EXHIBIT 10.2
Form of Sales Agency Agreement
AEROCENTURY FUND IV, INC.
A California Corporation
SALES AGENCY AGREEMENT
________________, 1997
Xxxxxxx Xxxxxxx Securities
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
The undersigned, AeroCentury Fund IV, Inc. ("ACF") hereby
confirm their agreement with Xxxxxxx Xxxxxxx Securities ("you" or
the "Sales Agent") as follows:
1. Introduction. This Agreement sets forth the
understandings and agreements among ACF and you, whereby, subject
to the terms and conditions herein contained, you will offer to
sell, on a best efforts basis, and ACF will sell, up to
$10,000,000 of 10% Secured Promissory Notes, each with a
principal amount of $1,000 (the "Note"), as provided in Section
3.1 hereof. Capitalized terms not otherwise defined in this
Agreement shall have the meanings set forth in the Prospectus (as
defined in Section 2.1 (a).
2. Representations and Warranties of ACF.
2.1 ACF represents and warrants to you that:
(a) Registration Statement. ACF has filed with the Securities and
Exchange Commission (the "Commission") a registration statement
on Form SB-2 (File No. 33-_______), including a related
prospectus, for the registration of the ACF under the Securities
Act of 1933, as amended (the "Securities Act"), and will file
such amendments of such registration statement and such amended
or supplemented prospectuses as may be required. Such
registration statement, as amended, and the prospectus on file
with the Commission at the time such registration statement
becomes effective (including financial statements and schedules,
exhibits and all other documents filed as a part thereof or
incorporated therein) are herein referred to, respectively, as
the "Registration Statement" and the "Prospectus," except that,
if the Registration Statement is amended by post-effective
amendment, from and after the date of effectiveness of such
post-effective amendment, the term "Registration Statement" shall
refer to the Registration Statement as so amended, and if the
Prospectus filed on behalf of ACF pursuant to Rule 424 of the
Rules and Regulations of the Commission (collectively, the
"Regulations") under the Securities Act shall differ from the
Prospectus on file at the time the Registration Statement shall
become effective, or if the Prospectus is thereafter amended or
supplemented pursuant to Rule 424 of the Regulations, the term
"Prospectus" shall refer to the Prospectus filed pursuant to Rule
424 of the Regulations from and after the date on which it shall
have been so filed or mailed to the Commission for filing.
(b) Organization: Qualification of ACF. ACF
is duly organized and validly existing as a corporation under the
laws of the state of California, with full power and authority to
acquire, own, lease and manage the assets referred to in the
Registration Statement and
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the Prospectus as assets to be acquired by ACF, including
interests in joint ventures to acquire assets in which ACF is a
participant (collectively, the "Assets"), and to conduct the
business in which ACF is engaged as described in the Prospectus.
(c) Validity of Units. The Notes, when issued,
sold, delivered and paid for in accordance with the terms and
conditions of the Prospectus, will be duly and validly issued,
fully paid and free of any liens or encumbrances.
(d) Compliance with Securities Act. At the time
the Registration Statement is declared effective by the
Commission (the "Effective Date") and during the period (the
"Offering Period") from the Effective Date to the Termination
Date (as hereinafter defined), the Registration Statement and the
Prospectus and any written materials used in connection with the
offering and sale of the Units, which materials will be approved
prior to use by an executive officer of ACF and the Sales Agent
(collectively, the "Sales Materials"), will contain all
statements which are required to be stated therein in accordance
with the Securities Act and the Regulations, will comply in all
material respects with the provisions of the Securities Act and
the Regulations and will not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that the representations and
warranties in this Section 2.1 (d) shall not apply to statements
in or omissions from the Registration Statement, with information
in the Prospectus or the Sales Materials made in reliance upon or
in conformity with information furnished to ACF in writing by you
expressly for use in the Registration Statement, the Prospectus
or the Sales Materials. Every contract or other document,
including, without limitation, the Sales Materials, required by
the Securities Act or the Regulations to be filed as an exhibit
to the Registration Statement has been so filed.
(e) Litigation. There is not pending or, to ACF's
knowledge, threatened or contemplated any action, suit or
proceeding before or by any court or any federal, state or local
governmental authority or agency to which ACF is or may be a
party, or to which any of the Assets or any other property owned
by ACF are or may be subject which is not referred to in the
Prospectus and which will result in any material adverse change
in the business or condition (financial or otherwise), of ACF or
will materially and adversely affect any of the Assets or any
other property of ACF.
(f) Description of ACF. The condition (financial
or otherwise) of ACF, the business of ACF, and the contracts,
options, rights or other commitments, if any, for the lease or
purchase of Assets entered into by or on behalf of ACF
(collectively, the "Asset Agreements") conform in all material
respects to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(g) Changes, Etc. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as may otherwise be stated in or contemplated
by the Registration Statement and the Prospectus: (a) there has
not been any material adverse change in the condition (financial
or otherwise) of ACF, any of the Assets or any other property of
ACF or in the earnings, affairs of business of ACF, any of the
Assets or any other property of ACF, whether or not arising in
the ordinary course of business; (b) there has not been any
transaction entered into by ACF, whether or not relating to any
of the Assets or any other property of ACF, other than in the
ordinary course of business; (c) there has not been any increase
in indebtedness or borrowings of ACF or any change in the capital
contributions to ACF; and (d) ACF has not issued or sold any
limited or general partnership interest or any right or option to
acquire any such interest.
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(h) Receipt of Commissions and Fees. Neither ACF
nor any Affiliate of ACF has received or is entitled to receive,
directly or indirectly, any compensation or other benefit,
including, but not limited to, any commission, finder's fee,
acquisition fee, selection fee, nonrecurring management fee or
other fee relating to the investments of ACF, except as described
in the Prospectus. For the purposes of this Agreement, the term
"Affiliate" means, when used with reference to a specified
person, (a) any person directly or indirectly controlling,
controlled by or under common control with such person, (b) any
person owning or controlling 10% or more of the outstanding
voting securities of such person, (c), any officer, director or
partner of such person, and (d) if any such person is an officer,
director or partner, any company for which such person acts in
any such capacity.
(i) Payment of Commissions and Fees. Neither ACF
nor any Affiliate of ACF has paid or awarded, nor will ACF, or
any Affiliate of ACF pay or award, directly or indirectly, any
commission or other compensation to any person engaged to render
investment advice to a potential purchaser of Units as an
inducement to advise the purchase of Units, except as such
commissions or other compensation may be paid or awarded by you
in connection with the offer and sale of the Units as described
in the Prospectus.
(j) Government Consents. No authorization,
approval or consent of any court or federal, state or local
governmental authority or agency is necessary in connection with
the execution and delivery of this Agreement, the consummation of
the transactions contemplated hereby or by the Prospectus or the
issuance and sale of the Units, except such as may be required
under the Securities Act or the "blue sky" or securities laws of
the jurisdictions referred to in Section 4.3 hereof, each of
which (i) has been obtained or applied for, or (ii) will be
obtained prior to the time when such authorization, approval or
consent is required by applicable law or regulations, or (iii) if
not obtained, will not result in a material adverse effect on
ACF, the Sales Agent or the offer and sale of Notes.
(k) Title to Aircraft. At such time as ACF
acquires ownership of an Asset, to the extent of its interest
therein, will be the beneficial owner, of good and marketable
title to each of the Assets purportedly owned by it and will have
legal and beneficial ownership, respectively, as described in the
Prospectus, subject to no mortgage, lien, charge or encumbrance
other than (a) the lien of the Noteholders and others as stated
in the Prospectus, (b) defects or encumbrances customarily found
in the case of assets or like size and character and which do not
impair the operation, development, use or sale of the particular
Asset by ACF as contemplated by the Prospectus, or (c) leases of
the Asset to users. Except as stated in the Prospectus, ACF will
possess, when required, all licenses, permits and approvals,
consents and orders of all federal, state and local governmental
agencies and authorities required for the acquisition, ownership
and leasing of the Assets acquired by ACF.
3. Sale of Units.
3.1 Agency. ACF hereby appoints you as its agent
to offer for sale, and hereby agrees to sell, up to 10,000 Notes,
each with a principal amount of $1,000, and, on the basis of the
representations and warranties herein contained (but subject to
the terms and conditions herein set forth), you agree to use your
best efforts as agent, promptly following receipt of written or
telegraphic notice of the Effective Date, to offer for sale for
the account of ACF such number of Units as is contemplated by
this Agreement at the public offering price of $1,000 per Note
upon such terms and in such minimum amounts as are described in
the Prospectus. In connection therewith, the Sales Agent shall
not offer any unit for sale, or solicit any offers to subscribe
for or
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purchase, any Unit other than in accordance with the Prospectus.
During the Offering Period, neither ACF or any Affiliate thereof
will sell or agree to sell Units otherwise than through you, as
herein provided. Subject to your commitment to sell the Units on
a "best efforts" basis, nothing in this Agreement shall prevent
you from entering into any agency agreement, underwriting
agreement or other similar agreement governing the offer and sale
of securities with any other issuer of securities, and nothing
contained herein shall be construed in any way as precluding or
restricting your right to sell or offer for sale securities
issued by any other person, including securities similar to, or
competing with, the Units. To the extent that you have actual
knowledge of the matters identified in Section 4.5 hereof, you
will give notice thereof to ACF and provide such information or
take such other actions as may be reasonably requested by ACF to
lift any stop order entered by the Commission referred to in
clause (iii) of Section 4.1 hereof.
3.2 Minimal Funds for Closing. No closing,
including the Initial Closing, will occur unless (i) the amount
of funds then held in escrow by the Escrow Agent is equal to or
greater than $500,000 and (ii) a specific asset has been
identified for acquisition and a written contract for such
purchase has been entered into by the seller thereof with ACF.
3.3 Acceptance of Subscriptions. No subscription
for Units shall be effective unless accepted by the Company. The
Company retains the unconditional right to reject any
subscription in whole or in part, in which event the funds
delivered by the subscriber thereunder with respect to such
subscription shall be returned to such subscriber, with any
interest earned thereon, immediately. Subscriptions shall be
accepted or rejected by the Company as promptly as practicable
after receipt, in no event later than 30 days after receipt.
3.4 Escrow Account. All funds received from
subscribers (the "Escrow Funds") shall be placed in an escrow
account (the "Escrow Account") with ____________ (the "Escrow
Agent"), in accordance with an Escrow Agreement in a form
satisfactory to the parties hereto, and all payments of, from or
on account of such funds shall be made pursuant to the Escrow
Agreement. Funds will be placed with the Escrow Agent in the form
of a check payable to "_______/AeroCentury Fund IV Escrow
Account", or by wire transfer of funds from the account of the
subscriber into the Escrow Account within the time periods
specified below:
(a) Off-Site Supervisory Review. Where
pursuant to your internal supervisory procedures, final internal
supervisory review of subscriptions is conducted at a different
office from where a check and confirmations are received, such
check and confirmation will be transmitted on the day received to
your office conducting such final internal supervisory review,
which will in turn, by the end of that day, transmit such check
and confirmation to the Escrow Agent.
(b) On-Site Supervisory Review. Where,
pursuant to your internal supervisory procedures, final internal
supervisory review of subscriptions is conducted at a different
office from where a check and confirmation are received, such
check and confirmation will be transmitted on the day received to
your office conducting such final internal supervisory review,
which will in turn, by the end of that day, transmit such check
and confirmation to the Escrow Agent.
(c) Wire Transfer of Funds. Where the
subscriber is to pay for the purchase of funds by wire transfer
rather than by check, such wire transfer is to be forwarded in
the same manner and within the same time limits as if the
subscriber had paid by check, as specified in the preceding two
paragraphs.
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(d) Involvement in Distribution
Process. Where you intend to transmit from your own funds the
purchase price for the Units and to subsequently debit a
customer's account in a like amount, you will debit the
securities account of such customer no later than the next
business day following the date that you transmit such purchase
price and any subscription documentation to the Escrow Agent.
3.5 Initial Closing Date. If subscription for
Notes have been received and accepted for purchase of an Asset or
interest therein on or before the Termination Date, you will
cause the Escrow Agent, on such date and at such time and place
as determined by you and ACF (which determination shall be
subject to the satisfaction on such date of the conditions
contained herein) following the deposit of the proceeds from the
Offering (such date and time being herein referred to as the
"Initial Closing Date"), to deliver to ACF immediately available
funds in an amount equal to the amount of funds on deposit in the
Escrow Account ("Escrow Funds") on the Initial Closing Date,
except for (i) any amount earned on such Escrow Funds which shall
be returned to the subscribers, (ii) the 5.0% Sales Commission
payable to you calculated in accordance with Section 3.8 with
respect to the aggregate principal amount of all Notes purchased
and paid for at the Initial Closing Date, including the aggregate
amount of reimbursements of Sales Commissions on certain orders
which amounts will be delivered to you and promptly reimbursed by
you to investors entitled to such reimbursements, (iii) due
diligence costs actually incurred by you in an amount not to
exceed 1.5% of the purchase price of all Notes purchased and paid
for at the Initial Closing Date, and (iv) the nonaccountable
organizational and offering expense allowance (the "Allowance")
payable to the Management Company in an amount equal to 1.5% the
purchase price of all Notes purchased and paid for at the Initial
Closing.
3.6 Additional Closing Dates. If, after the
Initial Closing Date and on or before the Termination Date,
additional sales of Notes are made on each such date or dates and
at each such time and place as determined by ACF (which
determination shall be subject to the satisfaction on each such
date of the conditions contained herein) (all such dates being
referred to herein as the "Additional Closing Dates"; the
Additional Closing Dates and the Initial Closing Date are herein
referred to collectively as the "Closing Dates"), you will cause
the Escrow Agent to deliver to ACF immediately available funds in
an amount equal to the Escrow Funds on deposit in the Escrow
Account on such Additional Closing Date, except for (i) any
amount earned on the Escrow Funds which shall be distributed by
the Escrow Agents directly to the subscribers, (ii) the Sales
Commission, the Allowance and due diligence costs payable to you
calculated in accordance with Section 3.6 hereof with respect to
the aggregate principal amount all Notes purchased and paid for
on such Additional Closing Date.
3.7 Selected Dealers. You may, in your sole
discretion, engage broker-dealers ("Selected Dealers") for the
offer and sale of Notes pursuant to a Selected Dealer Agreement
in a form satisfactory to the parties hereto. The Sales Agent
may, pursuant to the Selected Dealer agreement, allow such
concessions to the Selected Dealer out of its selling commission
as it may determine within the limits set forth in the
Registration Statement and Prospectus. Any such Selected Dealers
shall be members of the National Association of Securities
Dealers, Inc. (The "NASD"). Each such Selected Dealer Agreement
shall provide that the Selected Dealer must represent and warrant
that each Note sold by it will be in compliance with the terms of
the Prospectus, including without limitation, any suitability
requirement placed upon investors, and in compliance with
applicable blue sky laws. Each Selected Dealer Agreement shall
contain a provision indemnifying the Company for any losses,
claims, damages or other expenses arising out of a Selected
Dealer's breach of such representation and warranty.
3.8 Fees and Reimbursement. In consideration
for your execution of this
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agreement and for the performance of your obligations hereunder,
ACF agrees to cause the Escrow Agent to pay you, as provided in
Sections 3.5 and 3.6 hereof, (i) a Sales Commission equal to 5.0%
of all Notes sold, and (ii) reimbursement of actual costs
incurred in due diligence investigations not to exceed 1.5% of
all Notes sold. You may reallow all or a portion of such fees and
reimbursement to the Selected Dealers. Notwithstanding anything
herein to the contrary, if you, or your or ACF's respective
Affiliates or employees purchase any Notes, the Sales Agent, in
its discretion, may waive the Sales Commissions with respect to
such Notes. In the event that an Asset or interests therein, are
not available for purchase and this Agreement is terminated, you
shall not receive any Sales Commissions or reimbursement of due
diligence costs.
3.9 Finder's Fees. Except as set forth in the
Prospectus, none of you, ACF, directly or indirectly, shall pay
or award any finder's fee, commission or other compensation to
any person engaged by a potential subscriber for investment
advice as an inducement to such advisor to advise the purchase of
Notes or for any other purpose.
4. Covenants. ACF covenants with you and, where
applicable, you covenant with them as follows:
4.1 Notices. ACF immediately will notify you and
confirm the notice in writing, (i) when the Registration
Statement and any post-effective amendment thereto becomes
effective, (ii) when any Prospectus is filed with the Commission
or mailed to the Commission for filing pursuant to Rule 424 of
the Regulations, (iii) of the issuance by the Commission of any
stop order or of the initiation or threatening of any proceeding
for that purpose, (iv) of the receipt of comments from the
Commission with respect to the Registration Statement or of any
request, written or oral, by the Commission for any amendment to
the Registration Statement or any amendment or supplement to the
Prospectus or for additional information relating thereto, and
(v) of any fact known to it which would make inaccurate any
representation or warranty by ACF or of any change in facts on
which your obligation to perform under this Agreement is
dependent. If the Commission shall enter a stop order at any
time, ACF will make every reasonable effort to obtain the lifting
of such order at the earliest possible moment.
4.2 Delivery of Registration Statements,
Prospectuses, Etc. ACF will deliver to you, without expense to
you, at such locations as you shall request, (i) as soon as
practicable, three signed copies of the Registration Statement
and all amendments thereto, including exhibits, and (ii) as soon
as any Prospectus is filed with the Commission or is mailed to
the Commission for filing pursuant to Rule 424 of the
Regulations, or any supplement to the Prospectus is available,
such number of copies of the Prospectus and supplements and
amendments thereto, if any, as you reasonably may request
4.3 Blue Sky Qualification. ACF has delegated to
the Sales Agent the responsibility for the filing of material in
connection with the offering of the Notes to qualify the Notes or
to establish an exemption from qualification for the Notes prior
to the time that the Registration Statement becomes effective or
as soon thereafter as possible with the state securities, or
"blue sky," administrators or authorities in those jurisdictions
in which Notes will be offered and for that number of Notes in
each jurisdiction as shall be determined by the Sales Agent, and
the Sales Agent agrees to perform such functions as an agent of
ACF. In each jurisdiction where such qualification shall be
effected, the Sales Agent, in cooperation with ACF will file and
make such statements or reports at such time as may be required
by the laws of such jurisdiction. ACF will cooperate with the
Sales Agent in making filings or obtaining such qualifications,
and no filing shall be made without the review and approval of
ACF. ACF will furnish to the Sales Agent all information
requested by the Sales Agent to comply with the state securities,
or "blue sky" laws
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and regulations of all such jurisdictions. Any material so
furnished will not contain any misstatement of a material fact or
omit to state any material fact necessary to make any statement
of fact contained therein not misleading. Neither the Sales Agent
nor any Selected Dealer shall make any offers or sales of Notes
in any jurisdiction in which the offering of Notes has not been
qualified or an exemption from qualification has not been
established and shall not make any offers or sales to investors
that do not meet the suitability requirements applicable to such
investor as set forth in the Prospectus or by virtue of
applicable blue sky laws. ACF or the Sales Agent, as the case may
be, immediately will notify each other and confirm such advice in
writing, (i) of the receipt of comments from the authorities in
any jurisdiction or of any request, written or oral, by the
authorities in any such jurisdiction for any amendment of the
Registration Statement or any amendment or supplement to the
Prospectus or for additional information relating thereto, and
(ii) of the issuance by the authorities in any jurisdiction of
any stop order at any time, ACF and the Sales Agent will make
every reasonable effort to obtain the lifting of such order at
the earliest possible moment.
4.4 Amendments to Registration Statement, Etc. ACF
will not, before the Registration Statement becomes effective,
file any amendment thereto, without including therein such
changes or additions as you reasonably shall request after being
furnished with a copy thereof. If, during the time when a
Prospectus is required to be delivered under the Securities Act,
any event shall occur as a result of which it is necessary to
amend or supplement the Prospectus in order to make the
statements in the Prospectus not misleading in the light of
circumstances existing at the time it is delivered to a potential
subscriber, ACF forthwith will notify you promptly of the
occurrence of each such event and prepare and file with the
Commission an amendment or amendments of, or a supplement or
supplements to, the Registration Statement and the Prospectus
which will amend or supplement the Registration Statement and the
Prospectus, as necessary, so that, as amended or supplemented,
the Registration Statement and the Prospectus will not contain an
untrue statement of material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements therein not misleading; provided, however, that
ACF will not file any amendment to the Registration Statement or
any supplement to the Prospectus without including therein such
changes or additions as you reasonably request after being
furnished with a copy thereof. ACF will furnish to you such
information with respect to themselves as you or your counsel may
from time to time reasonably request. During the time when a
Prospectus is required to be delivered under the Securities Act,
ACF and the Sales Agent shall comply with all requirements
imposed upon them by the Securities Act, the Regulations, the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (collectively, the "Exchange
Act"), the rules and regulations of the NASD and by the laws of
each jurisdiction in which the Notes shall be offered or sold.
4.5 Financial and Other Information. So
long as Notes remain outstanding, ACF will notify you of and
furnish you, upon request, the following:
(a) At least three business days prior
to the date on which the same shall be sent to the Noteholders
and not later than the date on which the same is filed with the
Commission, two copies of each annual and interim financial and
other report, application, communication or document furnished to
the Noteholders or filed with the Commission, including, without
limitation, any accountant's report, together with such
accountant's comments and notations with respect thereto, in such
detail as ACF customarily may receive from such accountants;
(b) At least three business days prior
to the filing or submission thereof, a copy of any report,
application or document which ACF shall file with or submit to
any
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administrative authority under the "blue sky" or securities laws
of any state or other jurisdiction.
(c) At least three business days prior
to the release thereof, unless ACF shall conclude, upon advise of
counsel, that compliance with applicable law requires an earlier
release and in any event prior to such release, two copies of
every press release to be issued and every material new item and
article in respect of ACF or its affairs to be released by ACF;
and
(d) Promptly, such additional documents and information with
respect to ACF and its affairs as you from time to time
reasonably request.
4.6 Sales Material. ACF will deliver to you, in
such reasonable quantities as you may request, all supplemental
Sales Materials (whether designated solely for broker-dealer use
or otherwise) proposed to be used or delivered by ACF in
connection with the offer of the Notes prior to the use or
delivery to third parties of the Sales Materials and will not use
or deliver any such material to which you shall object. Prior to
the use or delivery to third parties of any Sales Materials, ACF
will file the Sales Materials in any jurisdiction in which the
Notes have been qualified for offering and sale, in every
jurisdiction in which an application for such qualification is
pending and with the Commission and the NASD.
4.7 Application of Net Proceeds. ACF will apply
the proceeds of the sale of the Notes substantially as set forth
under the caption "Estimated Use of Proceeds" in the Prospectus
and will file such reports on Form SR with the Commission with
respect to the sale of the Notes and the application of the
proceeds therefrom as may be required in accordance with Rule 463
under the Securities Act and the "blue sky" laws or regulation of
any state "blue sky" authority.
4.8 Approval of Sales Materials. Without your
prior approval, neither ACF nor any of its Affiliates will
distribute any Sales Materials to any Noteholder, subscriber,
potential subscriber or any regulatory authority, including,
without limitation, the Commission or any state "blue sky"
authority.
4.9 Sales Incentives. No sales incentive
bonuses shall be paid directly or indirectly in connection with
the offer and sale of the units.
4.10 Undertakings. ACF will comply with all
provisions of any undertaking contained in the Registration
Statement and, until the Termination Date, ACF will timely file
all documents, and any amendments to previously filed documents,
required to be filed by ACF pursuant to Section 13, 14 or 15(d)
of the Exchange Act or, subject to Section 4.3 hereof, any state
"blue sky" law or regulation. You hereby undertake to comply with
all applicable rules and regulations of the NASD including,
without limitation, Section 3 and 4 of Appendix F of the NASD's
Rules of Fair Practice.
4.11 Suitability Requirements. The Notes will be
sold only to persons who represent and warrant that they or their
beneficiaries meet the suitability requirements set forth in the
Prospectus either by payment for the Notes or, where required, by
execution of the Subscription Agreement in the manner described
in the Prospectus.
4.12 Investment Criteria. ACF will use its
best efforts to comply with the investment criteria set forth in
the Prospectus.
4.13 Assets Registration. ACF will file for
registration of all aircraft
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purchased by ACF (as that term is defined in the Registration
Statement), whether or not identified in the Prospectus as owned
by ACF, with the Federal Aviation Administration (the "FAA") to
the extent required by the Federal Aviation Act of 1958 as
amended, and all rules and regulations promulgated thereunder.
5. Payment of Expenses. ACF will pay all costs and
expenses incident to the performance of the obligations of ACF
under this Agreement, including, without limitation, all costs
and expenses incident to (i) the preparation, printing, filing
and delivery of the Registration Statement and the Prospectus,
including the cost of all copies thereof and any amendment
thereof or supplement thereto, including, without limitation,
such quantities of each such document as you reasonably may
request, (ii) the preparation of this Agreement, the Sales
Materials, the Escrow Agreement and all amendments or supplements
thereto and related documents and the filing or recording of such
certificates or other documents necessary to comply with the laws
of the State of California and other jurisdictions in which ACF
may own property or conduct business for the continued
qualification of a corporation, (iii) the delivery of the units,
(iv) any escrow arrangement in connection with the offer and sale
of the Notes, including any compensation with the offer and sale
of the Notes, including any compensation and reimbursement to the
Escrow Agents, (v) the qualification of the Notes under, and
continued compliance with, "blue sky" or securities laws of the
jurisdictions designated by you in Accordance with the provisions
of Section 4.3 hereof, including filing fees and the fees and
disbursements of counsel incurred in connection therewith and the
cost of printing of the "blue sky" survey and supplements thereto
referred to in Section 4.3 hereof, (vi) the fees and
disbursements of legal counsel and independent accountants
engaged by ACF and you in connection with the offer and sale of
the Notes, (vii) the filing fees payable to the Commission and to
the NASD, (viii) the fees of counsel and accountants for ACF in
connection with the offer and sale of the Notes, and (ix)
seminars and other activities incident to the marketing of the
Notes, provided that in the event the Initial Closing Date does
not occur, ACF shall have no liability for expenses set forth
above.
6. Conditions of Your Obligations. Your obligations
hereunder shall be subject to the continued accuracy throughout
the Offering Period of the representations and warranties of ACF,
to the performance by ACF of its obligations hereunder and to the
following terms and conditions:
6.1 Effective Registration Statement. The
Registration Statement shall have been declared effective and, at
any time during the term of this Agreement, no stop order shall
have been issued or proceeding therefor initiated or threatened
by the Commission or by the authorities in any jurisdiction in
which the Notes shall have been qualified for offering and sale
in accordance with the provisions of Section 4.3 hereof, unless
such order or proceedings have been withdrawn or terminated by
the Commission of such authorities.
6.2 Representations, Warranties and Covenants. At
the initial Closing Date and on each Additional Closing Date, the
representations and warranties contained in Section 2.1 hereof,
continue to be true and correct with the same effect as though
expressly made at such date and ACF shall have performed all
covenants or conditions on their or its part to be performed or
satisfied at or prior to the Effective Date and the Initial
Closing Date or the Additional Closing Date, as the case may be.
6.3 No Stop Order. At the Initial Closing Date and
on each Additional Closing Date, you shall receive such evidence
as you reasonably shall request to evidence that no order
suspending the sale of the Notes in any jurisdiction have been
issued and no proceeding for that purpose shall be been
instituted or contemplated.
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7. Indemnification and Contribution.
7.1 Indemnification by ACF. Subject to the
conditions set forth below, ACF agrees to indemnify and hold
harmless you and each Selected Dealer, if any, and each person,
if any, who controls you or a Selected Dealer within the meaning
of Section 15 of the Securities Act, against any and all loss,
liability, claim, damage and expense whatsoever (including, but
not limited to, reasonable expense incurred in investigating,
preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever) arising out of or based upon
(a) any untrue statement or alleged untrue statement of a
material fact contained (i) in any preliminary prospectus, the
Registration Statement or the Prospectus (as from time to time
amended and supplemented, (ii) in any application or other
document (in this Section 7, collectively called "application")
filed in any jurisdiction in order to qualify the Notes under the
"blue sky" or securities laws thereof or filed with the
Commission or any securities exchange, (iii) in any Sales
Materials (whether designated for broker-dealer use or
otherwise), or (iv) in any additional written or oral information
provided to prospective purchasers of Notes by an authorized
representative (other than the Sales Agent or a Selected Dealer)
of ACF, or (b) the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make
the statements therein not misleading, except (with respect to
paragraph (a) and paragraph (b) insofar as such untrue statement
or omission was made in reliance upon and in conformity with
written information furnished to ACF by you expressly for use in
the Registration Statement or the Prospectus or any Sales
Materials, application or any other written materials authorized
by the Sales Agent.
7.2 Indemnification by Sales Agent. You agree to
indemnify and hold harmless ACF and each person, if any, who
controls or manages ACF, including without limitation ACF
Management Corp., within the meaning of Section 15 of the
Securities Act to the same extent as the foregoing indemnity from
ACF to you pursuant to Section 7.1 herein, but only with respect
to (a) the statements in or omissions from the Registration
Statement or the Prospectus made in reliance upon and in
conformity with information separately furnished by you in
writing specifically for inclusion in the Registration Statement
or the Prospectus, and (b) any loss, liability, claim, damage or
expense resulting from (i) your failure to grant appropriate
credits or provide appropriate refunds to Noteholders entitled to
discounts from Sales Commissions pursuant to Section 3.8, or (ii)
any failure by you and your investment executives, or other
employees or agents to comply with requirements pertaining to the
offer and purchase of Notes (including, without limitation, those
requirements set forth in this Agreement, the Selected Dealer
Agreement or described in the Prospectus).
7.3 Notices of Claims: Employment of Counsel. Any
party which proposes to assert the right to be indemnified under
this Section 7 promptly shall notify in writing each party
against which a claim is to be made under this Section 7 of the
institution of such action, but the omissions so to notify such
indemnifying party of any such action shall not relieve it from
any liability it may have to any indemnified party otherwise than
under this Section 7. Such indemnifying party or parties shall
assume the defense of such action, including the employment of
counsel (satisfactory to the indemnified party) and payment of
fees and expenses, including attorneys' fees. An indemnified
party shall have the right to employ its own counsel in any such
case, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless the employment of such
counsel shall have been authorized in writing by the indemnifying
party or parties in connection with the defense of such action or
the indemnifying party or parties shall not have employed counsel
to have charge of the defense of such action or such indemnified
party or parties reasonably shall have concluded that there may
be defenses available to it or them which are different from or
additional to those available to such indemnifying party or
parties (in which case such indemnifying party or parties shall
not have the right to direct the defense of such action on behalf
of the indemnified party or parties), in any of which events such
fees and expenses shall be borne by such indemnifying party or
parties. Anything in this paragraph to the contrary
notwithstanding, an indemnifying party shall not be liable for
any settlement of any such claim or action effected without its
written consent.
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7.4 Contribution. If the indemnification provided
for in Sections 7.1 or 7.2 is unavailable to or insufficient to
hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof)
referred to therein, then ACF, on the one hand, and you, on the
other, shall contribute to such amount paid or payable in such
proportion as is appropriate to reflect the relative fault of
ACF, on the one hand, and you, on the other, in connection with
the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by ACF, on the one
hand, or to information with respect to you furnished by you, on
the other, in writing specifically for inclusion in the
Registration Statement or the Prospectus and the parties'
relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. ACF and you
agree that it would not be just and equitable if contribution
pursuant to this Section 7.4 were determined by pro rata
allocation or by any other method of allocation. The amount paid
or payable as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in
this Section 7.4 shall be deemed to include any legal or other
expenses reasonably incurred by any such party in connection with
investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) with respect to the
transactions giving rise to the right of contribution provided in
this Section 7.4 shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
7.5 Common Law. Nothing in this Agreement
shall be deemed to abrogate or restrict any rights or remedies to
indemnification or contribution to which any party hereto is
entitled under common law.
7.6 Limitation. Notwithstanding the above, ACF
should have no obligation to indemnify any person or any person
who controls such person within the meaning of Section 15 of the
Securities Act for any losses, liabilities or expenses arising
from or out of an alleged violation of federal or state
securities laws unless (i) there has been a successful
adjudication on the merits of each count involving alleged
securities law violations as to the particular indemnity before a
court of competent jurisdiction and the court approves
indemnification of the litigation costs, or (ii) such claims have
been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the particular indemnity and the
court approves indemnification of the litigation costs, or (iii)
a court of competent jurisdiction approves a settlement of the
claims against a particular indemnity and finds that
indemnification of the settlement and related costs should be
made. In any claim for indemnification for federal or state
securities law violations, the party seeking indemnification
shall place before such court of competent jurisdiction the
position of the Commission and any other applicable regulatory
authority with respect to the issue of indemnification for
securities law violations.
8. Representations and Agreements to Survive. Except
as the context otherwise requires, all representations,
warranties, covenants and agreements contained in this
11
Agreement shall be deemed to be representations, warranties,
covenants and agreements of ACF and you, as the case may be, and
shall remain operative and in full force and effect regardless of
any investigation made by you, or on your behalf, or by a
controlling person, or by or on behalf of ACF and shall survive
the Termination Date for a period of two years from the date
hereof, provided that any representation, warranty or covenant
concerning the truth or completeness of any information contained
in the Registration Statement, the Prospectus or the Sales
Materials, and any indemnification for the breach thereof, shall
survive the Termination Date for the period of any applicable
statute of limitations.
9. Effective Date and Termination of Agreement.
9.1 Effective Date. This Agreement shall become
effective on the Effective Date.
9.2. Termination of Agreement. You shall have the
right to terminate this Agreement at any time prior to the
Initial Closing Date or any Additional Closing Date (i) if any
representation or warranty hereunder shall be found to have been
incorrect or misleading when or made or ACF shall fail, refuse or
be unable to perform any of its agreement hereunder or to fulfill
any condition of your obligations hereunder, (ii) if there shall
have been a material adverse change in the condition (financial
or otherwise) of ACF or any of their Affiliates or if ACF or any
Asset shall have sustained a material or substantial loss by
fire, flood, accident, earthquake, act of terrorism or other
calamity or malicious act which, whether or not such loss shall
have been insured, will in your opinion make it inadvisable to
proceed with the offering and sale of Notes, (iii) if trading on
the New York Stock Exchange or the American Stock Exchange shall
have been suspended, or minimum or maximum prices for trading
generally shall have been fixed or maximum ranges for prices for
all securities shall have been required on either such Exchange
by such Exchange or by order of the Commission or any other
governmental authority having jurisdiction, (iv) if the United
States shall have become engaged in a war or other major
hostilities, (v) if a banking moratorium has been declared by a
state or federal authority, (vi) if there shall have been such a
change in the condition of securities markets generally as, in
your judgment, would make it inadvisable to proceed with the
offering and sale of Notes, or (vii) there shall have been a
federal legislation, a change in Internal Revenue Service's
rulings or a proposed change in Treasury Regulations or relevant
court decisions which, in your reasonable judgment, have a
material adverse effect on the tax consequences to the
Noteholders set forth in the Prospectus.
9.3 Result in Termination. If for any reason, this
Agreement shall not become effective or the offering of the Notes
is terminated as a result of Assets or any interest therein not
being available for purchase, ACF shall have no liability to you.
If this Agreement shall be terminated by you for treason of the
failure on the part of ACF to perform any material undertaking or
satisfy any condition of this Agreement by it to be performed or
satisfied, ACF shall pay you commissions on all Notes sold, to
the extent there is a closing with respect to such Notes, as
provided in Section 3 hereof, and shall pay expenses as required
by SEction 5 hereof, but will have no additional liability to you
except for such liabilities, if any, as xxx exist or thereafter
arise under Section 7 hereof.
10. Notices.
10.1 Method and Location of Notices. All
communications hereunder, except as herein otherwise specifically
provided, shall be in writing and, if sent to you, shall be
mailed, delivered or telegraphed and confirmed to you at Xxxxxxx
Xxxxxxx Securities, 0000 Xxxxxx
00
Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxx 00000, Attention:
Xxxxxxx X. Xxxxxxx; if sent to ACF, shall be mailed, delivered or
telegraphed and confirmed to it at 0000 Xxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxx X. Xxxxxxx.
10.2 Time of Notices. Notice shall be deemed to be
given (i) if by personal delivery, on the date of delivery; (ii)
if telegraphed, on the date of transmission, and (iii) if mailed,
three days after delivery to the mails, postage prepaid,
registered mail, return receipt requested to the addresses
provided in Section 10.1 hereof.
11. Parties. This Agreement shall inure solely to the benefit of
and shall be binding upon you, ACF and the controlling persons
referred to in Section 7.6 hereof, and their respective
successors, legal representatives and assigns, and no other
person shall have or be construed to have any legal or equitable
right, remedy or claim under or in respect of or by virtue of
this Agreement of any provision herein contained.
12. Construction. This Agreement shall be construed in
accordance with the laws of the State of California, without
giving effect to the principles thereof relating to the conflicts
of laws.
3. Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted
for convenience only and do not constitute a part of this
Agreement.
14. Counterparts. This Agreement may be executed in one or
more counterparts, and, if executed in more than one counterpart,
the executed counterparts shall together constitute a single
instrument.
If the foregoing correctly sets forth the understanding
between you and ACF, please so indicate in the space provided for
that purpose, whereupon this letter shall constitute a binding
agreement between us.
Very truly yours
AEROCENTURY FUND IV, INC.
A California Corporation
By:__________________________
Xxxx X. Xxxxxxx, President
Confirmed and Accepted as of
the date first above written
XXXXXXX XXXXXXX SECURITIES
A California Corporation
By:_____________________________
Xxxxxxx X. Xxxxxxx, President
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