EXHIBIT 1.1
Vestin Group, Inc.
Up To
$500,000,000
(Subordinated Notes)
DEALER MANAGER AGREEMENT
March ___, 2003
Vestin Capital, Inc.
0000 Xx Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Ladies and Gentlemen:
Vestin Group, Inc. (the "Company"), a Delaware corporation, proposes to
issue and sell up to $500,000,000 of unsecured, subordinated notes (the "Notes")
of the Company. Such Notes are to be sold for cash for an amount equal to or in
excess of $1,000. Terms not defined herein shall have the same meaning as in the
Prospectus. In connection therewith, the Company hereby enters into this Dealer
Manager Agreement ("Agreement") with you (the "Dealer Manager") as follows:
1. Representations and Warranties of the Company
The Company represents and warrants to the Dealer Manager and each
dealer with whom the Dealer Manager has entered into or will enter into a
Selected Dealer Agreement in the form attached to this Agreement as Exhibit A
(said dealers being hereinafter called the "Dealers") that:
1.1 A Registration Statement of the Company has been prepared by the
Company in accordance with applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the applicable rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "SEC"), covering the Notes. Said Registration Statement, which
includes a form of prospectus, was filed with the SEC on or about March ___,
2003. Copies of such Registration Statement and each amendment thereto have been
or will be delivered to the Dealer Manager. (The Registration Statement and
Prospectus, as finally amended and revised, are respectively referred to as the
"Registration Statement" and the "Prospectus").
1.2 The Company has been duly and validly organized and formed as a
Delaware corporation with the power and authority to conduct its business as
described in the Prospectus.
1.3 The Registration Statement and Prospectus comply with the Securities
Act and the Rules and Regulations and do not contain any untrue statements of
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading; provided,
however, that the foregoing provisions of this Section 1.3 will not extend to
such statements contained in or omitted from the Registration Statement or
Prospectus as are primarily within the knowledge of the Dealer Manager or any of
the Dealers and are based upon information furnished by the Dealer Manager or
any Dealer in writing to the Company specifically for inclusion therein.
1.4 The Company intends to use the funds received from the sale of the
Notes as set forth in the Prospectus.
1.5 No consent, approval, authorization or other order of any
governmental authority, is required in connection with the execution or delivery
by the Company of this Agreement, the issuance and sale by the Company of the
Notes, or the conduct by the Company of its business as described in the
Prospectus, except such as may be required under the Securities Act or
applicable state securities laws.
1.6 There are no actions, suits or proceedings pending or to the
knowledge of the Company, threatened against the Company, at law or equity or
before or by any federal or state commission, regulatory body or administration
agency or other governmental body, domestic or foreign, which will have a
material adverse effect on the business or property of the Company, except as
are described on Attachment 1.6 to this Agreement.
1.7 The execution and delivery of this Agreement, the consummation of
the transactions herein contemplated and compliance with the terms of this
Agreement by the Company will not conflict with or constitute a default under
the Company's Certificate of Incorporation, by-laws, or in any indenture,
mortgage, deed of trust, lease, rule, regulation, writ, injunction or decree of
any government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over the Company, except to the extent that the
enforceability of the indemnity and/or contribution provisions contained in
Section 4 of this Agreement may be limited under applicable securities laws.
1.8 The Company has full legal right, power and authority to enter into
this Agreement and to perform the transactions contemplated hereby, except to
the extent that the enforceability of the indemnity and/or contribution
provisions contained in Section 4 of this Agreement may be limited under
applicable securities laws.
1.9 At time of issuance of the Notes, the Notes will have been duly
authorized and will be binding obligations of the Company.
1.10 The respective financial statements contained in the Registration
Statement and the Prospectus fairly present the financial condition of the
Company and the results of their respective operations as of the dates and for
the periods therein specified; and such financial statements have been prepared
in accordance with generally accepted accounting principles consistently applied
throughout the periods involved; and the accountants who have certified
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certain of such financial statements are independent public accountants as
required by the Securities Act and the Rules and Regulations.
2. Covenants of the Company
The Company covenants and agrees with the Dealer Manager that:
2.1 It will, at no expense to the Dealer Manager, furnish the Dealer
Manager with such number of printed copies of the Registration Statement,
including all amendments and exhibits thereto, as the Dealer Manager may
reasonably request. It will similarly furnish to the Dealer Manager and others
designated by the Dealer Manager as many copies as the Dealer Manager may
reasonably request in connection with the offering of the Notes of: (a) the
Prospectus in preliminary and final form and every form of supplemental or
amended prospectus; (b) this Agreement; and (c) any other printed sales
literature or other materials (provided that the use of said sales literature
and other materials has been approved for use by the Company and all appropriate
regulatory agencies).
2.2 It will furnish such proper information and execute and file such
documents as may be necessary for the Company to register or qualify the Notes
for offer and sale under the securities laws of such jurisdictions as the Dealer
Manager may reasonably designate and will file and make in each year such
filings as may be required. The Company will furnish to the Dealer Manager a
copy of such papers filed by the Company in connection with any such
registration or qualification.
2.3 It will: (a) use its best efforts to cause the Registration
Statement to become effective; (b) file for review and use its best efforts to
obtain approval by the NASD Corporate Financing Department of the offering; (c)
furnish copies of any proposed amendment or supplement of the Registration
Statement or Prospectus to the Dealer Manager; (d) file every amendment or
supplement to the Registration Statement or the Prospectus that may be required
by the SEC; and (e) if at any time the SEC shall issue any stop order suspending
the effectiveness of the Registration Statement, it will use its best efforts to
obtain the lifting of such order at the earliest possible time.
2.4 If at any time when a Prospectus is required to be delivered under
the Securities Act any event occurs as a result of which, in the opinion of
either the Company or the Dealer Manager, the Prospectus or any other prospectus
then in effect would include an untrue statement of a material fact or, in view
of the circumstances under which they were made, omit to state any material fact
necessary to make the statements therein not misleading, the Company will
promptly notify the Dealer Manager thereof (unless the information shall have
been received from the Dealer Manager) and will effect the preparation of an
amended or supplemental prospectus which will correct such statement or
omission. The Company will then promptly prepare such amended or supplemental
prospectus or prospectuses as may be necessary to comply with the requirements
of Section 10 of the Securities Act.
3. Obligations and Compensation of Dealer Manager
3.1 The Company hereby appoints the Dealer Manager as its agent and
principal distributor for the purpose of selling for cash up to a maximum of
$500,000,000 of Notes
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through Dealers, all of whom shall be members of the NASD. The Dealer Manager
may also sell Notes for cash directly to its own clients and customers at the
public offering price and subject to the terms and conditions stated in the
Prospectus. The Dealer Manager hereby accepts such agency and distributorship
and agrees to use its best efforts to sell the Notes on said terms and
conditions. The Dealer Manager represents to the Company that it is a member of
the NASD and that it and its employees and representatives have all required
licenses and registrations to act under this Agreement.
3.2 Promptly after the effective date of the Registration Statement, the
Dealer Manager and the Dealers shall commence the offering of the Notes for cash
to the public in jurisdictions in which the Notes are registered or qualified
for sale or in which such offering is otherwise permitted. The Dealer Manager
and the Dealers will suspend or terminate offering of the Notes upon request of
the Company at any time and will resume offering the Notes upon subsequent
request of the Company.
3.3 The Manager will reimburse the Dealer Manager for its selling
expenses and any commissions and expenses paid by the Dealer Manager to selected
dealers pursuant to Section IV of the Selected Dealer Agreement. Without in any
way limiting the foregoing, no commissions, Dealer Manager Fee or expense
reimbursement will be paid to the Dealer Manager or any Dealer in excess of the
maximum permitted by NASD Rules of Conduct and applicable Guidelines pertaining
to sales compensation in offerings of this kind. The Company will not be liable
or responsible to any Dealer for direct payment of commissions to such Dealer,
it being the sole and exclusive responsibility of the Dealer Manager for payment
of commissions and reimbursements of expenses to Dealers.
3.4 The Dealer Manager represents and warrants to the Company, the
Manager and each person and firm that signs the Registration Statement that the
information under the caption "Plan of Distribution" in the Prospectus and all
other information furnished to the Company by the Dealer Manager in writing
expressly for use in the Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment or supplement thereto does not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
4. Indemnification
4.1 The Company will indemnify and hold harmless the Dealers and the
Dealer Manager, their officers and directors and each person, if any, who
controls such Dealer or Dealer Manager within the meaning of Section 15 of the
Securities Act from and against any losses, claims, damages or liabilities,
joint or several, to which such Dealers or Dealer Manager, their officers and
directors, or such controlling person may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (a) any untrue
statement or alleged untrue statement of a material fact contained (i) in the
Registration Statement (including the Prospectus as a part thereof) or any
post-effective amendment thereto or in the Prospectus or any amendment or
supplement to the Prospectus or (ii) in any application or other document
executed by the Company or on its behalf specifically for the purposes of
registering or qualifying any or all of the Notes for sale under the securities
laws of any state or based upon written information furnished by the Company
under
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the securities laws thereof (any such application, document or information being
hereinafter called a "Blue Sky Application"), or (b) the omission or alleged
omission to state in the Registration Statement (including the Prospectus as a
part thereof) or any post-effective amendment thereof or in any Blue Sky
Application a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (c) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus, if
used prior to the effective date of the Registration Statement, or in the
Prospectus or any amendment or supplement to the Prospectus or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and will reimburse
each Dealer or Dealer Manager, its officers and directors and each such
controlling person for any legal or other expenses reasonably incurred by such
Dealer or Dealer Manager, its officers and directors, or such controlling
persons in connection with investigating or defending such loss, claim, damage,
liability or action; provided that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of,
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Dealer or Dealer
Manager specifically for use with reference to such Dealer or Dealer Manager in
the preparation of the Registration Statement or any such post-effective
amendment thereof, any such Blue Sky Application or any such preliminary
prospectus or the Prospectus or any such amendment thereof or supplement
thereto; and further provided that the Company will not be liable in any such
case if it is determined that such Dealer or Dealer Manager was at fault in
connection with the loss, claim, damage, liability or action.
4.2 The Dealer Manager will indemnify and hold harmless the Company, and
each person or firm which has signed the Registration Statement and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act, from and against any losses, claims, damages or liabilities to
which any of the aforesaid parties may become subject, under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (a) any untrue statement of a
material fact contained (i) in the Registration Statement (including the
Prospectus as a part thereof) or any post-effective amendment thereof or (ii)
any Blue Sky Application, or (b) the omission to state in the Registration
Statement (including the Prospectus as a part thereof) or any post-effective
amendment thereof or in any Blue Sky Application a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(c) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, if used prior to the effective date of
the Registration Statement, or in the Prospectus, or in any amendment or
supplement to the Prospectus or the omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein in the light of the circumstances under which they were made not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or omission was made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Dealer Manager
specifically for use with reference to the Dealer Manager in the preparation of
the Registration Statement or any such post-effective amendments thereof or any
such Blue Sky Application or any such preliminary prospectus or the Prospectus
or any such amendment thereof or supplement thereto, or (d) any unauthorized use
of sales materials or use of unauthorized oral representations concerning the
Notes by the Dealer Manager and will reimburse the aforesaid parties, in
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connection with investigation or defending such loss, claim, damage, liability
or action. This indemnity agreement will be in addition to any liability which
the Dealer Manager may otherwise have.
4.3 Each Dealer severally will indemnify and hold harmless the Company,
the Dealer Manager, all directors thereof (including any persons named in the
Registration Statements with his consent, as about to become a director), each
of their officers who has signed the Registration Statement and each person, if
any, who controls the Company, as the Dealer Manager within the meaning of
Section 15 of the Securities Act from and against any losses, claims, damages or
liabilities to which the Company, the Dealer Manager, any such director or
officer, or controlling person may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (a) any untrue statement or
alleged untrue statement of a material fact contained (i) in the Registration
Statement (including the Prospectus as a part thereof) or any post-effective
amendment thereof or (ii) in any Blue Sky Application, or (b) the omission or
alleged omission to state in the Registration Statement (including the
Prospectus as a part thereof) or any post-effective amendment thereof or in any
Blue Sky Application a material fact required to be stated therein or necessary
to make the statements therein not misleading, or (c) any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, if used prior to the effective date of the Registration Statement,
or in the Prospectus, of in any amendment or supplement to the Prospectus or the
omission therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company or the Dealer
Manager by or on behalf of such Dealer specifically for use with reference to
such Dealer in the preparation of the Registration Statement or any such
post-effective amendments thereof or any such Blue Sky Application or any such
preliminary prospectus or the Prospectus or any such amendment thereof or
supplement thereto, or (d) any unauthorized use of sales materials or use of
unauthorized verbal representations concerning the Notes by such Dealer and will
reimburse the Company, the Dealer Manager, the Manager, any such directors or
officers, or controlling person, in connection with investigating or defending
any such loss, claim, damage, liability or action. This indemnity agreement will
be in addition to any liability which such Dealer may otherwise have.
4.4 Promptly after receipt by an indemnified party under this Section 4
of notice of the commencements of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under the
Section 4, notify in writing the indemnifying party of the commencement thereof
and the omission so as to notify the indemnifying party will relieve it from any
liability under this Section 4 as to the particular item for which
indemnification is then being sought, but not from any other liability which it
may have to any indemnified party. In case any such action is brought against
any indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled, to the extent it may wish,
jointly with any other indemnifying part similarly notified, to participate in
the defense thereof, with separate counsel. Such participation shall not relieve
such indemnifying party of the obligation to reimburse the indemnified party for
reasonable legal and other expenses (subject to Section 4.5) incurred by such
indemnified party in defending itself, except for such expenses incurred after
the indemnifying party has deposited funds sufficient to
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effect the settlement, with prejudice, of the claim in respect of which
indemnity is sought. Any such indemnifying party shall not be liable to any such
indemnified party on account of any settlement of any claim effected without the
consent of such indemnifying party.
4.5 The indemnifying party shall pay all legal fees and expenses of the
indemnified party in the defense of such claims or actions; provided, however,
the indemnifying party shall not be obliged to pay legal expenses and fees to
more than one law firm in connection with the defense of similar claims arising
out of the same alleged acts or omissions giving rise to such claims
notwithstanding that such actions or claims are alleged or brought by one or
more parties against more than one indemnified party. If such claims or actions
are alleged or brought against more than one indemnified party, then the
indemnifying party shall only be obliged to reimburse the expenses and fees of
the one law firm that has been selected by a majority of the indemnified parties
against which such action is finally brought; and in the event a majority of
such indemnified parties is unable to agree on which law firm for which expenses
or fees will be reimbursable by the indemnifying party, then payment shall be
made to the first law firm of record representing an indemnified party against
the action or claim. Such law firm shall be paid only to the extent of services
performed by such law firm and no reimbursement shall be payable to such law
firm on account of legal services performed by another law firm.
4.6 The indemnity agreements contained in this Section 4 shall remain
operative and in full force and effect regardless of (a) any investigation made
by or on behalf of any Dealer, or any person controlling any Dealer or by or on
behalf of the Company, the Dealer Manager or any officer or director thereof, or
by or on behalf of the Company, the Dealer Manager, (b) delivery of any Notes
and payment therefore, and (c) any termination of this Agreement. A successor of
any Dealer or of any the parties to this Agreement, as the case may be, shall be
entitled to the benefits of the indemnity agreements contained in this Section
4.
5. Survival of Provisions
The respective agreements, representations and warranties of the Company
and the Dealer Manager set forth in this Agreement shall remain operative and in
full force and effect regardless of (a) any termination of this Agreement, (b)
any investigation made by or on behalf of the Dealer Manager or any Dealer or
any person controlling the Dealer Manager or any Dealer or by or on behalf of
the Company, its partners or any person controlling the Company, and (c) the
acceptance of any payment for the Notes.
6. Applicable Law
This Agreement was executed and delivered in, and its validity,
interpretation and construction shall be governed by the laws of, the State of
Nevada.
7. Counterparts
This Agreement may be executed in any number of counterparts. Each
counterpart, when executed and delivered, shall be an original contract, but all
counterparts, when taken together, shall constitute one and the same Agreement.
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8. Successors and Amendment
8.1 This Agreement shall inure to the benefit of any be binding upon the
Dealer Manager, the Company and their respective successors. Nothing in this
Agreement is intended or shall be construed to give to any other person any
right, remedy or claim, except as otherwise specifically provided herein. This
Agreement shall inure to the benefit of the Dealers to the extent set forth in
Sections 1 and 4 hereof.
8.2 This Agreement may be amended by the written agreement of the Dealer
Manager and the Company.
9. Term
Any party to this Agreement shall have the right to terminate this
Agreement on 60 days' written notice.
10. Confirmation
The Company hereby agrees and assumes the duty to send an
acknowledgement to each investor whose subscription for Notes is accepted in
whole or in part by the Company.
11. Suitability of Investors
The Dealer Manager will offer Notes, and in its agreements with Dealers
will require that the Dealers offer Notes, only to persons who it reasonably
believes meet all applicable suitability standards and will only make offers to
persons in the states in which it is advised in writing that the Notes are
qualified for sale or that such qualification is not required. In offering
Notes, the Dealer Manager will comply, and in its agreements with Dealers the
Dealer Manager will require that the Dealer comply, with the provisions of Rule
2310 of the Conduct Rules set forth in the NASD Manual, as well as all other
applicable rules and regulations relating to suitability of investors.
12. Submission Orders
12.1 Those persons who purchase Notes will be instructed by the Dealer
Manager or the Dealer to make their checks payable to the Company. The Dealer
Manager and 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 Manager or Dealer which conform to the foregoing instructions shall be
transmitted for deposit pursuant to one of the methods described in this Section
12. Transmittal of received investor funds will be made in accordance with the
following procedures.
12.2 Where, pursuant to a 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 Company.
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12.3 Where, pursuant to a Dealer's internal supervisory procedures,
final 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 in care of the Dealer Manager for deposit to the Company.
12.4 Where the Dealer Manager is involved in the distribution process,
checks will be transmitted by the Dealer Manager for deposit to the Company, as
soon as practicable, but in any event by the end of the second business day
following receipt by the Dealer Manager. Checks of rejected subscribers will be
promptly returned to such subscribers.
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding agreement between us
as of the date first above written.
Very truly yours,
Vestin Group, Inc.
By:
----------------------------
Name:
Title:
Accepted and agreed as of the date first above written.
VESTIN CAPITAL, INC.
By:
--------------------------
President
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ATTACHMENT 1.6
TO THE DEALER MANAGER AGREEMENT
Response to Section 1.6 - Material Litigation
Vestin Mortgage, Inc., a wholly owned subsidiary ("Vestin Mortgage), is
a defendant in the following lawsuit incurred in the ordinary course of
business.
Vestin Mortgage is currently engaged in litigation in the State of
Nevada. Vestin Mortgage, the Company, Del Mar Mortgage, Xxxxxxx Xxxxxxx and
various affiliates of Xx. Xxxxxxx are defendants in a civil action entitled
Desert Land, L.L.C. et al. x. Xxxxx Financial Group, Inc., et. al., currently
pending in the United States District Court for the District of Nevada (the
"Civil Action"). The Civil Action was initiated by a borrower which defaulted on
various loans arranged by Vestin Mortgage. The Civil Action alleges 18 claims
for relief including intentional interference with contractual relations and
prospective economic advantage, breach of contract, fraudulent inducement,
economic duress, common law fraud and securities fraud. The Civil Action seeks
rescission of various contracts entered into between plaintiffs and defendants,
compensatory damages in excess of $10,000,000 and punitive damages, among other
remedies. The Civil Action was filed on December 7, 2000. Defendants denied the
allegation and vigorously contested the Civil Action. Following a trial, the
District Court judge indicated that he intends to enter a judgment against Del
Mar Mortgage but not against other parties in the amount of $4.1 million. If
such judgment is in fact entered, Del Mar Mortgage intends to appeal the
judgment.
