EXHIBIT 1.2
VESTIN FUND III, LLC
UP TO
$120,000,000
12,000,000 UNITS OF LIMITED LIABILITY COMPANY INTEREST
AT $10.00 EACH
SELECTED DEALER AGREEMENT
Ladies and Gentlemen:
VESTIN CAPITAL, INC., as the dealer manager ("DEALER MANAGER") for VESTIN
FUND III, LLC, a Nevada limited liability company (the "COMPANY") of which
VESTIN MORTGAGE, INC., a Nevada corporation is the Manager (the "MANAGER"),
invites you (the "DEALER") to participate in the distribution of units of
limited liability company interest in the Company ("UNITS") subject to the
following terms of this Selected Dealer Agreement ("AGREEMENT"):
I. DEALER MANAGEMENT AGREEMENT
The Dealer Manager has entered into an agreement with the Company and the
Manager called the Dealer Manager Agreement dated _____ ___, 2003, in the form
to which this Agreement is attached as Exhibit A. By your acceptance of this
Agreement, you will become one of the Dealers referred to in such Dealer Manager
Agreement between the Company, the Manager and the Dealer Manager, you agree to
become subject to all terms and conditions of the Dealer Manager Agreement,
which is incorporated herein by this reference, and will be entitled and subject
to the indemnification provisions contained in such Dealer Manager Agreement,
including the provisions of such Dealer Manager Agreement (Section 4) wherein
the Dealers severally agree to indemnify and hold harmless the Company, the
Manager and Dealer Manager and each officer and director thereof, and each
person, if any, who controls the Company, the Manager and Dealer Manager within
the meaning of the Securities Act of 1933. Except as otherwise specifically
stated herein, all terms used in this Agreement have the meanings provided in
the Dealer Manager Agreement. The Units are offered solely through
broker-dealers who are members of the National Association of Securities
Dealers, Inc. ("NASD").
Dealer hereby agrees to use its best efforts to sell the Units for cash on
the terms and conditions stated in the Prospectus. Nothing in this Agreement
shall be deemed or construed to make Dealer an employee, agent, representative
or partner of the Dealer Manager or of the Company or the Manager, and Dealer is
not authorized to act for the Dealer Manager, the Company or the Manager or to
make any representations on their behalf except as set forth in the Prospectus
and such other printed information furnished to Dealer by the Dealer Manager or
the Company to supplement the Prospectus ("SUPPLEMENTAL INFORMATION").
II. SUBMISSION OF SUBSCRIPTION AGREEMENTS
Those persons who purchase Units (each a "PURCHASER," and collectively,
the "PURCHASERS") will be instructed by the Dealer to make their checks payable
to "US Bank, as
Escrow Agent for Vestin Fund III, LLC" during the course of the Minimum Offering
and to the Company after the Minimum Offering has been achieved. Dealer hereby
agrees to be bound by the terms of the Bank Escrow Agreement executed as of
[___________________], 2003 by US Bank, as escrow agent, the Dealer Manager and
the Company, a copy of which Dealer hereby acknowledges having received and
which is enclosed. 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 which conform to the foregoing instructions shall be transmitted,
together with a completed and executed Subscription Agreement in the form that
is Exhibit B to the Prospectus, for deposit pursuant to one of the methods in
this Article II. Transmittal of received investor funds will be made in
accordance with the following procedures:
Where, pursuant to the 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 escrow agent,
during the course of the Minimum Offering and to the Company after the
Minimum Offering has been achieved.
Where, pursuant to the Dealer's internal supervisory procedures, final and
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 for deposit to the escrow agent
during the course of the Minimum Offering and to the Company after the
Minimum Offering has been achieved.
III. PRICING
Units shall be offered to the public at the offering price of $10.00 per
Unit payable in cash. Except as otherwise indicated in the Prospectus or in any
letter or memorandum sent to the Dealer by the Company or Dealer Manager, a
minimum initial purchase of 1,000 Units is required. Additional investments may
be made in cash in minimal increments of at least 1,000 Units. The Units are
nonassessable, and investors will not be required to contribute further sums to
the capital of the Company. Dealer hereby agrees to place any order for the full
purchase price.
IV. DEALERS' COMMISSIONS
The Dealer's compensation for the offering and sale of Units will be sales
commissions of seven percent (7.0%) of the aggregate proceeds generated from the
sale of Units by such Dealer. The seven percent (7.0%) sales commission may be
paid at the time the sale of Units are effected or, at the Dealer's election,
the Dealer may receive three percent (3.0%) at the time the sale of Units are
effected plus 1% each year for the next four years provided, that the member
does not withdraw such Units from the Company. For these purposes, a "sale of
Units" shall occur if and only if a transaction has closed with a Purchaser
pursuant to all applicable offering and subscription documents and the Company
has thereafter distributed the commission to the Dealer Manager in connection
with such transaction.
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The Dealer hereby waives any and all rights to receive payment of commissions
due until such time as the Dealer Manager is in receipt of the commission from
the Manager. The Dealer affirms that the Dealer Manager's liability for
commissions payable is limited solely to the proceeds of commissions receivable
associated therewith.
The parties hereby agree that the foregoing commission are not in excess
of the usual and customary distributors' or sellers' commission received in the
sale of securities similar to the Units, that Dealer's interest in the offering
is limited to such commission from the Dealer Manager and Dealer's indemnity
referred to in the Dealer Manager Agreement, that the Company is not liable or
responsible for the direct payment of such commission to the Dealer.
V. PAYMENT
Payments of selling commissions will be made by the Manager to Dealer
within five (5) business days of the receipt by the Company of the gross
proceeds generated from the sale of Units; provided that, no commissions shall
be payable prior to the Company selling at least 1,000,000 Units.
VII. RIGHT TO REJECT ORDER OR CANCEL SALES
All orders, whether initial or additional, are subject to acceptance by
and shall only become effective upon confirmation by the Manager; the Company
and the Manager reserve the right to reject any order in whole or in part.
Orders not accompanied by a Subscription Agreement and signature page and the
required check payment for the Units may be rejected. Issuance and delivery of
the certificates for the Units will be made only after actual receipt of payment
therefor. Subject to the otherwise applicable terms of the Bank Escrow
Agreement, if any check is not paid upon presentment, or if the Company is not
in actual receipt of clearinghouse funds or cash, certified or cashier's check
or the equivalent in payment for the Units within 15 days of sale, the Company
reserves the right to cancel the sale without notice. If an order is rejected,
cancelled or rescinded for any reason, the Dealer agrees to return to the Dealer
Manager any commission theretofore paid with respect to such order.
VII. PROSPECTUS AND SUPPLEMENTAL INFORMATION
Dealer is not authorized or permitted to give and will not give, any
information or make any representation concerning the Units except as set forth
in the Prospectus and supplemental information authorized by the Manager. The
Dealer Manager will supply Dealer with reasonable quantities of the Prospectus,
any supplements thereto and any amended Prospectus, as well as any supplemental
information, for delivery to investors, and Dealer will deliver a copy of the
Prospectus and all supplements thereto and any amended Prospectus to each
investor to whom an offer is made prior to or simultaneously with the first
solicitation of an offer to sell the Units to an investor. The Dealer agrees
that it will not send or give any supplements thereto and any amended Prospectus
to that investor unless it has previously sent or given a Prospectus and all
supplements thereto and any amended Prospectus to the investor or has
simultaneously sent or given a Prospectus and all supplements thereto and any
amended Prospectus with such supplemental information. Dealer
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agrees that it will not show or give to any investor or reproduce any material
or writing which is supplied to it by the Dealer Manager and marked "dealer
only" or otherwise bearing a legend denoting that it is not to be used with
respect to members of the public. Dealer further agrees that it will not use in
connection with the offer or sale of Units any materials or writings which have
not been previously approved by the Dealer Manager. Each Dealer agrees that it
will mail or otherwise deliver all final Prospectuses required for compliance
with the provisions of Rule 15c2-8 under the Securities Exchange Act of 1934. On
becoming a Dealer, and in offering and selling Units, Dealer agrees to comply
with all the applicable requirements under the Securities Act of 1933 and the
Securities Exchange Act of 1934, including, without limitation, the provisions
of Rule 15c2-4 of the Securities and Exchange Commission. Notwithstanding the
termination of this Agreement or the payment of any amount to Dealer, Dealer
agrees to pay Dealer' proportionate share of any claim, demand or liability
asserted against Dealer and the other Dealers on the basis that Dealers or any
of them constitute an association, unincorporated business or other separate
entity, including in each case Dealer's proportionate share of any expenses
incurred in defending against any such claim, demand or liability.
VIII. LICENSE AND ASSOCIATION MEMBERSHIP
Dealer's acceptance of this Agreement constitutes a representation to the
Company, the Manager and Dealer Manager that Dealer is a properly registered or
licensed broker-dealer, duly authorized to sell Units under Federal and state
securities laws and regulations and in all states where it offers or sells
Units, and that it is a member in good standing of the NASD. This Agreement
shall automatically terminate if the Dealer ceases to be a member in good
standing of to NASD, or in the case of a foreign dealer, so to conform. Dealer
agrees to notify the Dealer Manager immediately if Dealer ceases to be a member
in good standing, or in the case of a foreign dealer, so to conform. The Dealer
Manager also hereby agrees to abide by the Conduct Rules of the NASD.
IX. LIMITATION OF OFFER
Dealer will offer Units only to persons who meet the financial
qualifications set forth in the Prospectus or in any suitability letter or
memorandum sent to it by the Company or Dealer Manager and will only make offers
to persons in the states in which it is advised in writing that the Units are
qualified for sale or that such qualification is not required. Dealer Manager
will not assume any obligation or responsibility as to the right of Dealer to
sell the Units in any jurisdiction. In offering Units, Dealer will comply with
the provisions of Rule 2810(b)(1), (2) and (3) of the NASD Conduct Rules set
forth in the NASD Manual, attached hereto as Attachment No. 1, as well as all
other applicable rules and regulations relating to suitability of investors,
including without limitation, the provisions of Article III of the Statement of
Policy Regarding Mortgage Programs and Article III of the Statement of Policy
Regarding Real Estate Programs of the North American Securities Administrators
Association, Inc. Dealer shall provide such certification as Dealer Manager may
reasonably request regarding its compliance with applicable law.
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X. TERMINATION
Dealer will suspend or terminate its offer and sale of Units upon the
request of the Company or the Dealer Manager at any time and will resume its
offer and sale of Units hereunder upon subsequent request of the Company or the
Dealer Manager. Unless a Post-Effective Amendment is in effect which permits
sales more than two years after the initial effective date of the Registration
Statement, Dealer shall not sell Units after two years after the effective date
of the registration statement covering the Units. Any party may terminate this
Agreement by written notice. Such termination shall be effective 48 hours after
the mailing of such notice. This Agreement is the entire agreement of the
parties and supersedes all prior agreement, if any, between the parties hereto.
This Agreement may be amended at any time by the Dealer Manager by written
notice to the Dealer, and any such amendment shall be deemed accepted by Dealer
upon placing an order for sale of Units after he has received such notice.
XI. NOTICES
All notices will be in writing and will be duly given to the Dealer
Manager when mailed to 0000 Xx Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx
00000, and to Dealer when mailed to the address specified by Dealer herein.
XII. ATTORNEY'S FEES AND APPLICABLE LAW
In any action to enforce the provisions of this Agreement or to secure
damages for its breach, the prevailing party shall recover its costs and
reasonable attorney's fees. This Selected Dealer Agreement shall be construed
under the laws of the State of Nevada and shall take effect when signed by
Dealer and countersigned by the Dealer Manager.
THE DEALER MANAGER
VESTIN CAPITAL, INC.
Attest:
By: By:
----------------------------- -----------------------------------
Name: Name:
----------------------------- -----------------------------------
Title: Title: President
-----------------------------
We have read the foregoing Selected Dealer Agreement and we hereby accept and
agree to the terms and conditions therein set forth. We hereby represent that
the list below of jurisdictions in which we are registered or licensed as a
broker or dealer and are fully authorized to sell securities is true and
correct, and we agree to advise you of any change in such list during the term
of this Selected Dealer Agreement.
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1. Identity of Dealer:
Name:
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Type of
Entity:
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(to be completed by Dealer) (corporation, partnership or proprietorship)
Organized in the State of:
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(to be completed by Dealer)
Licensed as broker-dealer in the following states:
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(to be completed by Dealer)
Tax I.D. #:
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2. Person to receive notice pursuant to Section XI.
Name:
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Company:
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Address:
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City, State and Zip Code:
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Telephone No.: (____)
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AGREED TO AND ACCEPTED BY THE DEALER:
--------------------------------------------------------------
(Dealer's Firm Name)
By:
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Signature
Title:
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ATTACHMENT NO. 1
NASD CONDUCT RULES
RULE 2810 - DIRECT PARTICIPATION PROGRAMS
(B) REQUIREMENTS
(1) APPLICATION
No member or person associated with a member shall participate in a public
offering or a direct participation program or a limited partnership rollup
transaction except in accordance with this paragraph (b).
(2) SUITABILITY
(A) A member or person associated with a number shall not underwrite
or participate in a public offering of a direct participation
program unless standards of suitability have been established by the
program for participants therein and such standards are fully
disclosed in the prospectus and are consistent with the provisions
of subparagraph (B).
(B) In recommending to a participant the purchase, sale or exchange
of an interest in a direct participation program, a member or person
associated with a member shall:
(i) 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 member or
associated person, that:
(a) the participant is or will be in a financial
position appropriate to enable him to realize to a
significant extent the benefits described in the
prospectus, including the tax benefits where they are a
significant aspect of the program;
(b) the participant has a fair market net worth
sufficient to sustain the risks inherent in the program,
including loss of investment and lack of liquidity; and
(c) the program is otherwise suitable for the
participant; and
(ii) maintain in the files of the member documents disclosing
the basis upon which the determination of suitability was
reached as to each participant.
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(C) Notwithstanding the provisions of subparagraph (A) and (B)
hereof, no member shall execute any transaction in a direct
participation program in a discretionary account without prior
written approval of the transaction by the customer.
(D) Subparagraphs (A) and (B), and, only in situations where the
member is not affiliated with a direct participation program,
subparagraph (C) shall not apply to:
(i) a secondary public offering of or a secondary market
transaction in a unit, depository receipt, or other interest
in a direct participation program for which quotations are
displayed on Nasdaq or which is listed on a registered
national securities exchange, or
(ii) an initial public offering of a unit, depository receipt
or other interest in a direct participation program for which
an application for inclusion on Nasdaq or listing on a
registered national securities exchange has been approved by
Nasdaq or such exchange and the applicant makes a good faith
representation that it believes such inclusion on Nasdaq or
listing on an exchange will occur within a reasonable period
of time following the formation of the program.
(3) DISCLOSURE
(A) Prior to participating in a public offering of a direct
participation program, a member or person associated with a member
shall have reasonable grounds to believe, based on information made
available to him by the sponsor through a prospectus or other
materials, that all material facts are adequately and accurately
disclosed and provide a basis for evaluating the program.
(B) In determining the adequacy of disclosed facts pursuant to
subparagraph (A) hereof, a member or person associated with a member
shall obtain information on material facts relating at a minimum to
the following, if relevant in view of the nature of the program.
(i) items of compensation;
(ii) physical properties;
(iii) tax aspects;
(iv) financial stability and experience of the sponsor;
(v) the program's conflicts and risk factors; and
(vi) appraisals and other pertinent reports.
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(C) For purposes of subsections (A) or (B) hereof, a member or
person associated with a member may rely upon the results of an
inquiry conducted by another member or members, provided that:
(i) the member or person associated with a member has
reasonable grounds to believe that such inquiry was conducted
with due care;
(ii) the results of the inquiry were provided to the member or
person associated with a member with the consent of the member
or members conducting or directing the inquiry; and
(iii) no member that participated in the inquiry is a sponsor
of the program or an affiliate of such sponsor.
(D) Prior to executing a purchase transaction in a direct
participation program, a member or person associated with a member
shall inform the prospective participant of all pertinent facts
relating to the liquidity and marketability of the program during
the term of the investment; provided, however, that paragraph (b)
shall not apply to an initial or secondary public offering of or a
secondary market transaction in a unit, depositary receipt or other
interest in a direct participation program which complies with
subparagraph 2(D).
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