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.___ 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:
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(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 of Utah/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).
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The undersigned, the Sales Agent and the
Company agree and acknowledge that, unless specifically requested
by the Company or otherwise required by the state of residence of
a particular investor, investors will not be required to enter
into a subscription agreement with the Company.
Where, pursuant to the undersigned's
internal supervisory procedures, final internal supervisory
review of subscriptions is conducted at the office where a check
and a Subscription Agreement, if any, are received, such check
and any Subscription Agreement shall be transmitted to the Escrow
Agents on the day received.
Where, pursuant to the undersigned's
internal supervisory procedures, final internal supervisory
review of subscriptions is conducted at a different office from
where a check and any Subscription Agreement are received, such
check and any Subscription Agreement shall be transmitted on the
day received to the office of the undersigned conducting such
final internal supervisory review for receipt on or before the
next business day, which shall in turn, by noon of the day of
receipt, transmit such check and any Subscription Agreement to
the Escrow Agents.
Where the purchaser is to pay for the
purchase of funds by wire transfer rather than by check, such
wire transfer is to be forwarded with any Subscription Agreement
in the same manner and within the same time limits as if the
purchaser had paid by check, as specified in the preceding two
paragraphs.
Where the undersigned intends to
transmit from its own funds the purchase price for the Notes and
to subsequently debit a customer's account in a like amount, the
undersigned shall debit the securities account of such customer
no later than the next business day following the date that the
undersigned transmits such purchase price and any Subscription
Agreement to the Escrow Agents.
Notwithstanding the foregoing, the account
of a customer who subscribes for Notes during the first five
business days after commencement of the Offering of the Notes
shall be debited to the customer's account on the sixth business
day after the commencement of the Offering.
In the event that the payment received
by the undersigned is not made payable as set forth in
subparagraph (h) (ii) above, such payment shall be returned to
the purchaser within one business day from receipt thereof.
In addition, the undersigned will provide
the Escrow Agents with the name, address and social security or
tax identification number of, and the amount tendered and number
of Notes subscribed for by each such Subscriber (it being
understood that the undersigned will have in its possession a
properly executed Form W-9 for each such Subscriber subject to
back-up withholding, as required under the Tax Equity and Fiscal
Reform Act of 1982). The data furnished to the Escrow Agents in
accordance with the preceding sentence shall also be provided to
the Escrow Agents in magnetic media tape format.
(i) In recommending to a participant the purchase,
sale or exchange of Notes, the undersigned and persons associated
with the undersigned shall:
(A) Have reasonable grounds to believe,
on the basis of information obtained from the investor concerning
his investment objectives, other investments, financial situation
and needs, and any other information known by the undersigned or
associated person
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that:
(1) The investor complies with the
suitability requirements, if any, set forth in the Prospectus, or
applicable blue-sky laws;
(2) The investor is or will be in a
financial position appropriate to enable the participant to
realize to a significant extent the benefits described in the
Prospectus;
(3) The investor has a fair market net
worth sufficient to sustain the risk inherent in the Company,
including loss of investment and lack of liquidity; and
(4) An investment in the Company is
otherwise suitable for the participant; and
(B) Maintain in the files of the
undersigned for a period of six years documents disclosing the
basis upon which the determination of suitability was reached as
to each participant.
Notwithstanding the provisions of the
Section 2(i), the undersigned shall not execute any transaction
in a discretionary account without prior written approval of the
transaction by the customer;
(j) To comply with and abide by all terms and
conditions of the Registration Statement and the Prospectus;
(k) To submit to the Sales Agent any sales
materials prepared by it in connection with the offer or sale of
Notes and not to use such materials until they have been reviewed
and cleared for presentation by the staff of the SEC, the NASD
and such other regulatory agencies as my be appropriate. As used
herein, "sales materials" shall not be deemed to include
administrative, nonsubstantive materials which are not to be
distributed to the public;
(l) To review the Company's Registration Statement
and other materials provided by the Company and to have
reasonable grounds to believe, based on information obtained from
the Company, 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 Company. In determining the adequacy of
disclosed facts pursuant to this Section 2, the undersigned and
persons associated with the undersigned shall obtain information
on material facts relating at a minimum to the following, if
relevant in view of the nature of the proposed activities of the
Company:
(i) Items of compensation;
(ii) Financial stability and experience of
the management;
(iii) The Company's conflicts and risk
factors; and
(iv) Tax aspects.
(m) Prior to executing a purchase transaction in
the Company, to inform the prospective participant of all
pertinent facts relating to the liquidity and marketability of
the Notes during the term of the investment;
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(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 5.0% 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 1.5% 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,
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whichever occurs earlier, and shall continue (unless otherwise
terminated as provided herein) until the undersigned has been
notified that the Offering of Notes has ceased or has been
completed.
The undersigned's services under this Agreement may be
terminated by the Sales Agent or the Company if (i) the
undersigned fails to comply with any provisions of this
Agreement: (ii) any of the undersigned's representations or
warranties made herein is false: or (iii) the undersigned 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
the undersigned ceases to be registered in less than all the
states listed herein, this Agreement may not be terminated by the
Company but the undersigned shall no longer offer or sell Notes
in such states. The undersigned will promptly notify the Company
in writing of the occurrence of any of the foregoing. In the
event of termination, the undersigned 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.
6. Authority. It is understood that the undersigned's
relationship with the Company is as an independent contractor and
that nothing herein shall be construed as creating a partnership,
joint venture, or employer and employee relationship between the
undersigned and the Company. The undersigned is not authorized to
give any information or make any representations or warranties in
connection with the offer and sale of the Notes except as stated
in the Prospectus, or any sales material approved in writing by
the Company or use any sales material or advertising in
connection with the offer of the Notes except as approved in
writing by the Company; and provided further that any such sales
material or advertising may be delivered to a person only if
accompanied or preceded by the delivery of a copy of the
Prospectus.
7. Third Party Beneficiary. It is understood that the
Company intends to rely, in connection with the Offering, on the
covenants, representations and warranties made herein by the
undersigned to the Sales Agent, and that the Company is intended
to be a third party beneficiary of such covenants,
representations and warranties.
8. Indemnification. The Company agrees to indemnify and
hold harmless the undersigned and each person, if any, who
controls the undersigned, within the meaning of Section 15 of the
Act, for any and all losses, claims, damages, and liabilities
arising in connection with the offering or sale of Notes, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of, or are based upon any untrue
statement of any material fact contained in the Registration
Statement or any amendment thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and to reimburse any legal or
other expense reasonably incurred by such persons in connection
with investigation or defense of any such loss, claim, damage,
liability or action.
The undersigned agrees to indemnify and hold harmless the
Company and the Sales Agent and their controlling persons,
shareholders, officers and directors, for any and all losses,
claims, damages, or liabilities arising in connection with the
offering or sale of Notes, 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 the undersigned, any untrue statement or
alleged untrue statement of any material fact made by the
undersigned in writing to the Company or the Sales Agent, or the
failure of the undersigned to deliver a copy of the Prospectus to
a purchaser of the Notes, or for a violation of any federal,
state (including Blue Sky and securities laws and any applicable
suitability requirements) or local statue or common law, or of
any court order, or of
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any rule or regulation of any governmental unit or agency or
the NASD, for the breach of any representation or warranty made
by the undersigned herein, or for the failure of the undersigned
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
any such loss, claim, damage, liability or action.
Notwithstanding the foregoing, the Company and the Sales
Agent 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 violations,
the party seeking indemnification shall place before the court
the position of the SEC and any other applicable regulatory
authority with respect to the issue of indemnification for
securities law violations.
9. Method and Location of Notices. All communications
hereunder, except as herein otherwise specifically provided,
shall be in writing and, if sent to the Sales Agent, shall be
mailed, delivered, or telecopied and confirmed to you at Xxxxxxx
Xxxxxxx Securities, 000 Xxxx Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx,
Xxxxxxxx 00000; Attention: Xxxxxxx X. Xxxxxxx (Telecopy
606-253-3872); if sent to the Company, shall be mailed, delivered
or telecopied and confirmed to it at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxx X. Xxxxxxx
(Telecopy 415-696-3929); if sent to the undersigned, shall be
mailed, delivered or telecopied and confirmed to it at the
address listed on the signature page. 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 Section 9 hereof.
10. Miscellaneous.
(a) No rights or interests created hereunder may
be transferred, conveyed or assigned except with the prior
written consent of the Company and the Sales Agent.
(b) This Agreement shall be governed by the laws
of the State of California and venue for any legal action arising
out of this Agreement shall be in San Mateo County, California.
(c) Notwithstanding the date or dates that this
Agreement shall be actually signed by the parties hereto, the
undersigned's representations, warranties and agreements herein
shall be effective as if made prior to the commencement by the
undersigned of its performance hereunder.
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If the foregoing is in accordance with the Sales Agent
and the Company's understanding, please sign and return to the
undersigned the counterpart hereof, whereupon this letter and
your acceptance as signified by your signature shall constitute a
binding agreement.
Very truly yours,
_______________________________________
Name of Selected Dealer (type or print)
By:____________________________________
Title:_________________________________
Address:_______________________________
_______________________________________
Att'n:_________________________________
Telecopy:______________________________
State(s) in which Dealer is licensed:
_______________________________________
_______________________________________
_______________________________________
Dated:_________________________________
The foregoing is hereby confirmed and accepted as of the date
written below:
Xxxxxxx Xxxxxxx Securities,
a California corporation
By:____________________________________
Its:___________________________________
Dated:_________________________________
AGREED AND ACKNOWLEDGED: AeroCentury Fund IV, Inc.
a California corporation
By:____________________________________
Its:___________________________________
Dated:_________________________________
