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6,000,000 UNITS
ROYAL SILVER MINES, INC.
(a Utah corporation)
PARTICIPATING DEALER'S AGREEMENT
You are invited to participate as a Participating Dealer
("Participating Dealer") in an offering of up to 6,000,000 Units
of ROYAL SILVER MINES, INC., a Utah corporation, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), to
be offered to the public at $0.75 per share. Each Unit consists
of one (1) shares of Common Stock, $0.01 par value, and one (1)
Redeemable Common Stock Purchase Warrant. The Common Stock and
Redeemable Common Stock Purchase Warrants are being offered as a
Unit. They are immediately detachable and separately tradeable.
Each Redeemable Warrant ("Redeemable Warrant") entitles the
holder to purchase one share of Common Stock at a price of $1.40
until September 1, 2000. The Redeemable Warrants are callable by
the Company upon thirty (30) days written notice provided that
the bid price of the Company's Common Stock trades above $3.00
per share for ninety (90) consecutive trading days. The Units
are more particularly described in the enclosed Prospectus,
additional copies of which will be supplied in reasonable
quantities upon request. The Company is offering the shares
subject to the terms of: (i) this Agreement, and (ii) the
Company's instructions which may be forwarded to the
Participating Dealers from time to time. This invitation is made
by the Company only if the Company's shares may be lawfully
offered in your state. The terms and conditions of this
invitation are as follows:
1. Acceptance of Orders. Orders received from the
Participating Dealer will be accepted only at the price, in the
amounts, and on the terms which are set forth in the Company's
offering memorandum.
2. Selling Concession. As a Participating Dealer, you will
be allowed on all shares sold by you a commission of ten percent
(10%) of the total sales price ($0.75 per share) as shown in the
Company's offering memorandum.
3. Status of Dealers. The Participating Dealer agrees to
purchase the Company's shares for its customers only through the
Company, and all such purchases shall be made only upon order
already received by the Participating Dealer from its customers.
In all sales of the Company's shares to the public, the
Participating Dealer shall confirm as agent for another. The
Participating Dealer agrees that no member of the National
Association of Securities Dealers, Inc., will allow commissions
to any non-member broker/dealer, including foreign broker/dealers
registered pursuant to the Securities Act of 1934.
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4. Delivery of Funds. The Participating Dealer will
promptly transmit (not later than noon of the next business day)
to the Company all funds received from the purchasers and will
transmit to the Company a confirmation or a record of each sale
which will set forth the name, address and social security number
of each individual purchaser, the number of shares purchased,
and, if there is more than one registered owner, the form of
ownership in which the certificate or certificates are to be
issued, e.g., joint tenancy or tenancy in common. Also, each
Participating Dealer shall report, in writing, to the Company,
the number of the Company's shares which have been sold in each
state and the number of persons in each such state who purchased
shares from the Participating Dealer. Each sale may be rejected
by the Company, and if rejected, the Company will return to you
all funds paid by the purchaser which have been received by the
Company. In such event, the Participating Dealer will return to
the Purchaser within five (5) business days after actual receipt
from the Company the full purchase price paid by the Purchaser.
5. Payment. Payment for the shares shall accompany all
confirmations and applications and shall be in clearing house
funds. All checks and other orders for the payment of money
shall be made payable to ROYAL SILVER MINES, INC. and shall be
delivered to it not later than 12 o'clock noon of the next
business day following receipt. The shares sold by the
Participating Dealer shall be available for delivery at the
office of the Company, unless other arrangements are made with
the Company for delivery.
6. Dealer's Undertakings. No person is authorized to made
any representations concerning the Company's shares except those
contained in the Company's offering memorandum. The
Participating Dealer will not sell the Company's shares pursuant
to this Agreement unless the offering memorandum is furnished to
the purchaser at least 48 hours prior to the mailing of the
confirmation of sale, or is sent to such person under such
circumstances that it would be received by him 48 hours prior to
his receipt of a confirmation of the sale. The Participating
Dealer agrees not to use any supplemental sales literature of any
kind without prior written approval of the Company unless it is
furnished by the Company for such purpose. In offering and
selling the Company's shares, the Participating Dealer will rely
solely on the representations contained in the Company's offering
memorandum. The Participating Dealer understands that during the
ninety (90) day period after the first date upon which the shares
of the Company are bona fide offered to the public, all Dealers
effecting transactions in the Company's shares may be required to
deliver the Company's offering memorandum to any purchasers
thereof prior to or concurrent with the receipt of the
confirmation of sale [see Rule 256(g) under the Securities Act of
1933, as amended]. Additional copies of the offering memorandum
will be supplied by the Company in reasonable quantities upon
request.
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7. Conditions of Offering. All sales will be subject to
delivery by the Company or Certificates evidencing the shares.
The Company has reserved the right, without notice, to cancel or
modify the Offering and to reject any order, in whole or in part.
8. Failure of Order. In an order is rejected or if an
payment is received which proves insufficient or worthless, any
compensation paid to the Participating Dealer shall be returned
either by the Participating Dealer's remittance in cash or by a
charge against the account of the Participating Dealer, as the
Company may elect.
9. Representations and Agreements of Participating Dealer.
By accepting this Agreement, the Participating Dealer represents
that it is registered as a broker/dealer under the Securities
Exchange Act of 1934, as amended; is qualified to act as Dealer
in the states or other jurisdictions in which it offers the
Company's shares; is a member in good standing of the National
Association of Securities Dealers, Inc.; and will maintain such
registration, qualifications, and memberships throughout the term
of this Agreement. The Participating Dealer agrees to comply
with all applicable federal laws; the laws of the states or other
jurisdictions concerned; and the Rules and Regulations of the
National Association of Securities Dealers, Inc. Further, the
Participating Dealer agrees that it will not offer or sell the
Company's shares in any state or jurisdiction except as the
Company shall advise the Participating Dealer in writing that the
shares are exempt from registration in particular states. The
Participating Dealer shall not be entitled to any compensation
during any period in which it has been suspended or expelled from
membership in the National Association of Securities Dealers,
Inc.
10. Dealer's Employees. By accepting this Agreement, the
Participating Dealer has assumed full responsibility for thorough
and proper training of its representatives concerning the selling
methods to be used in connection with the offer and sale of the
Company's shares, giving special emphasis to the principles of
full and fair disclosure to prospective investors and the
prohibitions against "Free-riding and Withholding."
12. Indemnification. The Company agrees to indemnify,
defend, and hold the Participating Dealer and each person, if
any, who controls the Participating Dealer within the meaning of
Section 15 of the Securities Act of 1933, as amended (the "Act"),
free and harmless from and against any and all losses, claims,
demands, liabilities, and expenses (including reasonable legal
and other expense incurred by each such Participating Dealer and
controlling person in connection with defending or investigating
any such claims or liabilities, whether or not resulting in any
liability to the Participating Dealer or any controlling person),
which the Participating Dealer or controlling person may incur
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under the Act or at common law or otherwise, but only to the
extent that such losses, claims, demands, liabilities and expense
shall arise out of or be based upon any untrue statement or
alleged untrue statement of a material fact contained in the
registration statement, or in the offering memorandum, or in any
amendment or amendments to the registration statement or the
offering memorandum, or in any application or other papers,
hereinafter collectively called "Blue Sky Applications," executed
by any Participating Dealer with the written approval of the
Company for filing in any state or states in order to qualify the
Securities covered by this Agreement, or shall arise out of or be
based upon any omission or alleged omission to state therein any
material facts required to be stated in the registration
statement or the offering memorandum, in any Amendment or
Amendments, in any Blue Sky Application, or necessary to make the
Statements in any thereof not misleading, provided, however, that
the Indemnity Agreement shall not apply to any such losses,
claims, demands, liabilities or expenses arising out of or based
upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement or the
offering memorandum, or in any Blue Sky Application, or arising
out of or 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, which
statement or omission was made in reliance upon information
furnished to the Company by the Participating Dealer in writing
expressly for use in the registration statement or offering
memorandum, or in any Amendment or Amendments, or was made by the
Participating Dealer in any Blue Sky Application not in reliance
upon information furnished by the Company. The Participating
Dealer agrees to give the Company an opportunity to participate
in the defense or preparation of the defense of any action
brought against the Participating Dealer or controlling persons
of the Participating Dealer to enforce any such claim or
liability, and the Company shall have the right to so
participate. The Agreement of the Company under the indemnity is
expressly conditioned upon notice of any such action having been
sent by the Participating Dealer or controlling persons, as the
case may be, to the Company, by letter or telegram, promptly
after the commencement of such action against the Participating
Dealer or controlling persons, such notice either being
accompanied by copies of papers served or filed in connection
with such action or by a statement of the nature of the action to
the extend known to the Participating Dealer. Failure to notify
the Company within a reasonable time of any such action shall
relieve the Company of its respective liabilities under the
foregoing indemnity, but failure to notify the Company as herein
provided shall not relieve it from any liability which it may
have to the Participating Dealer or controlling persons other
than on account of the Indemnity Agreement.
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12. Participating Dealer's Indemnification. The
Participating Dealer hereby agrees to indemnify and to hold
harmless the Company and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act of
1933, as amended, from and against any and all losses, claims,
damages or liabilities to which the Company may become subject
under the Securities Act of 1933, as amended, or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon
information contained in the registration statement, offering
memorandum, or other document filed with the Securities and
Exchange Commission to the extent such information is supplied by
the Participating Dealer to the Company for inclusion therein, or
is based upon alleged misrepresentations or omissions to state
material facts in connection with statements made by the
Participating Dealer or the Participating Dealer's salesmen
orally or by other means; and the Participating Dealer will
reimburse the Company for legal or other expenses reasonably
incurred in connection with the investigation or the defending of
any such action or claim. The Company shall, after receiving the
first Summons or other legal process disclosing the nature of the
action being served upon it, in any proceeding in respect of
which indemnity may be sought by the Company hereunder, promptly
notify the Participating Dealer in writing of the commencement
thereof. In case any such litigation be brought against the
Company, the Company shall notify the Participating Dealer of the
commencement thereof and the Participating Dealer shall be
entitled to participate in (and, to the extent the Participating
Dealer shall which, to direct) the defense thereof at the
Participating Dealer's own expense, but such defense shall be
conducted by counsel of good standing satisfactory to the
Company. If the Participating Dealer shall fail to provide such
defense, the Company may defend such action at the Participating
Dealer's cost and expense. The Participating Dealer's obligation
under this paragraph shall survive the termination of this
Agreement.
13. Expenses. No expenses will be charged to Participating
Dealers. A single transfer tax, if any, on the sale of the
shares by the Participating Dealer to its customers will be paid
when such certificates are delivered to the Participating Dealer
for delivery to its customers. However, the Participating Dealer
will pay its proportionate share of any transfer tax or any other
tax (other than the single transfer tax described above) if any
such tax shall be from time to time assessed against the Company
and other Participating Dealers.
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14. Communications. All communications to the Company
should be sent to the address shown in the opening paragraph of
this Agreement. Any notice to the Participating Dealer shall be
properly given if mailed or telephoned to the Participating
Dealer at the address specified in its Form of Acceptance. This
Agreement shall be construed according to the laws of the state
of Utah.
15. Assignment and Termination. This Agreement may not be
assigned by the Participating Dealer without the Company's
consent. This Agreement (except as otherwise specified above)
will terminate upon the termination of the Offering except that
either party may terminate this Agreement at any time be giving
written notice to the other.
16. Acceptance. If you desire to become a Participating
Dealer, please advise us immediately by signing and returning to
us the Form of Acceptance attached hereto.
Dated this _____ day of _______________, 1997.
ROYAL SILVER MINES, INC.
BY: _____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
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FORM OF ACCEPTANCE
ROYAL SILVER MINES, INC.
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Gentlemen:
We agree to become a Participating Dealer with respect to
the offering of shares of Royal Silver Mines, Inc. at the public
offering price of $0.75 per share as outlined in your
Participating Dealer's Agreement. We acknowledge receipt of the
Participating Dealer's Agreement and of the Prospectus dated
____________, 1997. We agree to subscribe on the terms set forth
in the Participating Dealer Agreement for _____________ shares of
Royal Silver Mines, Inc. and to make payment for such securities
with three (3) days of the confirmation from you of our order but
not later than noon of the next business day after the receipt of
funds from a customer. We further confirm to you that we are
members in good standing of the National Association of
Securities Dealers, Inc. (the "NASD"); and we agree to abide by
the Rules and Regulations of the NASD. We further agree that we
will not reallow commissions to any broker/dealer, including
foreign broker/dealers, registered pursuant to the Securities
Exchange Act of 1934, who are not members in good standing of the
NASD.
Dated this _____ day of ___________________, 1997.
___________________________________
Participating Dealer
BY: _______________________________
Title: ________________________
Authorized Officer or Partner
Address of Record:
__________________________________
__________________________________
__________________________________
IRS Employer Identification No.
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RESERVED FOR COMPANY ACTION
Share Allocation: _______________________________
Dollar Allocation: ______________________________
BY: _______________________________
Authorized Officer