic and other ramifications of an investment in the Corporation. No
representation, warranty or advice of any kind is made by the Corporation, the
officers or any other person with respect to any consequences relating to the
business of the Corporation or an investment in the Corporation, except to the
extent otherwise set forth in the Prospectus. (Please note that the provisions
of the federal securities laws, in the view of the Commission, are not subject
to disclaimer or waiver);
(vii) The undersigned, if a corporation, partnership, trust or other form
of business entity, is authorized and otherwise duly qualified to purchase and
hold the Notes, and such entity has the principal place of business as set forth
in the signature page hereof and such entity has not been formed for the
specific purpose of acquiring the Notes;
(viii) The undersigned understands that the Notes have been registered
under the 1933 Act;
(ix) All the information which the undersigned has furnished to the
Corporation with respect to his financial position and business experience is
correct and complete as of the date of this Letter and, if there should be any
material change in such information prior to the consummation of this offering,
the undersigned will immediately furnish such revised or corrected information
to the Corporation;
(x) The undersigned hereby acknowledges that no state regulatory authority
has passed upon the adequacy or merits of this offering and has expressed no
opinion as to the quality of the Notes offered xxxxxxxxx; and
(xi) The undersigned hereby acknowledges that all financial and related
projections pertaining to the Corporation and MCMI are merely predictions which
are dependent upon various assumptions including, but not limited to, the cost
of maintaining inventory, the cost of overhead, market conditions, competition
and general economic factors.
5
The undersigned acknowledges that his right to purchase the Notes hereunder
is not transferable or assignable by him.
If the undersigned is more than one person, the obligations of the
undersigned shall be joint and several and the representations and warranties
herein contained shall be deemed to be made by, and be binding upon, each such
person and his heirs, executors, administrators, successors and assigns.
Indemnification
---------------
The undersigned agrees to indemnify and hold harmless the Corporation
against any and all liabilities, losses, costs, damages, fees (including
attorney's fees) and other expenses which the Corporation may sustain or incur
by reason of the undersigned's breach of any representation or warranty
contained herein; or by reason of any action improperly taken by the undersigned
relating to the sale of the Notes.
Date of Execution:
__________________ ____________________________________________
Signature
Date of Execution:
__________________ ____________________________________________
Signature
____________________________________________
Printed or Typewritten Name
____________________________________________
Printed or Typewritten Name
____________________________________________
Street Address
____________________________________________
City, State, Zip Code
____________________________________________
Telephone
____________________________________________
Social Security Number or
Tax ID Number
6
The investments purchased hereunder shall be held as follows:
____________________________________________
____________________________________________
____________________________________________
____________________________________________
____________________________________________
7
