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EXHIBIT 1.(i)
NATIONAL ENERGY RESOURCES TRUST SERIES
A THROUGH L
SOLICITING DEALER AGREEMENT
______________, 1996
Dear Sirs:
National Energy Resources, Inc. ("National Energy" or the "Sponsor"), a
California corporation, has organized and will act as the Sponsor of a series
of grantor trusts (the "Trusts") which will engage in the business of acquiring
production payments in producing oil and gas. The Trusts are known as Trust-A
Through L ("Trust A Through L").
An aggregate of $6,000,000 of trust units of $1,000.00 each (the "Trust
Units") is being offered by the Trust in a series of sequential offering
periods through ___________, 1997. The maximum offering includes Units that
may be purchased by the Sponsor. The minimum investment in any one Trust
Series is 500 units, or $500,000. The subscription period of Trust-A will
commence on the effective date of the Registration Statement filed with the
Securities and Exchange Commission relating to the Units (the "Registration
Statement") and the subscription periods for each of the subsequent Trust in
the series will follow sequentially thereafter, each commencing on the date of
a supplement to the Prospectus filed as Part I of the Registration Statement
(the "Prospectus") describing the results of the prior subscription period(s)
and any other changes in the terms of the offering. Terms used unless
otherwise defined herein, shall have the meanings ascribed thereto in the
Prospectus. The subscription period of each Trust will be terminated at a date
to be determined by the Sponsor, in its discretion, or in no event before the
minimum subscription amount of $500,000 for any Trust shall have been raised
(the "Termination Date" for each such Trust), and no subscription period will
extend beyond ________________________. The balance of Units not sold in the
prior offering(s) will be offered in the subsequent offerings. However, the
subsequent offerings will not be made unless there are available for offering
at least 500 registered Units with respect to the subsequent offerings at the
time each such offering is to commence or unless additional Units are
registered under a new registration statement. If a minimum of $500,000 of
Units is not held by the escrow agent for the offering, Boatmen's Trust Company
of Oklahoma, Oklahoma City, Oklahoma (the "Escrow Agent"), at the Termination
Date for a Trust, such Trust will not commence business and the Escrow Agent
will promptly return to the subscribers to such Trust all Subscription
Agreements and sums which have been deposited in escrow during the subscription
period for such Trust. Interest will be paid to subscribers on any such sums
so returned.
National Energy Resources, Inc., as Sponsor, is organizing a group of
soliciting dealers consisting of brokers and dealers who shall be members in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"), the members of such group being hereinafter called the "Soliciting
Dealers", to solicit purchasers of the Units. You are invited to become one of
the Soliciting Dealers and by your confirmation hereof you agree to act in such
capacity and to use your best efforts, in accordance with the following terms
and conditions, to
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obtain purchasers of Units.
SECTION 1. Solicitation and Solicitation Material. Solicitation and other
activities by you hereunder shall be undertaken only in accordance with this
Agreement,the Securities Act of 1933, as amended (the "1933 Act") and the
applicable rules and regulations of the Securities and Exchange Commission.
Accompanying this Agreement are copies of the Prospectus describing the terms
of the offering and the Units offered thereby and including the Subscription
Agreement. Additional copies of the Prospectus will be supplied in reasonable
quantities upon your request. You agree that during the period of the offering
you will not use any solicitation material other than the Prospectus and such
other material as may hereafter be furnished to you by us.
SECTION 2. Compensation of Soliciting Dealers. As compensation for the
services of the Soliciting Dealers hereunder, each Trust will pay to each
Soliciting Dealer designated in a Subscription Agreement a commission in the
amount of eight percent (8%) for each Unit in such Trust sold to a subscriber
through such Soliciting Dealer's efforts with respect to such Trust. A
Soliciting Dealer shall be entitled to the foregoing compensation only if (i)
the insertion of such Soliciting Dealer's name has been made in the
Subscription Agreement relating to such subscriber's Units, (ii) an account
executive from such Soliciting Dealer has executed the certificate contained on
the final page of such Subscription Agreement, (iii) such Soliciting Dealer has
executed this Agreement in the form hereof and delivered it to National Energy,
and (iv) the subscriber accepted by the Sponsor as a Beneficiary of the Trust
for the number of Units indicated in his Subscription Agreement. No Soliciting
Dealer may re-allow any portion of its commission hereunder to any non-member
of the NASD.
SECTION 3. Trading. You represent that you have not engaged, and agree that
you will not engage, in any activity in respect of the Units in violation of
the Securities and Exchange Act of 1934, as amended (the "1934 Act"), including
Rule 10b-6 thereunder. Acceptance of Compensation by you will constitute a
representation that you have complied with the preceding sentence.
SECTION 4. Unauthorized Information and Representations. Neither you nor
any other person is authorized by National Energy or any of the Trusts to give
any information or make any representations in connection with this Agreement
or the offering of the Units other than those contained in the Prospectus and
other authorized solicitation material furnished by National Energy or the
Trusts. Without limiting the generality of the foregoing, you agree not to
publish, circulate or otherwise use any other advertisement or solicitation
material without the prior approval of National Energy. On becoming a
Soliciting Dealer and in soliciting purchases, you agree to comply with any
applicable requirements of the 1933 Act, the 1934 Act, and the rules and
regulations under both such Acts.
SECTION 5. Blue Sky and Securities Laws. National Energy assumes no
obligation or responsibility in respect of the qualification of the Units under
the laws of any jurisdiction. The Blue Sky Memorandum for each Trust indicates
or will indicate the jurisdiction in which it is believed that offers and sales
of the Units may be made under the applicable Blue Sky or state securities
laws. In effecting offers or sales in a jurisdiction, you will comply with all
special conditions and limitations imposed by such jurisdiction, as set forth
in the Blue Sky
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Memorandum for the Trust in which Units are then being offered or sold. If the
Blue Sky Memorandum for a Trust is not enclosed herewith, it will be made
available to you at a later date. Under no circumstances will you as
Soliciting Dealer engage in any activities hereunder in any jurisdiction (a)
which is not listed in the applicable Blue Sky Memorandum as a jurisdiction in
which offers and sales of the Units may be made under the Blue Sky or
securities laws of such jurisdiction or (b) in which you may lawfully so
engage. No Blue Sky Memorandum shall be considered solicitation material, as
that term is herein used.
SECTION 6. Suitability. In recommending to a potential investor the
purchase of Units, you or anyone associated with you shall:
A. Have reasonable grounds to believe, on the basis of information
obtained from the potential investor concerning his investment objectives,
other investments, financial situation and needs, and any other information
known by you or such person associated with you, that:
(1) The potential investor 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 of
the Trust to which such potential investor is subscribing;
(2) The potential investor has a fair market net worth
sufficient to sustain the risks inherent in the Trust to which such
potential investor is subscribing, including loss of investment and lack
of liquidity; and
(3) The Trust to which a potential investor is subscribing is
otherwise suitable for such potential investor; and
B. Maintain in your files for a period of at least six years
documents disclosing the basis upon which the determination of suitability was
reached as to each potential investor.
You hereby represent that you will communicate to each of your sales
agents, representatives and other appropriate persons associated with you the
above-referenced suitability standards. Notwithstanding the provisions of this
Section 6, you shall not execute any transaction in any of the Trusts in a
discretionary account without prior written approval of the transaction by the
potential investor.
SECTION 7. Disclosure.
A. Prior to participating in the offerings of any of the Trusts, you
or a person associated with you shall have reasonable grounds to believe, based
on information made available to you or such person by National Energy through
the Prospectus or other materials, that all material facts are adequately and
accurately disclosed and provide a basis for evaluating the Trust in which
Units are then being offered.
B. In determining the adequacy of disclosed facts pursuant to
Section 7A. hereof, you or a person associated with you shall obtain
information on material facts relating at a minimum to the following, if
relevant in view of the nature of the Trust in which Units are then being
offered:
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(1) items of compensation;
(2) physical properties;
(3) tax aspects;
(4) financial stability and experience of National Energy;
(5) such Trust's conflicts and risk factors; and
(6) appraisals and other pertinent reports.
C. For purposes of Sections 7A. and 7B. hereof, you or a person
associated with you may rely upon the results of an inquiry conducted by
another member or members of the NASD, provided that:
(1) You or such person associated with you has reasonable
grounds to believe that such inquiry was conducted with due care;
(2) The results of the inquiry were provided to you or such
person associated with you with the consent of the NASD member or
members conducting or directing the inquiry; and
(3) No NASD member that participated in the inquiry is a
sponsor of any of the Trusts or an affiliate of such a sponsor.
D. Prior to executing a purchase transaction in any of the Trusts,
you or a person associated with you shall inform the prospective investor of
all pertinent facts relating to the liquidity and marketability of an
investment in the Units during the term of the prospective investment in the
applicable Trust.
SECTION 8. Termination. This Agreement may be terminated by written or
telegraphic notice to you from National Energy, or upon the expiration or
termination of the offering of Units, provided, however, that such termination
shall not relieve the Trusts of the obligation to pay when due all fees payable
to you hereunder or their obligations referred to under Section 10 hereof, and
shall not relieve you of any obligation or any liability under this Agreement.
SECTION 9. Liability of National Energy. Nothing herein contained shall
constitute the Soliciting Dealers as partners with National Energy or with one
another, nor shall anything herein contained render National Energy liable for
the obligations of any of the Soliciting Dealers. National Energy shall be
under no liability to any Soliciting Dealer or any other person for any act or
omission or any matter connected with this Agreement or the Trusts, except for
obligations expressly assumed by National Energy in this Agreement.
SECTION 10. Indemnification.
A. National Energy will indemnify and hold harmless each Soliciting
Dealer from
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and against any and all losses, claims, damages or liabilities, joint or
several, to which any Soliciting Dealer may become subject, under the 1933 Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement 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 will reimburse
each such Soliciting Dealer for any legal or other expenses (including, but not
limited to, reasonable attorneys' fees) reasonably incurred by such Soliciting
Dealer in connection with investigating or defending any such claim or action,
whether or not resulting in any liability.
The indemnify agreement in this Section 10A. will be in addition to any
liability which National Energy may otherwise have and shall extend upon the
same terms and conditions to each person, if any, who controls any Soliciting
Dealer within the meaning of the 1933 Act or is a registered representative of
that Soliciting Dealer who was, at the time the act occurred which gave rise to
the liability for which indemnity is sought hereunder, a registered
representative of that Soliciting Dealer.
B. Each Soliciting Dealer will severally indemnify and hold harmless
National Energy and each Trust and Boatmen's Trust Company of Oklahoma
("Trustee") from and against any and all losses, claims, damages, or
liabilities to which National Energy, the Trustee and any Trust may become
subject insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon the failure or alleged failure
by such Soliciting Dealer to perform fully and to act in compliance with the
provisions of Sections 1, 3, 4, 5, 6 and 7 hereof, and will reimburse any legal
or other expenses (including, but not limited to, reasonable attorneys' fees)
reasonably incurred by National Energy, the Trustee or any Trust in connection
with investigating or defending any such claim or action, whether or not
resulting in any liability.
The indemnity agreement in this Section 10B will be in addition to any
liability which such Soliciting Dealer may otherwise have and shall extend upon
the same terms and conditions to each person signing the Registration Statement
on behalf of each Trust and each person, if any, who controls National Energy,
the Trustee, or any Trust within the meaning of the 1933 Act.
C. Promptly after receipt by an indemnified party under this Section
10 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party under
this Section 10, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
him or it from any liability which he or it may have to any indemnified party
otherwise than under this Section 10. In case any such action is brought
against any indemnified party and he or it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that he or it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except with
the consent of the indemnifying party, be counsel to the indemnifying party),
and after notice from the
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indemnifying party to such indemnified party of his or its election so to
assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section 10 for any legal expenses of other counsel
or any other expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs of
investigation.
D. If the right to indemnification provided for in paragraphs A, B
or C of this Section 10 would by its terms be available to a person hereunder
but is held to be unavailable by a court of competent jurisdiction for any
reason other than because of the terms of such indemnification provision, then
National Energy and the Soliciting Dealer (collectively, the "Parties") and
individually, a "Party") shall contribute to the aggregate of such losses,
claims, damages and liabilities as are contemplated in those paragraphs
(including, but not limited to, any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any claim,
action, suit or proceeding) in the ratio in which the proceeds of the offering
of the Units have been actually received by each such Party. For purposes of
the preceding sentence, proceeds paid to any Party hereunder and subsequently
paid to another Party or Parties pursuant to this Agreement, the Trust
Agreement for any Trust or otherwise, shall be deemed received by the last of
such Parties to whom or to which such proceeds were paid; provided, however,
that proceeds paid to a Trust and not subsequently paid to such Soliciting
Dealer shall be considered to be received by National Energy. However, the
right of contribution described in the preceding sentences is subject to the
following limitations:
(1) In no case shall any Party and the persons who control
such Party within the meaning of applicable state and federal securities
laws be required to contribute any amount in excess of the aggregate
offering proceeds actually received by it and them (determined as
described above); and
(2) No person guilty of fraudulent misrepresentation within
the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Promptly after receipt by any Party entitled to contribution under this
subsection 10.D of notice of commencement of any action, suit, proceeding or
claim against him or it in respect of which a claim for contribution may be
made against another party or Parties, such Party entitled to contribution
will, if a claim in respect thereof is to be made against such other Party or
Parties under this subsection 10.D, notify such other Party or Parties.
Failure to so notify such other Party or Parties shall not relieve such other
Party or Parties from any other obligation it or they may have hereunder or
otherwise. If such other party or Parties are so notified, such other Party or
Parties shall be entitled to participate in the defense of such action, suit,
proceeding or claim at its or their own expense or in accordance with
arrangements satisfactory to all Parties who may be required to contribute.
After notice from such other Party or Parties to the Party entitled to
contribution of its or their election to assume its or their own defense, the
Party or Parties so electing shall not be liable for any legal or other
expenses of litigation subsequently incurred by the Party entitled to
contribution in connection with the defense thereof,other than the reasonable
costs of investigation. No Party shall be required to contribute with respect
to any action or claim settled without his or its consent.
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SECTION 11. Transfer of Funds. Each Soliciting Dealer will instruct
subscribers to make their checks payable to the Escrow Agent as agent for the
applicable Trust. Any Soliciting 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 Soliciting Dealers which conform to the foregoing instructions
shall be transmitted for deposit by any Soliciting Dealer pursuant to one of
the following methods:
A. Where, pursuant to a Soliciting Dealer's internal supervisory
procedures, internal supervisory review is conducted at the same location at
which Subscription Agreements and payments are received, such subscription
payments will be transmitted by the end of the next business day following
receipt b the Soliciting Dealer for deposit to the Escrow Agent; and
B. Where, pursuant to a Soliciting Dealer's internal supervisory
procedures, final internal supervisory review is conducted at a different
location, subscription payments will be transmitted by the end of the next
business day following receipt by the Soliciting Dealer to the office of the
Soliciting Dealer conducting such final internal supervisory review (the "Final
Review Office"). The Final Review Office will in turn transmit such
subscription payments for deposit to the Escrow Agent by the end of the next
business day following receipt thereof by the Final Review Office.
In conjunction with all of the foregoing procedures, investor
checks and subscription documentation delivered on Saturdays, Sundays and
holidays will be treated as not having been received by a Soliciting Dealer
until the first business day thereafter.
SECTION 12. Notices. Any notice hereunder shall be in writing or by
telegram and if to you as a Soliciting Dealer shall be deemed to have been duly
given if mailed or telegraphed to you at the address to which this letter is
addressed, and if to National Energy or any Trust if delivered or sent to us at
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SECTION 13. Parties in Interest. The Agreement herein set forth is intended
for the benefit of each Soliciting Dealer, National Energy, the Trustee and
each of the Trusts.
SECTION 14. Confirmation. Please confirm your agreement to become one of
the Soliciting Dealers under the terms and conditions herein set forth by
signing and returning the confirmation on the enclosed duplicate copy of this
letter to us at the above address.
Very truly yours,
CONFIRMED: NATIONAL ENERGY RESOURCES, INC.
, 1996 By:
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NAME OF SOLICITING DEALER (Authorized Signature)
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By:
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(Authorized Signature)
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