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EXHIBIT 10.4
SELECTED DEALER AGREEMENT
This agreement is hereby entered into by and between
______________________ ("Dealer") and GREAT NATION INVESTMENT CORPORATION
("Underwriter") upon the date of acceptance by Underwriter as set forth below.
R E C I T A L S:
WHEREAS, TRANSITION AUTO FINANCE III, INC. ("Issuer") proposes to make
a public offering and sale of $20,000,000 of Redeemable Secured Notes (the
"Notes") on a best efforts basis through Underwriter and certain additional
broker dealers who are members of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, Dealer desires to offer the Notes on a best efforts basis;
A G R E E M E N T:
NOW, THEREFORE, Dealer and Underwriter do hereby agree that Dealer may
offer for sale the Notes of Issuer upon the following terms and conditions:
1. BEST EFFORTS. Dealer agrees to use its best efforts to solicit and
obtain subscriptions to purchase the Notes in accordance with the terms and
conditions set forth herein.
2. REPRESENTATION AND WARRANTIES. Dealer represents and warrants that
(i) it is a member in good standing of the NASD, (ii) is registered as a
broker-dealer under the Securities and Exchange Act of 1934, (iii) is licensed
as a broker-dealer under the law of the state(s) listed below the Dealer's
signature hereunder, (iv) neither Dealer nor any of its executive officers and
directors are currently subject to any administrative order or judgment in any
state which prohibits the use of any exemption from registration in connection
with the purchase or sale of securities, (v) neither Dealer nor any of its
executive officers and directors are subject to any order, judgment or decree of
any court of competent jurisdiction temporarily or preliminarily restraining or
enjoining, or subject to any order, judgment or decree of any Court of competent
jurisdiction entered within the last five years permanently restraining or
enjoining such person from engaging in or continuing any conduct or practice in
connection with the purchase or sale of any security or commodity or involving
the making of any false filing with any such state, and (vi) neither Dealer nor
any of its executive officers and directors have been convicted of a felony
involving the purchase or sale of a security within five years prior to the
commencement of the Offering.
3. DUTIES. Dealer covenants and agrees:
(a) To use its best efforts to procure purchases for the Notes
in accordance with the terms of the Offering as set forth in the
Prospectus. Such purchases shall be at or above the minimum investment
in the Notes as set forth in the Prospectus.
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Dealer shall not be entitled to solicit the services of other
broker-dealers or pass through or reallow any portion of the
compensation set forth in Section 4 in connection with performing the
Dealer's service hereunder.
(b) To at all times comply with all applicable provisions of
the Securities Act of 1933, as amended (the "Act"), the Securities Act
of 1934 and the rules and regulations of the Commission thereunder,
state Blue Sky securities laws and the rules of the NASD, including,
without limitation, Rules 2730, 2740, 2420 and 2750 of the NASD Rules
of Fair Practice, all prospectus delivery requirements as required by
law and the prohibition against the direct or indirect payment or
awarding of any finder's fees, commissions, or other compensation to
any person engaged by a potential investor or investment advice as an
inducement to such advisor to advise the purchase of an interest in a
particular program; provided, however, that the payment of the normal
sales commissions payable to a registered broker-dealer or other
properly licensed person for selling the Notes shall not be prohibited;
(c) To sell the Notes only in state(s) and jurisdiction(s) in
which Dealer is licensed as a broker-dealer, and only in state(s) and
jurisdiction(s) and in such amounts for which Blue Sky clearance has
been obtained as indicated to Dealer by the Underwriter;
(d) To take actions as may be required by law or which it may
deem reasonably necessary in order to ascertain that a purchase of the
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 supply the Underwriter with such written reports of
Dealer's activities relating to the offering of the Notes as the
Underwriter may from time to time reasonably request;
(f) To obtain in connection with the sale of the Notes, the
appropriate payment by the purchaser for the number or amount of the
Notes indicated in the form of a check payable to the escrow agent
until escrow is broken and thereafter a check made payable to
Underwriter. In either event, such funds shall be transmitted to the
escrow agent or Trustee by noon of the next business day following the
day of receipt.
In the event that the payment received by Dealer is not made
payable as set forth in subparagraph (f) above, then Dealer agrees to
return such payment to the purchaser within one business day from
receipt thereof. In the event that a payment is received by the
Underwriter which is not made payable as set forth in this subparagraph
(f), then Underwriter will return such payment within one business day
from receipt thereof.
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If there is no escrow, the Registrar will mail the securities
to the security purchaser after the receipt of payment. If there is an
escrow, the Registrar will mail the securities to the security
purchaser after the conditions of escrow have been met. The procedure
for the handling of orders shall be subject to instructions which shall
be forwarded from time to time to all members of the Selling Group.
Neither the escrow agent or the Underwriter, as applicable, will accept
any order from Dealer which is placed on a conditional basis or subject
to any delay or contingency prior to execution.
In addition, Dealer will provide the Underwriter with the
name, address and social security or tax identification number of, and
the amount tendered and number of Notes indicated for, by each such
participant.
(g) In recommending to a participant the purchase, sale or
exchange of the Notes, Dealer and persons associated with Dealer shall:
(1) Have reasonable grounds to believe, on the basis
of information obtained from the participant concerning his
investment objectives, other investments, financial situation
and needs, and any other information known by the Dealer or
associated person that:
(a) The participant is, or will be, in an
financial position appropriate to enable the
participant to realize to a significant extent the
benefits described in the Prospectus;
(b) An investment in the Issuer is otherwise
suitable for the participant; and
(2) Maintain in the files of the Dealer for a period
of six years documents disclosing the basis upon which the
determination of suitability was reached as to each
participant.
Notwithstanding the above, the Underwriter has no duty to
determine the suitability of the investment for a particular investor
and nothing contained herein shall imply to the Underwriter any such
duty. Nor shall the Underwriter be subject to any duty to determine if
Dealer has complied with Dealer's duty to determine the suitability of
the investment for a particular investor.
(h) To comply with and abide by all terms and conditions of
the Prospectus;
(i) To not alter, change or modify in any regards the
prospectus or any sales materials provided by the Underwriter and
furthermore, Dealer understands
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that if Dealer uses any other sales materials not provided by the
Underwriter, then Dealer does so at Dealer's own risk and peril.
(j) To review the Prospectus and other materials provided by
the Issuer, and to have reasonable grounds to believe, based on
information obtained from the Issuer, through the Prospectus and any
other materials provided, that all material facts are adequately and
accurately disclosed and provide a basis for evaluating the proposed
activities of the Issuer. In determining the adequacy of disclosed
facts pursuant to this Section 2, Dealer and persons associated with
Dealer shall obtain information of material facts relating at a minimum
to the following, if relevant in view of the nature of the proposed
activities of the Issuer:
(1) Items of compensation;
(2) Physical properties;
(3) Tax aspects;
(4) The Issuer's conflicts and risk factors; and
(5) Appraisals and other financial data.
(k) Prior to the purchase of the Notes, to inform the
prospective participant of all pertinent facts relating to the
liquidity and marketability of the Notes during the term of the
investment.
(l) To promptly inform the Underwriter if Dealer shall have
knowledge of any material misstatement or material omission in any
customer records.
4. COMPENSATION. Dealer shall receive as compensation Selling
Commissions of six percent (6%) and up to 2% in connection with due diligence
activities of the sales price of any Notes sold by the Dealer to the public in
accordance herewith. Notwithstanding the above, no Sales Commissions and no
expense allowance or reimbursement shall be paid with respect to the Notes sold
hereunder until escrow has been met. Subject to the previous sentence, all
Selling Commissions and other compensation to Dealer under this Agreement shall
be paid as hereinafter provided. It is understood by Dealer that a portion of
its commission is being paid to Dealer in consideration of its efforts to
conduct the due diligence determined by the Dealer to be reasonably necessary
and that Dealer will be solely responsible for such diligence; the Underwriter
will have no responsibility or liability pertaining thereto (although the
Underwriter may, in its discretion, reallow a portion of its due diligence cost
reimbursement to Dealer in connection therewith). Notwithstanding the foregoing,
Dealer will not be entitled to receive compensation pursuant to this section 3
in the event that (i) the Underwriter or the Issuer determines that any offer,
sale or solicitation
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by Dealer was made in violation of the Act, of any of the regulations
thereunder, of the securities or Blue Sky laws of any jurisdiction or the NASD,
or of any covenant or representation made hereunder, (ii) if the Underwriter
shall not have previously received from Dealer a confirmed copy of this
Agreement; or (iii) with respect to certain subscriptions, the Issuer or the
Underwriter, in their sole discretion, do not accept (in whole or in part) such
subscriptions to purchase Notes obtained by Dealer for any reason, or any
Documents for such subscriptions, if any, fully complete and duly executed, are
received by the Underwriter after the final Closing Date.
Prior to escrow being met, all monies for the purchase of the Notes by
subscribers will be sent directly to the escrow agent. The Trustee will pay all
commissions to the Underwriter and the Underwriter does hereby agree to remit to
Dealer the commissions due Dealer as follows:
After escrow is broken, commission checks will be mailed to
Dealer by the Underwriter no later than the 25th of the month in regard
to all customer funds received by the Trustee during the first 15 days
of the month and no later than the 10th day of the following month in
regard to all customer funds received by the Trustee after the 15th day
of the month. Commissions will not be paid until all of the conditions
of the escrow are met. Once the conditions of the escrow are met, then
such initial commissions will be paid to Dealer by Underwriter on the
next scheduled commission pay date after receipt of the funds by
Underwriter.
In the event that the Trustee pays the commissions due Dealer directly
to Dealer, then Underwriter is released thereby for the payment of such
commissions actually paid to Dealer by Trustee.
5. SALES INCENTIVE PROGRAMS. No sales incentive bonuses shall be paid
directly or indirectly in connection with the offer and sale of the Notes.
6. TERMS AND TERMINATION. Dealer's obligations under this Agreement
shall commence as of the date of this Agreement or the effective date of the
Prospectus, whichever occurs later, and shall continue (unless otherwise
terminated as provided herein) until Dealer has been notified that the Offering
of the Notes has ceased or has been completed.
Dealer's services, under this Agreement, may be terminated by the
Underwriter, if (i) Dealer fails to comply with any provisions of this
Agreement; (ii) any of Dealer's representations or warranties made herein are
false; or (iii) Dealer ceases to be (a) a member in good standing of the NASD,
(b) registered as a broker-dealer under the Securities Exchange Act of 1934, (c)
licensed as a broker-dealer under the Securities Exchange Act of 1934, or (d)
licensed as a broker-dealer under the state(s) listed on the signature page
hereto; provided, however, that if Dealer ceases to be registered in less than
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all the states listed herein, this Agreement may not be terminated by the
Underwriter, but Dealer shall no longer offer or sell the Notes in such states.
Dealer will notify the Underwriter in writing of the occurrence of any of the
foregoing.
Furthermore, either party hereto may terminate this Agreement, with or
without cause, upon ten days prior written notice.
In the event of termination, Dealer shall not be entitled to any
commissions earned after the date of the occurrence giving rise to the
termination or any restitution for the value of its services thereafter
performed.
7. AUTHORITY. It is understood that Dealer's relationship with the
Underwriter is as an independent contractor and that nothing herein shall be
construed as creating a partnership, joint venture, or employer and employee
relationship between Dealer and the Underwriter. Dealer is not authorized to
give any information or make any representations or warranties in connection
with the offer and sale of the Notes except as stated in the Prospectus, or any
sales material provided by the Underwriter; and provided further that any such
sales material or advertising may be delivered to a person only if a copy of the
Prospectus is forwarded upon receipt of an indication of interest.
8. THIRD PARTY BENEFICIARY. It is understood that the Issuer intends to
rely, in connection with the Offering on the covenants, representations and
warranties made herein by Dealer to the Underwriter, and that the Issuer is
intended to be a third party beneficiary of such covenants, representations and
warranties.
9. INDEMNIFICATION. Dealer agrees to indemnify and hold harmless the
Issuer and the Underwriter and their controlling persons, shareholders, officers
and directors for any and all losses, claims, damages, liabilities, and
expenses, including attorney's fees, arising in connection with the offering or
sale of 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 Dealer, any untrue statements or alleged
untrue statement of any material fact made by Dealer, or the failure of Dealer
or Underwriter to deliver a copy of the Prospectus to a purchaser of the Notes
procured by Dealer at or prior to the time such person agrees to purchase the
Notes, or for a violation by Dealer of any federal, state (including state Blue
Sky and securities laws and any applicable suitability requirements) or local
statute or common law, or of any court order, or of any rule or regulation of
any governmental unit or agency or the NASD, for the breach of any
representation or warranty made by Dealer herein, or for the failure of Dealer
to properly perform any of its duties described herein, and to reimburse any
legal or other expense reasonably incurred by any of such persons in connection
with investigation or defense of such loss, claim, damage, liability, or action.
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Notwithstanding the foregoing, the Underwriter and their Affiliates and
any person acting as a Selected Dealer shall not be indemnified hereunder for
any losses, liabilities or expenses arising from or out of an alleged violation
of federal or state securities laws unless (1) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations as to the particular indemnitee and the court approves
indemnification or the litigation costs, or (2) such claims have been dismissed
with prejudice on the merits by a court of competent jurisdiction as to the
indemnification of the litigation costs, or (3) a court of competent
jurisdiction approves a settlement of the claims against a particular indemnitee
and finds that indemnification of the settlement and related costs should be
made. If any claim for indemnification for federal or state securities law
violation, the party seeking indemnification shall place before the court the
position of the S.E.C. and any other applicable regulatory authority with
respect to the issue of the indemnification for securities law violations.
10. METHOD AND LOCATION OF NOTICES. All communications hereunder,
except as herein otherwise specifically provided, shall be in writing and shall
be mailed, delivered, or telecopied as follows:
To Underwriter at:
0000 X Xxxx Xxxxxx Xxxxxxxx, Xxxxx 00000 FAX (000) 000-0000,
and
To Dealer at:
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FAX .
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Notice shall be deemed to be given by a party to another (i) if by
personal delivery, on the date of such delivery, (ii) if telecopied, on the date
of transmission, if the receiving party confirms receipt of such notice
telephonically, and (iii) if mailed, three days after delivery to the mails,
postage prepaid, registered mail, return receipt requested, to the addresses
provided in this Section 10.
11. RESPONSIBILITY FOR COMPLIANCE. Dealer is solely responsible for
Dealer's compliance with all applicable securities laws in regard to the
offering of the Notes and nothing contained herein shall be construed so as to
cause the Underwriter to assume responsibility for Dealer's compliance.
12. COMPLIANCE WITH UNDERWRITING AGREEMENT. Dealer hereby acknowledges
that Dealer has been provided with a copy of the Best Efforts Underwriting
Agreement entered into by and between Underwriter and Issuer in regard to the
offering of the Notes
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and Dealer does hereby agree to be bound by the terms and conditions of such
agreement as applicable to Dealer. Furthermore, such Underwriting Agreement
shall inure to the benefit of Dealer to the extent applicable.
13. MISCELLANEOUS.
(a) Any customer account information submitted by the Dealer
shall be considered confidential. The Underwriter shall not use such information
as a source for solicitation purposes or in any other manner that is
inconsistent with the purposes of this Agreement.
(b) No rights or interests created hereunder may be
transferred, conveyed or assigned except with the prior written consent of the
Underwriter.
(c) Notwithstanding the date or dates that this Agreement
shall be actually signed by the parties hereto, Dealer's representations,
warranties and agreements herein shall be effective as if made prior to the
commencement by Dealer of its performance hereunder.
DEALER:
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By:
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Title:
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Dated:
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States in which Dealer is licensed:
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UNDERWRITER:
GREAT NATION INVESTMENT CORPORATION
By:
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Xxxxx Xxx Treat
Its President
Date:
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