AMERICAN FAMILY COOKIES, INC.
(a Delaware Corporation)
750,000 Shares
SELECTED DEALER'S AGREEMENT
AMERICAN FAMILY COOKIES, INC. a Delaware corporation (the "Company"),
invites your participation as a Selected Dealer ("Selected Dealer") in an
offering of up to 750,000 Shares of its Common Stock, (the "Shares"). The
Company is offering the Shares pursuant to a registration statement (the
"Registration Statement") filed under the Securities Act of 1933, as amended
(the "Act"). This invitation is made by the Company only if the Shares may be
lawfully offered by dealers in your state. The terms and conditions of this
invitation are as follows:
1. APPLICATION TO PARTICIPATE. If you desire to offer and sell any of
the Shares, your application should reach us promptly by telephone or telegraph
at American Family Cookies, Inc., 000 Xxxxxxx Xxxxxx, XxXxxxxx, Xxxxxxxxx, 00000
(telephone (000) 000-0000). You should sign and return to us the enclosed copy
of this letter agreement, whereupon we shall use our best efforts to comply with
your request. The Company reserves the right to accept, reject or modify
subscriptions, in whole or in part, to make allotments, and to close the
subscription book at any time, without notice. The Shares will be confirmed
subject to the terms and conditions of this Agreement. The Shares are offered
for delivery when, as and if accepted by the Company and subject to the terms
stated herein and in the Prospectus filed as part the Registration Statement, as
well as to the approval of counsel for the Company as to legal matters and to
withdrawal, cancellation or modification, without notice.
2. OFFERING TO PUBLIC. You agree to make a bona fide public offering of
all Shares allotted to you, and you will not offer to sell any such Shares below
the public offering price of $2.00 per Share before the termination of this
Agreement.
3. COMMISSIONS. All Selected Dealers will be allowed, on all Shares
sold by them, a commission of eight (8%) percent of the total sales price or
$0.16 per Share. Each Selected Dealer will, in connection with this
participation, comply with the provisions of Section 24 of the National
Association of Securities Dealers, Inc. ("NASD") Rules of Fair Practice and will
not grant any concessions, discounts or any other allowances which are not
permitted by those rules.
4. SELECTED DEALER'S SALES. The Selected Dealer shall purchase the
Shares for its customers only and all such purchases shall be made only upon
orders received by the Selected Dealer from its customers. No Shares may be
purchased for the account of the Selected Dealer or its principals. In all sales
of the Shares hereunder, the Selected Dealer shall confirm as agent for a member
of the public.
5. DELIVERY OF FUNDS. The Selected Dealer shall promptly transmit to
Continental Stock Transfer & Trust Company (the "Escrow Agent") no later than 12
noon of the day subsequent to the receipt of funds received form purchasers with
a confirmation or a record of each sale which shall set forth the name, address,
and social security number of each individual purchaser, the number of Shares
purchased, and, if there is more than one registered owner, whether the
certificate or certificates evidencing the securities comprising the Shares
purchased are to be issued to the purchaser in joint tenancy or otherwise. Also,
each Selected Dealer shall report, in writing, to the Company the number of
persons in each such state who purchase the Shares from the Selected Dealer.
Each sale may be rejected by the Company, and if rejected, the Escrow Agent will
directly return funds to the rejected customer.
6. PAYMENT FOR SALES. Payment for the Company's Shares shall accompany
all confirmations and applications and shall be in clearing house funds. All
checks and other orders for the payment of money shall be made payable to the
Escrow Agent for deposit into an escrow account maintained at XX Xxxxxx
Xxxxx Bank (the "Escrow Account"). All subscribers' checks are to be made
payable to "Continental Stock Transfer & Trust Company, as Escrow Agent." Shares
sold by the Selected Dealer will be available for delivery at Continental Stock
Transfer & Trust Company, 00 Xxxxxxx Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000
unless other arrangements are made by the Company for delivery.
7. DEPOSIT OF SALES PROCEEDS. The proceeds from the sale of all of the
Shares sold in the offering (the "Offering Proceeds") will be deposited in the
Escrow Account. In the event that Offering Proceeds in an amount of $1,200,000
have not been deposited and cleared within one hundred twenty (120) days from
the effective date of the Registration Statement (unless extended for an
additional thirty (30) days), the full amount paid will be refunded to the
purchasers. No certificates evidencing the Shares will be issued unless and
until Offering Proceeds in an amount of $1,200,000 have been cleared and such
funds have been released and the proceeds thereof delivered to the Company. If
Offering Proceeds in an amount of $1,200,000 are cleared within the time period
provided above, all amounts so deposited will be delivered to the Company. No
commissions will be paid by the Company or concessions allowed by the Company
unless and until Offering Proceeds of $1,200,000 have been cleared and such
funds have been released and the net proceeds thereof delivered to the Company.
8. FAILURE OF ORDER. If an order is rejected or if a payment is
received which proves insufficient, any compensation paid to the Selected Dealer
shall be returned by the Selected Dealer in cash.
9. CONDITIONS OF OFFERING. All sales will be subject to delivery by the
Company of certificates evidencing the Shares.
10. SELECTED DEALER'S UNDERTAKINGS. No person is authorized to make any
representations concerning the Company's Shares except those contained in the
Company's then current Prospectus. The Selected Dealer will not sell the
Company's Shares pursuant to this Agreement unless the Prospectus is furnished
to the purchaser at lease forty-eight (48) hours prior to the mailing of the
confirmation of sale, or is sent to such persons under such circumstances that
it would be received by him 48 hours prior to his receipt of a confirmation of
the sale. The Selected Dealer agrees not to use any supplemental sales
literature of any kind without prior written approval of the Company unless it
is furnished by the Company for such purpose. In offering and selling the
Company's Shares, the Selected Dealer will rely solely on the representations
contained in the Company's then current Prospectus. Additional copies of the
then current Prospectus will be supplied by the Company in reasonable quantities
upon request.
The Selected Dealer understands that during the ninety (90) business
day period after the first date upon which the Company's Shares are bona fide
offered to the public, all dealers effecting transactions in the Company's
Shares may be required to deliver the Company's current Prospectus to any
purchaser thereof prior to or concurrent with the receipt of the confirmation of
sale. Additional copies of the then current Prospectus will be supplied by the
Company in reasonable quantities upon request.
11. REPRESENTATIONS AND AGREEMENTS OF SELECTED DEALERS. By accepting
this Agreement, the Selected Dealer represents that either (a) it is registered
as a broker-dealer under the Securities and Exchange Act of 1934, as amended; is
qualified to act as a dealer in the states or other jurisdictions in which it
offers the Company's Shares; is a member in good standing with the NASD, and
will maintain such registrations, qualifications and memberships throughout the
term of this Agreement or (b) is a foreign bank, dealer or institution not
eligible for membership in the NASD which agrees to make no sales in the United
States, its territories or possessions or to persons who are citizens thereof or
residents therein, and in making other sales to comply with XXXX's
interpretation with respect to free-riding and withholding.
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Further, the Selected Dealer agrees to comply with all applicable Federal laws,
the laws of the states of other jurisdictions concerned and the Rules and
Regulations of the NASD, and in particular the Selected Dealer agrees that in
connection with any purchase or sale of the Company's Shares wherein a selling
concession, discount or other allowance is received or granted (i) that it will
comply with the decisions of Section 24 of Article II of the NASD's Rules of
Fair Practice or (2) if a non-NASD member, broker or dealer in a foreign
country, it will also comply with the provisions of Sections 8 and 36 thereof as
though it were a NASD member and with the provisions of Section 25 as such
Section 25 applies to a non-NASD member, broker or dealer in a foreign country.
NASD members shall comply with Sections 8, 24, 25 and 36 of Article III of the
NASD's Rules of Fair Practice. Further, the Selected Dealer agrees that it will
not offer to sell the Company's Shares in any state or jurisdiction except the
states in which it is licensed as a broker-dealer under the laws of such states.
The Selected Dealer shall not be entitled to any compensation during any period
in which it has been suspended or expelled from membership in the NASD.
12. SELECTED DEALER'S EMPLOYEES. By accepting this Agreement, the
Selected Dealer has assumed full responsibility for proper training and
instruction of its representatives concerning the selling methods to be used in
connection with the offer and sale of the Company's Shares, giving special
emphasis to the principles of suitability and full disclosure to prospective
investors and prohibitions against "free-riding and withholding."
13. INDEMNIFICATION. The Company agrees to indemnify and hold harmless
the Selected Dealer (including within the definition of Selected Dealer, each
person, if any, who controls the Selected Dealer within the meaning of Section
15 of the Act or under any other statute or at common law and will reimburse the
Selected Dealer and each such person specified above for any legal or other
expenses (including the cost of any investigation and preparation) reasonably
incurred by them or any of them in connection with any litigation or claim
whether or not resulting in any liability, but only insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or any post-effective amendment thereto or in any Blue
Sky application or omission to state therein a material fact required to be
stated therein necessary to make the statements therein not misleading, all as
of the date when the Registration Statement or such post-effective amendment,
the filing of any such Blue Sky application as the case may be, becomes
effective or any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or final prospectus (as amended or as
supplemented thereto), or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary in order to
make the statements therein, not misleading; provided however, that the
indemnity agreement contained in this paragraph 12 shall not apply to amounts
paid in settlement of any such litigation if such settlement is effected without
the consent of the Company nor shall it extend to any Selected Dealer or any
person controlling the Selected Dealer in respect of any such losses, claims,
damages, liabilities or actions arising out of, or based upon any such untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by the Selected Dealer on behalf of such
Selected Dealer specifically for use in connection with the preparation of the
Registration Statement, the Prospectus or any such amendment thereof or
supplement thereto or Blue Sky application.
14. SELECTED DEALER'S INDEMNIFICATION. The Selected Dealer agrees to
indemnify and hold harmless the Company, each of the Company's officers and
directors who signed the Registration Statement, and each person, if any, who
controls the Company and within the meaning of Section 15 of the 33 Act, against
any and all loss, liability, claim, damage and expense (a) described in the
indemnity contained in paragraph 13 of this Agreement, but only with respect to
untrue statements or omissions or alleged untrue statements or omissions, made
in the Registration Statement or the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
the Company by such Selected Dealer expressly for use in the Registration
Statement (or any amendment thereto) or the Prospectus (or any amendment or
supplement thereto) or (b) based upon alleged misrepresentations or
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omissions to state material facts in connection with statements made by the
Selected Dealer or the Selected Dealer's salesmen orally or by other means; and
the Selected Dealer will reimburse the Company, each of the Company's officers
and directors who signed the Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Act, for any legal
or other expenses reasonably incurred in connection with the investigation of or
the defending of any such action or claim.
15. REQUIRED NOTICES AND CLAIMS. Each indemnified party is required to
give prompt notice to each indemnifying party of any action commenced against it
in respect of which indemnity may be sought hereunder, but failure to so notify
an indemnifying party shall not relieve it from any liability which it may
otherwise have on account of the indemnification provisions hereof. Any
indemnifying party may participate at its own expense in the defense of such
action. If it so elects, within a reasonable time after receipt of such notice,
an indemnifying party, jointly with any other indemnifying parties receiving
such notice, may assume the defense of such action with counsel chosen by it and
approved by the indemnified parties who are defendants in such action, unless
such indemnified parties reasonably object to such assumption on the ground that
there may be legal defenses available to them which are different from or in
addition to those available to such indemnifying parties and shall not be liable
for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action. In no event shall the indemnifying
parties be liable for the fees and expenses of more than one counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
16. EXPENSES. No expenses will be charged to Selected Dealers. A single
transfer tax, if any, on the sale of the Shares by the Selected Dealer to its
customers will be paid when such Shares are delivered to the Selected Dealer for
delivery to its customers.
17. COMMUNICATIONS. All communications to the Company should be sent to
the address shown in the first page of this Agreement. Any notice to the
Selected Dealer shall be properly given if mailed or telephoned to the Selected
Dealer at the address given below. This agreement shall be construed according
to the laws of the State of New York.
18. ASSIGNMENT AND TERMINATION. This Agreement may not be assigned by
the Selected Dealer without the Company's written consent. This Agreement will
terminate upon the termination of the offering of the Shares except that either
party may terminate this Agreement at any time by giving written notice to the
other.
19. INCORPORATION BY REFERENCE. The Selected Dealer agrees that it is
bound by the terms of the Escrow Agreement executed by the Company and the
Escrow Agent.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Date of Acceptance set forth below.
AMERICAN FAMILY COOKIES, INC.
By:
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Xxxxxx Xxxxxxx, President
Agreed and Accepted: Date of Acceptance: , 2002
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Dealer Name:
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Address:
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Accepted:
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Signature of Principal of Dealer
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Name of Principal of Dealer (print)
Telephone No.:
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IRS Employer I.D. No.:
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Share Allocation:
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