STRATSTONE/BLUEGREEN SECURED INCOME FUND, LLC UP TO $500,000,000 IN UNITS OF MEMBERSHIP INTEREST DEALER MANAGER AGREEMENT
UP TO $500,000,000 IN UNITS OF
MEMBERSHIP INTEREST
[_________], 2010
Stratstone Securities,
LLC
0000 X.
Xxxxxxx Xxxxx Xxxx
Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Ladies and
Gentlemen:
Stratstone/Bluegreen Secured Income
Fund, LLC (the “Company”) is a Delaware limited liability
company. The Company is offering (a) up to $500,000,000 in units of
membership interest, (the “Units”), for a purchase price of $10.00 per
Unit with a minimum initial investment of $2,500, in the primary offering (the
“Primary
Offering”) and (b) up to
$70,000,000 in Units for a purchase price of $9.10 per Unit for issuance through
the Company’s distribution reinvestment program (the “DRP” and together with the Primary
Offering, the “Offering”) (subject to the right of the Company
to reallocate the Units between the Primary Offering and the DRP), all upon the
other terms and conditions set forth in the Prospectus, as described in
Section
1(a)
hereof.
Subject to the terms and conditions
contained in this Exclusive Dealer Manager Agreement (this “Agreement”), the Company hereby appoints
Stratstone Securities, LLC, a Delaware limited liability company (the
“Dealer
Manager”) to act as the
exclusive dealer manager for the Offering, and the Dealer Manager desires to
accept such engagement.
1. REPRESENTATION
AND WARRANTIES OF THE COMPANY. The Company hereby
represents, warrants and agrees during the term of this Agreement and as of the
Effective Date (as hereinafter defined), and thereafter with respect to
representations and warranties which by their terms apply to periods subsequent
to the Effective Date, as follows:
(a) REGISTRATION STATEMENT AND
PROSPECTUS. In
connection with the Offering, the Company has prepared and filed with the
Securities and Exchange Commission (the “Commission”) a registration statement (File No.
__________) on Form S-11 for the registration of the Units under the Securities
Act of 1933, as amended (the “Securities
Act”), and the rules and
regulations of the Commission promulgated thereunder (the “Securities
Act Rules and Regulations”); one or more amendments to such
registration statement have been or may be so prepared and filed. The
registration statement on Form S-11 and the prospectus contained therein, as
finally amended at the effective date of the registration statement (the
“Effective
Date”) are respectively
hereinafter referred to as the “Registration
Statement” and the
“Prospectus,” except that (i) if the Company files
a post-effective amendment to such registration statement, then the term
“Registration Statement” shall, from and after the declaration of the
effectiveness of such post-effective amendment, refer to such registration
statement as amended by such post-effective amendment, and the term “Prospectus”
shall refer to the amended prospectus then on file with the Commission, (ii) if
the prospectus filed by the Company pursuant to either Rule 424(b) or (c) of the
Securities Act Rules and Regulations shall differ from the prospectus on file at
the time the Registration Statement or the most recent post-effective amendment
thereto, if any, shall have become effective, the term “Prospectus” shall refer
to such prospectus filed pursuant to either Rule 424(b) or (c), as the case may
be, as amended or supplemented pursuant to Rule 424(b) or (c), from and after
the date on which such prospectus and any amendments or supplements thereto
shall have been filed, and (iii) prior to the Effective Date
the term “Registration Statement” shall refer to the registration statement, as
amended, and the term “Prospectus” shall refer to the most recent preliminary
prospectus included in the registration statement. As used herein,
the terms “Registration Statement”, “preliminary Prospectus” and “Prospectus”
shall include the documents, if any, incorporated by reference
therein.
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(b) COMPLIANCE WITH THE SECURITIES
ACT. From the
time the Registration Statement becomes effective and at all times subsequent
thereto up to and including the “Termination
Date” (as defined in
Section
9(a)
hereof):
(i) the Registration Statement, the
Prospectus and any amendments or supplements thereto have complied and will
comply in all material respects with the Securities Act and the Securities Act
Rules and Regulations; and
(ii)
the
Registration Statement does not, and any amendment thereto will not,
in each case as of the applicable Effective Date, include any untrue statement
of material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and the
Prospectus does not, and any amendment or supplement thereto will not, as of the
applicable filing date, include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they are made,
not misleading; provided, however, that the foregoing provisions of this
Section
1(b) will not extend to any
statements contained in or omitted from the Registration Statement or the
Prospectus that are based upon information furnished by the Dealer Manager or
any Soliciting Dealer to the Company for use in the Registration Statement or
Prospectus.
(c) DOCUMENT INCORPORATED BY
REFERENCE. The
documents incorporated or deemed to be incorporated by reference in the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material
respects with the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and the rules and
regulations
promulgated thereunder (the “Exchange
Act Rules
and Regulations”), and, when read together with the
other information in the Prospectus, at the
time the Registration Statement became effective and as of the
applicable effective date
of each post-effective amendment to the Registration Statement, did not and will not include an untrue statement of
a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
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(d) There has not been (x) any request by
the Commission for any further amendment to the
Registration Statement or the Prospectus or for any additional information, (y)
any issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or, to the Company’s
knowledge, threat of any
proceeding for that purpose or (z) any notification with respect to the
suspension of the qualification of the Units for sale in any jurisdiction or any
initiation or, to the
Company’s knowledge, threat
of any proceeding for such purpose.
(e) STATUS. The Company is a limited
liability company duly formed and validly existing under the Delaware Limited
Liability Company Act.
(f) AUTHORIZATION OF AGREEMENT. This Agreement has been
duly and validly authorized, executed and delivered by or on behalf of the
Company and constitutes a valid and binding agreement of the Company enforceable
in accordance with its terms (except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws of the
United States, any state or any political subdivision thereof which affect
creditors’ rights generally or by equitable principles relating to the
availability of remedies or except to the extent that the enforceability of the
indemnity and contribution provisions contained in this Agreement may be limited
under applicable securities laws). The execution and delivery of this
Agreement and the performance of this Agreement, the consummation of the
transactions contemplated herein and the fulfillment of the terms hereof, do not
and will not result in a breach of any of the terms and provisions of, or
constitute a default (X)(i) under the Company’s or its subsidiaries’ operating
agreements, or other organizational documents (ii) under any indenture,
mortgage, deed of trust, voting trust agreement, note, lease or other agreement
or instrument to which the Company or its subsidiaries is a party or by which
the Company or its subsidiaries or their properties are bound as of the date of
this Agreement except, in the event of clauses (ii) and (iii) only, for such
conflicts or defaults that could not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the Company and
its subsidiaries considered as one enterprise; or (iii) under any statute,
rule or regulation or order of any court or other governmental agency or body
having jurisdiction over the Company, its subsidiaries or any of their
properties, and (Y) no consent, approval, authorization or order of any court or
governmental agency or body has been or is required for the performance of this
Agreement or for the consummation by the Company of the transactions
contemplated hereby (except as have been obtained under the Securities Act, the
Exchange Act, from the Financial Industry Regulatory Authority (the
“FINRA”) or as may be required under state
securities or blue sky laws in connection with the offer and sale of the Units
or under the laws of states in which the Company may own real properties in
connection with its qualification to transact business in such states or as may
be required by subsequent events which may occur). Neither the
Company nor any of its subsidiaries is in violation of its charter, bylaws or
other organizational documents.
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(g) ACTIONS OR PROCEEDINGS. There are no actions or proceedings
against, or investigations of, the Company or its subsidiaries pending or, to the knowledge of the
Company, threatened, before any court, arbitrator, administrative agency or
other tribunal (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the issuance of the Units or the consummation of any of the
transactions contemplated by this Agreement, (iii) that might materially and
adversely affect the performance by the Company and its subsidiaries considered as one
enterprise of its
obligations under, or the validity or enforceability of, this Agreement, or the
Units, (iv) that might have a material
adverse effect on the condition, financial or otherwise, earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise or (v)
seeking to affect adversely the federal income tax attributes of the
Units except as described in the
Prospectus.
(h) ESCROW
AGREEMENT. The Company will enter into an escrow agreement (the
“Escrow
Agreement”) with the Dealer Manager, and an escrow agent to be agreed
upon (the “Escrow
Agent”), in the form to be included as an exhibit to the Registration
Statement, which provides for the establishment of an escrow account (the “Escrow
Account”). During the period commencing with the Effective Date and
ending on the Termination Date, the Company will deposit subscribers’ funds in
the Escrow Account as described in Section 3
below.
(i) SALES LITERATURE. Any supplemental sales
literature or advertisement, regardless of how labeled or described, used in
addition to the Prospectus in connection with the Offering which is prepared,
furnished or approved by or on behalf of the Company, including, without
limitation, the Prospectus and such sales literature and advertising as has been
previously approved in writing by the Company (“Approved
Sales Literature”), shall,
to the extent required, be filed with and approved by the appropriate securities
agencies and bodies, provided that the Dealer Manager will make all FINRA
filings, to the extent required.
(j) AUTHORIZATION OF UNITS. The Units have been duly
authorized and, upon payment therefore as provided in this Agreement and the
Prospectus, will be validly issued and will conform to the description thereof
contained in the Prospectus.
(k) TAXES. Any taxes, fees and other governmental
charges in connection with the execution and delivery of this Agreement or the
execution, delivery and sale of the Units have been or will be paid when
due.
(l) INVESTMENT COMPANY. The Company is not, and neither the
offer or sale of the Units nor the activities of the Company will
cause the Company to be, an “investment company” or under the control of an
“investment company” as such terms are defined in the Investment Company Act of 1940, as
amended.
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(m) TAX RETURNS. The Company has filed all material
federal, state and foreign income tax returns required to be filed by or on
behalf of the Company on or before the due dates therefor (taking into account
all extensions of time to file) and has paid or provided for the payment of all
such material taxes indicated by such tax returns and all assessments received
by the Company to the extent that such taxes or assessments have become
due.
(n) INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. The accountants who have certified
certain financial statements appearing or incorporated by
reference in the Prospectus
are an independent registered public accounting firm within the meaning of the Act and the
Rules and Regulations.
(o) PREPARATION OF THE FINANCIAL
STATEMENTS. The
financial statements filed with the Commission as a part of the Registration
Statement and included in the Prospectus present fairly the consolidated
financial position of the Company and its subsidiaries as of and at the dates
indicated and the results of their operations and cash flows for the periods
specified. Such financial statements have been prepared in conformity
with generally accepted accounting principles as applied in the United States
applied on a consistent basis throughout the periods involved, except as may be
expressly stated in the related notes thereto. No other financial
statements or supporting schedules are required to be included in the
Registration Statement or the Prospectus.
(p) MATERIAL ADVERSE CHANGE. Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as
may otherwise be stated therein or contemplated thereby, there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business.
(q) GOVERNMENT PERMITS. The Company and its subsidiaries possess
such certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them, other than those the failure to possess or own
that could not reasonably be expected to have, individually or in the
aggregate, a material
adverse effect on the condition, financial or otherwise, or on the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such certificate, authority or permit which, individually or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, could reasonably be expected to materially and adversely affect the
condition, financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise.
2. REPRESENTATIONS
AND WARRANTIES OF THE DEALER MANAGER. As an inducement to the
Company to enter into this Agreement, the Dealer Manager represents, warrants
and agrees as of the date hereof and as of the Effective Date, and thereafter
with respect to representations and warranties which by their terms apply to
periods subsequent to the Effective Date, as follows:
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(a) COMPLIANCE WITH ACT. The Dealer Manager is, and
during the term of this Agreement will be, a member in good standing of FINRA, a
broker dealer in good standing and registered as such under the Exchange Act and
under the securities laws of all U.S. states and the District of Columbia where
the Company intends to offer the Units and is required to be
registered. The Dealer Manager and its employees and representatives
involved in offering Units under this Agreement possess all required licenses
and registrations to act under this Agreement. The Dealer Manager will comply
with all applicable laws, rules, regulations and requirements of the Securities
Act, the Exchange Act, other federal securities laws, state securities laws and
the rules of FINRA, specifically including, but not in any way limited to,
Conduct Rules 2340, 2420, 2730, 2740, 2750 and 2810. Each salesperson
acting on behalf of the Dealer Manager will be registered with FINRA and duly
licensed by each regulatory authority in each jurisdiction in which it or he
will offer and sell Units. Each Soliciting Dealer will be required to
represent pursuant to a Soliciting Dealer Agreement that it and each salesperson
acting on behalf of the Soliciting Dealer will be registered with FINRA and duly
licensed by each regulatory authority in each jurisdiction in which it or he
will offer and sell Units.
(b) ORGANIZATIONAL STATUS. The Dealer Manager has been
duly organized and is validly existing as a limited liability company in good
standing under the laws of the State of Delaware, and has full limited liability
company right, power and authority to enter into this Agreement and to perform
the transactions contemplated hereby, and the Dealer Manager has duly
authorized, executed and delivered this Agreement.
(c) AUTHORIZATION OF AGREEMENT. This Agreement has been
duly authorized and constitutes a valid and binding agreement of the Dealer
Manager, enforceable in accordance with its terms, except to the extent that the
enforceability of the indemnity and contribution provisions contained in this
Agreement may be limited under applicable securities laws.
(d) VIOLATIONS. The execution,
delivery and performance of this Agreement, the consummation of the transactions
contemplated herein, and the fulfillment of the terms hereof, do not and will
not result in a breach of any of the terms and provisions of, or constitute a
default (X)(i) under the Dealer Manager’s governing documents; (ii) under any
indenture, mortgage, deed of trust, voting trust agreement, note, lease or other
agreement or instrument to which the Dealer Manager is a party as of the date of
this Agreement, except in the case of clause (ii) and (iii) only, for such
conflicts or defaults that could not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the Dealer
Manager or (iii) under any statute, rule or regulation or order of any court or
other governmental agency or body having jurisdiction over the Dealer Manager;
and (Y) no consent, approval, authorization or order of any court or
governmental agency or body has been or is required for the performance of this
Agreement or for the consummation by the Dealer Manager of the transactions
contemplated hereby (except as have been obtained under the Securities Act, the
Exchange Act, from FINRA or as may be required under state securities or blue
sky laws in connection with the offer and sale of the
Units).
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(e) APPROVALS. No consent, approval,
authorization or other order of any governmental authority is required in
connection with the execution, delivery or performance by the Dealer Manager of
this Agreement.
(f) REGISTRATION STATEMENT AND
PROSPECTUS. The
Dealer Manager represents and warrants to the Company and each person that signs
the Registration Statement that the information under the caption “Plan of
Distribution” insofar as it relates to the Dealer Manager or the Offering in the
Prospectus and all other information furnished to the Company by the Dealer
Manager in writing expressly for use in the Registration Statement, any
preliminary Prospectus, or the Prospectus, does not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading.
(g) INFORMATION. The Dealer
Manager has reasonable grounds to believe, based on information made available
to it by the Company, that the Prospectus discloses all material facts
adequately and accurately and provides an adequate basis for evaluating an
investment in the Units; provided that this representation does not
prevent the Dealer Manager from relying on the representations and warranties
made by the Company in this Agreement.
(h) OBLIGATIONS TO SOLICITING
DEALERS. The
Company will not be liable or responsible to any Soliciting Dealer for direct
payment of commissions or any reallowance of the Dealer Manager Fee to such
Soliciting Dealer, it being the sole and exclusive responsibility of the Dealer
Manager for payment of commissions or any reallowance of the Dealer Manager Fee
to Soliciting Dealers.
(i) LITIGATION. There is no litigation,
arbitration or reference proceeding pending or, to the Dealer Manager's
knowledge threatened, against the Dealer Manager or against the Dealer Manager
with respect to the Dealer Manager's executive management team or which could
prevent or materially impair the ability of the Dealer Manager to perform its
duties and obligations under this Agreement.
(j) NO VIOLATIONS OR
INVESTIGATIONS. No proceeding is or was
pending against the Dealer Manager, nor to the knowledge of the Dealer Manager
has there been any investigations or any threatened proceeding involving or
alleging violations of any federal securities laws, any FINRA rules, any Blue
Sky laws or any other applicable laws or regulations.
3. OFFERING AND SALE OF THE
UNITS. Subject to the terms and conditions set forth in this
Agreement, the Company hereby appoints the Dealer Manager as its agent and
exclusive distributor to solicit and to retain the Soliciting Dealers (as
described in Section
3(a) hereof) to solicit
subscriptions for the Units at the subscription price to be paid in
cash. The Dealer Manager hereby accepts such agency and exclusive
distributorship and agrees to use its best efforts to sell or cause to be sold
the Units in such quantities and to such persons in accordance with such terms
as are set forth in this Agreement, the Prospectus and the Registration
Statement. The Dealer Manager shall do so during the period
commencing on the Effective Date and ending on the earliest of the following:
(i) the later of (x) three years after the initial effective date of the
Registration Statement, or (y) at the Company’s election, the date on which the
Company is permitted to extend the Offering in accordance with the rules of the
Commission; (ii) the acceptance by the Company of subscriptions for $500,000,000
Units; (iii) the termination of the Offering by the Company, which the Company
shall have the right to terminate in its sole and absolute discretion at any
time; (iv) the termination of the effectiveness of the Registration
Statement; or (v) the liquidation or dissolution of the Company (such period
being the “Offering
Period”). The
number of Units, if any, to be reserved for sale by each Soliciting Dealer may
be decided by the mutual agreement, from time to time, of the Dealer Manager and
the Company. In the absence of such mutual agreement, the Company
shall, subject to the provisions of Section
3(b) hereof, accept
Subscription Agreements based upon a first-come, first accepted reservation or
other similar method.
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(a) SOLICITING DEALERS. The Units offered
and sold through the Dealer Manager under this Agreement shall be offered and
sold only by the Dealer Manager and other securities dealers the Dealer Manager
may retain (collectively the “Soliciting
Dealers”); provided
that (i) all Soliciting
Dealers are registered with the Commission, members of FINRA and are duly
licensed or registered by the regulatory authorities in the jurisdictions in
which they will offer and sell Units or exempt from broker dealer registration
with the Commission and all other relevant regulatory authorities, and (ii) all
such engagements are evidenced by written agreements, the terms and conditions
of which substantially conform to the form of Soliciting Dealer Agreement
approved by the Company and attached hereto as Exhibit
A (the “Soliciting
Dealer Agreement”).
(b) SUBSCRIPTION DOCUMENTS. Each person
desiring to purchase Units through the Dealer Manager, or any other Soliciting
Dealer, will be required to complete and execute the subscription documents
described in the Prospectus.
(c) COMPLETED SALE. A sale of a
Unit shall be deemed by the Company to be completed for purposes of Section
3(e) if and only if (i) the
Company has received a properly completed and executed subscription agreement,
together with payment of the full purchase price of each purchased Unit, from an
investor who satisfies the applicable suitability standards and minimum purchase
requirements set forth in the Registration Statement as determined by the
Soliciting Dealer, or the Dealer Manager, as applicable, in accordance with the
provisions of this Agreement, (ii) the Company has accepted such subscription,
and (iii) such investor has been admitted as a member of the
Company. In addition, no sale of Units shall be completed until at
least five (5) business days after the date on which the subscriber receives a
copy of the Prospectus. The Dealer Manager hereby acknowledges and
agrees that the Company, in its sole and absolute discretion, may accept or
reject any subscription, in whole or in part, for any reason whatsoever, and no
commission or dealer manager fee will be paid to the Dealer Manager with respect
to that portion of any subscription which is rejected.
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(d) DEALER-MANAGER
COMPENSATION.
(i) Subject to the volume discounts and
other special circumstances described in or otherwise provided in the “Plan of
Distribution” section of the Prospectus or this Section
3(d), the Company agrees to
pay the Dealer Manager selling commissions in the amount of seven percent (7.0%)
of the selling price of each Unit for which a sale is completed from the
$50,000,000,000 in Units offered in the Primary Offering. The Company
will not pay selling commissions for sales of Units pursuant to the DRP, and the
Company will pay reduced selling commissions or may eliminate commissions on
certain sales of Units, including the reduction or elimination of selling
commissions in accordance with, and on the terms set forth in, the
Prospectus. The Dealer Manager will reallow all of the selling
commissions, subject to federal and state securities laws, to the Soliciting
Dealer who sold the Units, as described more fully in the Soliciting Dealer
Agreement.
(ii) Subject to the special circumstances
described in or otherwise provided in the “Plan of Distribution” section of the
Prospectus or this Section
3(d), as compensation for
acting as the dealer manager, the Company agrees to pay the Dealer Manager, a
dealer manager fee in the amount of three percent (3.0%) of the selling price of
each Unit for which a sale is completed from the $50,000,000,000 in Units
offered in the Primary Offering. No dealer manager fees will be paid
in connection with Units sold pursuant to the DRP. The Dealer Manager
may retain or reallow all or a portion of the dealer manager fee, subject to
federal and state securities laws, to the Soliciting Dealer who sold the Units,
as described more fully in the Soliciting Dealer Agreement.
(iii) All sales commissions payable to the
Dealer Manager will be paid within thirty (30) days after the investor
subscribing for the Unit is admitted as a member of the Company, in an amount
equal to the sales commissions payable with respect to such
Units.
(iv) In
no event shall the total aggregate underwriting compensation payable to the
Dealer Manager and any Soliciting Dealers participating in the Offering,
including, but not limited to, selling commissions and dealer manager fees
exceed ten percent (10.0%) of gross offering proceeds from the Primary Offering
in the aggregate. In no event shall the Company be required to pay
for any specific expenses, including marketing support fees.
(v) Notwithstanding
anything to the contrary contained herein, in the event that the Company pays
any selling commission to the Dealer Manager for sale by a Soliciting Dealer of
one or more Units and the subscription is rescinded as to one or more of the
Units covered by such subscription, the Company shall decrease the next payment
of selling commissions or other compensation otherwise payable to the Dealer
Manager by the Company under this Agreement by an amount equal to the commission
rate established in Section 3(f) below,
multiplied by the number of Units as to which the subscription is rescinded. In
the event that no payment of selling commissions or other compensation is due to
the Dealer Manager after such withdrawal occurs, the Dealer Manager shall pay
the amount specified in the preceding sentence to the Company within ten (10)
days following receipt of notice by the Dealer Manager from the Company stating
the amount owed as a result of rescinded subscriptions.
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(vi) The
Company shall not be obligated to reimburse the Dealer Manager for any legal
fees and expenses, travel, food and lodging for employees of the Dealer Manager
to sponsor educational meetings, attendance fees and expense reimbursements for
broker-dealer sponsored conferences, attendance fees and expenses for industry
sponsored conferences, and informational seminars.
(vii) The
Company shall reimburse the Dealer Manager and Soliciting Dealers for reasonable
bona fide due diligence
expenses incurred by the Dealer Manager or any Soliciting Dealer in an amount
not to exceed 0.5% of the gross proceeds from the Primary
Offering. The Company shall only reimburse the Dealer Manager or any
Soliciting Dealer for bona
fide due diligence expenses to the extent such expenses are supported by
a detailed and itemized invoice to the Company.
4.
COVENANTS OF THE
COMPANY. The Company covenants and agrees with the Dealer Manager as
follows:
(a) REGISTRATION STATEMENT. The
Company will use its commercially reasonable efforts to cause the Registration
Statement and any subsequent amendments thereto to become effective as promptly
as possible and will furnish a copy of any proposed amendment or supplement of
the Registration Statement or the Prospectus to the Dealer
Manager.
(b) COMMISSION ORDERS. If the
Commission shall issue any stop order or of any other order preventing or
suspending the use of the Prospectus or the institution of any proceedings for
that purpose, the Company will promptly notify the Dealer Manager and use its
best efforts to prevent the issuance of any such order and, if any such order is
issued, to use its best efforts to obtain the removal thereof as promptly as
possible.
(c) BLUE SKY QUALIFICATIONS. The
Company will use its commercially reasonable efforts to qualify the Units for
offering and sale under the securities or blue sky laws of such jurisdictions as
the Dealer Manager may reasonably request and to make such applications, file
such documents and furnish such information as may be reasonably required for
that purpose. The Company will, at the Dealer Manager’s request, furnish the
Dealer Manager with a copy of such papers filed by the Company in connection
with any such qualification. The Company will promptly advise the
Dealer Manager of the issuance by such securities administrators of any stop
order preventing or suspending the use of the Prospectus or of the institution
of any proceedings for that purpose, and will use its best efforts to prevent
the issuance of any such order and if any such order is issued, to use its best
efforts to obtain the removal thereof as promptly as possible. The Company will
furnish the Dealer Manager with a Blue Sky Survey dated as of the Effective Date
(the “Blue
Sky Survey”), which will be
supplemented to reflect changes or additions to the information disclosed in
such survey.
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(d) AMENDMENTS AND
SUPPLEMENTS. If at any time when a Prospectus relating to the Units
is required to be delivered under the Securities Act, any event shall have
occurred to the knowledge of the Company, or the Company receives notice from
the Dealer Manager that it believes such an event has occurred, as a result of
which the Prospectus or any Approved Sales Literature as then amended or
supplemented would include any untrue statement of a material fact, or omit to
state a material fact necessary to make the statements therein not misleading in
light of the circumstances existing at the time it is so required to be
delivered to a subscriber, or if it is necessary at any time to amend the
Registration Statement or supplement the Prospectus relating to the Units to
comply with the Securities Act, the Company will promptly notify the Dealer
Manager thereof (unless the information shall have been received from the Dealer
Manager) and will prepare and file with the Commission an amendment or
supplement which will correct such statement or effect such compliance to the
extent required, and shall make available to the Dealer Manager thereof
sufficient copies for its own use and/or distribution to the Soliciting
Dealers.
(e) DEALER MANAGER’S REVIEW OF PROPOSED
AMENDMENTS AND SUPPLEMENTS. Prior to amending or supplementing the
Registration Statement, any preliminary prospectus or the Prospectus, the Company shall furnish to the
Dealer Manager for review, a reasonable amount of time prior to the proposed
time of filing or use thereof, a copy of each such proposed amendment or
supplement (and such copy
shall clearly indicate in bold that it is for review by the Dealer Manager and
set forth the deadline for responding with comments and/or consent, which shall,
to the extent practicable, not be less than three business days), and the Company shall not file or use
any such proposed amendment or supplement without the Dealer Manager’s consent,
unless (i) the Dealer
Manager has not responded with comments or consent to such amendment or
supplement by the deadline set forth in the copy provided or (ii) counsel for the Company has advised the
Company that such amendment or supplement is required.
(f) REQUESTS FROM
COMMISSION. The
Company will promptly advise the Dealer Manager of any request made by the
Commission or a state
securities administrator
for amending the Registration Statement, supplementing the Prospectus or for
additional information.
(g) COPIES OF REGISTRATION STATEMENT. The
Company will furnish the Dealer Manager with one signed copy of the Registration
Statement, including its exhibits, and such additional copies of the
Registration Statement, without exhibits, and the Prospectus and all amendments
and supplements thereto, which are finally approved by the Commission, as the
Dealer Manager may reasonably request for sale of the
Units.
11
(h) QUALIFICATION TO TRANSACT
BUSINESS. The Company will take all steps necessary to ensure that at
all times the Company will validly exist as a Delaware limited liability company
and will be qualified to do business in all jurisdictions in which the conduct
of its business requires such qualification and where such qualification is
required under local law.
(i) AUTHORITY TO PERFORM AGREEMENTS. The
Company undertakes to obtain all consents, approvals, authorizations or orders
of any court or governmental agency or body which are required for the Company’s
performance of this Agreement and under the Amended and Restated Limited
Liability Company Operating Agreement in the form included as exhibits to the
Registration Statement or the consummation of the transactions contemplated
hereby and thereby, respectively, or the conducting by the Company of the
business described in the Prospectus.
(j) SALES LITERATURE. Any supplemental sales literature or
advertisement, regardless of how labeled or described, used in addition to the
Prospectus in connection with the Offering which is prepared, furnished or approved by the Company
(including, without limitation, Approved Sales Literature) shall, to the extent
required, be filed with and, to the extent required, approved by the appropriate
securities agencies and bodies, provided that the Dealer Manager will make all
FINRA filings, to the extent required. The Company will furnish to
the Dealer Manager as promptly as shall be practicable upon request any Approved
Sales Literature (provided that the use of said material has been first approved
for use in writing by the Company and all appropriate regulatory
agencies). The Company agrees to prepare sales
literature reasonably requested by the Dealer
Manager in connection with the Offering. The Company and the Dealer
Manager agree that all sales literature developed in connection with the
Offering shall be the property of the Company and the Company shall have control
of all such sales literature.
(k) USE
OF PROCEEDS. The Company will apply the proceeds from the sale of the
Units as set forth in the Prospectus.
5.
COVENANTS OF THE DEALER MANAGER. The
Dealer Manager covenants and agrees with the Company as
follows:
(a) COMPLIANCE WITH LAWS. With respect to
the Dealer Manager’s participation and the participation by each Soliciting
Dealer in the offer and sale of the Units (including, without limitation any
resales and transfers of Units), the Dealer Manager agrees, and each Soliciting
Dealer in its Soliciting Dealer Agreement will agree, to comply with all
applicable requirements of the Securities Act, the Securities Act Rules and
Regulations, the Exchange Act, and the Exchange Act Rules and Regulations, and
all other federal regulations applicable to the Offering, the sale of Units and
with all applicable state securities or blue sky laws, and the Rules of the
FINRA applicable to the Offering, from time to time in effect, specifically
including, but not in any way limited to, Conduct Rules 2340, 2420, 2730, 2740,
2750 and 2810 therein. The Dealer Manager will not offer the Units
for sale in any jurisdiction unless and until it has been advised that the Units
are either registered in accordance with, or exempt from, the securities and
other laws applicable thereto.
12
In addition, the Dealer Manager shall,
in accordance with applicable law or as prescribed by any state securities
administrator, provide or direct Soliciting Dealers to provide to any
prospective investor copies of any prescribed document which is part of the
Registration Statement and any supplements thereto during the course of the
Offering and prior to the sale. The Company may provide the Dealer
Manager with certain Approved Sales Literature to be used by the Dealer Manager
and the Soliciting Dealers in connection with the solicitation of purchasers of
the Units. The Dealer Manager agrees not to deliver the Approved
Sales Literature to any person prior to the Effective Date. In the
event the Dealer Manager elects to use such Approved Sales Literature after the
Effective Date, the Dealer Manager agrees that such material shall not be used
by it in connection with the solicitation of purchasers of the Units and that it
will direct Soliciting Dealers not to make such use unless accompanied or
preceded by the Prospectus, as then currently in effect, and as it may be
amended or supplemented in the future. The Dealer Manager agrees that
it will not use any Approved Sales Literature other than those provided to the
Dealer Manager by the Company and approved by the Company for use in the
Offering. The use of any other sales material is expressly
prohibited.
With respect to the Dealer Manager’s and
each Soliciting Dealer’s participation in any resales or transfers of the Units,
the Dealer Manager agrees, and each Soliciting Dealer agrees, to comply and
shall comply with any applicable requirements as set forth above. In
addition, the Dealer Manager and each Soliciting Dealer agree that should the
Dealer Manager or the Soliciting Dealer assist with the resale or transfer of
the Units, the Dealer Manager and each Soliciting Dealer will fulfill the
obligations pursuant to FINRA Conduct Rule 2810.
(b) NO ADDITIONAL INFORMATION. In offering
the Units for sale, the Dealer Manager shall not, and each Soliciting Dealer
shall agree not to, give or provide any information or make any representation
other than those contained in the Prospectus or the Approved Sales Literature
(provided that the use of said material has been first approved for use in
writing by the Company).
(c) SALES OF UNITS. The Dealer Manager
shall and each Soliciting
Dealer shall agree to, solicit purchases of the Units only in the jurisdictions
in which the Dealer Manager and such Soliciting Dealer are legally qualified to
so act and in which the Dealer Manager and each Soliciting Dealer have been
advised by the Company that such solicitations can be made.
(d) SUBSCRIPTION AGREEMENT. The Dealer
Manager will comply in all material respects with the subscription procedures
and “Plan of Distribution” set forth in the Prospectus. Subscriptions
will be submitted by the Dealer Manager and each Soliciting Dealer to the
Company only on the form which is included as Exhibit A to the Prospectus. The
Dealer Manager understands and acknowledges, and each Soliciting Dealer shall
acknowledge, that the Subscription Agreement must be executed and initialed by
the subscriber as provided for by the Subscription
Agreement.
13
(e) SUITABILITY; SUITABILITY
RECORDS.
(i) The Dealer Manager will offer Units, and
in its agreement with each Soliciting Dealer will require that the Soliciting
Dealer offer Units, only to persons that it has reasonable grounds to believe
meet the financial qualifications set forth in the Prospectus or in any
suitability letter or memorandum sent to it by the Company and will only make
offers to persons in the states in which it is advised in writing by the Company
that the Units are qualified for sale or that such qualification is not
required. In offering Units, the Dealer Manager will comply, and in
its agreements with the Soliciting Dealers, the Dealer Manager will require that
the Soliciting Dealers comply, with the provisions of all applicable rules and
regulations relating to suitability of investors, including without limitation,
the FINRA Conduct Rules and the provisions of Article III.C. of the NASAA
Mortgage Program Guidelines (the “NASAA
Guidelines”). The Dealer Manager agrees
that in recommending the purchase of the Units in the Primary Offering to an
investor, the Dealer Manager and each person associated with the Dealer Manager
that make such recommendation shall have, and each Soliciting Dealer in its
Soliciting Dealer Agreement shall agree with respect to investors to which it
makes a recommendation shall agree that it shall have reasonable grounds to
believe, on the basis of information obtained from the investor concerning the
investor’s age, investment objectives, other investments, financial situation
and needs, and any other information known by the Dealer Manager, person
associated with the Dealer Manager, or the Soliciting Dealer that: (a) the
investor is or will be in a financial position appropriate to enable the
investor to realize to a significant extent the benefits described in the
Prospectus, including the tax benefits where they are a significant aspect of
the Company; (b) the investor 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) an investment in the Units offered in the Primary Offering is
otherwise suitable for the investor. The Dealer Manager agrees as to
investors to whom it makes a recommendation with respect to the purchase of the
Units in the Primary Offering (and each Soliciting Dealer in its Soliciting
Dealer Agreement shall agree, with respect to Investors to whom it makes such
recommendations) to maintain in the files of the Dealer Manager or the
Soliciting Dealer documents disclosing the basis upon which the determination of
suitability was reached as to each investor. In making the
determinations as to financial qualifications and as to suitability required by
the NASAA Guidelines, the Dealer Manager and Soliciting Dealers may rely on
(i) representations from investment advisers who are not affiliated with a
Soliciting Dealer, banks acting as trustees or fiduciaries and (ii)
information it has obtained from a prospective investor, including
information such as the age, investment objectives, other investments, financial
situation and needs of the person or any other information known by the Dealer
Manager or Soliciting Dealer, as applicable, after due inquiry. Notwithstanding the
foregoing, the Dealer Manager shall not, and each Soliciting Dealer shall agree
not to, execute any transaction in the Company in a discretionary account
without prior written approval of the transaction by the
customer.
14
(ii) SUITABILITY RECORDS. The
Dealer Manager shall, and each Soliciting Dealer shall agree to, maintain, for
at least six years or for a period of time not less than that required in order
to comply with all applicable federal, state and other regulatory requirements,
whichever is later, a record of the information obtained to determine that an
investor meets the suitability standards imposed on the offer and sale of the
Units (both at the time of the initial subscription and at the time of any
additional subscriptions) and a representation of the investor that the investor
is investing for the investor’s own account or, in lieu of such representation,
information indicating that the investor for whose account the investment was
made met the suitability standards. The Company agrees that the
Dealer Manager can satisfy its obligation by contractually requiring such
information to be maintained by the investment advisers or banks discussed in
the preceding Section.
(f) INFORMATION. Subject to any limitations
under the securities laws and FINRA Rules, the Dealer Manager will provide the
Company with such information relating to the offer and sale of the Units by it
as the Company may from time to time request, including to enable the Company to
prepare such reports of sale as may be required to be filed under applicable
federal or state securities laws, provided that this section shall not require
the Dealer Manager to disclose any of its or any third party’s confidential
information.
(g) SOLICITING DEALER
AGREEMENTS. All engagements of the Soliciting Dealers will be
evidenced by a Soliciting Dealer Agreement, except when the Dealer Manager
obtains the prior written consent of the Company. When Soliciting Dealers are
used in this Offering, the Dealer Manager will use commercially reasonable
efforts to cause such Soliciting Dealers to comply with all their respective
obligations pursuant to the Soliciting Dealer Agreement.
(h) ELECTRONIC DELIVERY. If it
intends to use electronic delivery to distribute the Prospectus to any person,
that it will comply with all applicable requirements of the Commission, the Blue
Sky laws and/or FINRA and any other laws or regulations related to the
electronic delivery of documents.
(i) ESCROW AGENT. The Dealer
Manager agrees to be bound by the terms of the Escrow
Agreement.
(j) COORDINATION. The Company and the Dealer
Manager shall have the right, but not the obligation, to meet with key personnel
of the other on an ongoing and regular basis to provide feedback, input and make
recommendations and suggestions regarding the performance of Dealer Manager's
services hereunder and the Offering. The Dealer Manager shall comply
with any reasonable recommendations or suggestions made by the
Company.
15
(k) AML
COMPLIANCE. The Dealer Manager represents to the Company that it has
established and implemented anti-money laundering compliance programs in
accordance with applicable law, including applicable FINRA Conduct Rules,
Exchange Act Rules and Regulations and the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
(USA PATRIOT Act) of 2001, as amended (the “USA
PATRIOT Act”), specifically including, but not limited to, Section 352 of
the International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001 (the “Money
Laundering Abatement Act,” and together with the USA PATRIOT Act, the
“AML
Rules”) reasonably expected to detect and cause the reporting of
suspicious transactions in connection with the offering and sale of the
Units. The Dealer Manager further represents that it is currently in
compliance with all AML Rules, specifically including, but not limited to, the
Customer Identification Program requirements under Section 326 of the Money
Laundering Abatement Act, and the Dealer Manager hereby covenants to remain in
compliance with such requirements and shall, upon request by the Company,
provide a certification to the Company that, as of the date of such
certification (a) its AML Program is consistent with the AML Rules and (b) it is
currently in compliance with all AML Rules, specifically including, but not
limited to, the Customer Identification Program requirements under Section 326
of the Money Laundering Abatement Act.
(l) CUSTOMER
INFORMATION. The Dealer Manager shall:
(i) abide
by and comply with (i) the privacy standards and requirements of the
Xxxxx-Xxxxx-Xxxxxx Act of 1999 (the “GLB
Act”); (ii) the privacy standards and requirements of any other
applicable federal or state law; and (iii) its own internal privacy policies and
procedures, each as may be amended from time to time;
(ii) refrain
from the use or disclosure of nonpublic personal information (as defined under
the GLB Act) of all customers who have opted out of such disclosures except as
necessary to service the customers or as otherwise necessary or required by
applicable law; and
(iii) determine
which customers have opted out of the disclosure of nonpublic personal
information by periodically reviewing and, if necessary, retrieving an
aggregated list of such customers from the Soliciting Dealers (the “List”)
to identify customers that have exercised their opt-out rights. In
the event either party uses or discloses nonpublic personal information of any
customer for purposes other than servicing the customer, or as otherwise
required by applicable law, that party will consult the List to determine
whether the affected customer has exercised his or her opt-out
rights. Each party understands that it is prohibited from using or
disclosing any nonpublic personal information of any customer that is identified
on the List as having opted out of such disclosures.
6.
EXPENSES.
16
(a) Subject to Section
6(b)(iii), the Dealer Manager shall pay all of
its own costs and expenses incident to the performance of its obligations under
this Agreement.
(b) The Company agrees to pay all costs and
expenses related to:
(i) the Commission’s registration of the
offer and sale of the Units with the Commission;
(ii) expenses of printing the Registration
Statement as originally filed and any amendment or supplement thereto as herein
provided;
(iii) to reimburse the Dealer Manager and
Soliciting Dealers for bona fide
due diligence expenses as
provided in Section
3(d)(vi);
(iii) fees and expenses incurred in connection
with any required filing with the FINRA;
(iv) all of the expenses of agents of the
Company, excluding the Dealer Manager, incurred in connection with performing
marketing and advertising services for the Company; and
(v) expenses of qualifying the Units for
offering and sale under state blue sky and securities laws, and expenses in
connection with the preparation and printing of the Blue Sky
Survey.
7.
INDEMNIFICATION.
(a) INDEMNIFIED PARTIES DEFINED. For the purposes of this
Section
7, an entity’s
“Indemnified
Parties” shall include such
entity’s officers, directors, employees, members, partners, affiliates, agents
and representatives, and each person, if any, who controls such entity within
the meaning of Section
15 of the Securities Act or
Section 20 of the Exchange
Act.
17
(b) INDEMNIFICATION OF THE DEALER MANAGER
AND SOLICITING DEALERS. The Company will indemnify,
defend (subject to Section
7(f)) and hold harmless the
Dealer Manager and the Soliciting Dealers, and their respective Indemnified
Parties, from and against any losses, claims and expenses (including reasonable
legal and other expenses incurred in investigating and defending such claims or
liabilities), damages or liabilities, joint or several, to which such Soliciting
Dealers or the Dealer Manager, or their respective Indemnified Parties, may
become subject, under the Securities Act or the Exchange Act, or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (a) in whole or in part, any material
inaccuracy in the representations or warranties contained in Sections
1(b) and 1(c) or any material breach of a covenant
contained herein by the Company, or (b) any untrue statement or alleged untrue
statement of a material fact contained (i) in any Registration Statement or any
post-effective amendment thereto or in the Prospectus or any amendment or
supplement to the Prospectus or (ii) in any Approved Sales Literature or (iii)
in any blue sky application or other document executed by the Company or on its
behalf specifically for the purpose of qualifying any or all of the Offered
Units for sale under the securities laws of any jurisdiction or based upon
written information furnished by the Company under the securities laws thereof
(any such application, document or information being hereinafter called a
“Blue
Sky Application”), or (c)
the omission or alleged omission to state a material fact required to be stated
in the Registration Statement or any post-effective amendment thereof to make
the statements therein not misleading or the omission or alleged omission to
state a material fact required to be stated in the Prospectus or any amendment
or supplement to the Prospectus to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the Company will
reimburse each Soliciting Dealer or the Dealer Manager, and their respective
Indemnified Parties, for any reasonable legal or other expenses incurred by such
Soliciting Dealer or the Dealer Manager, and their respective Indemnified
Parties, in connection with investigating or defending such loss, claim, damage,
liability or action; provided,
however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of, or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished either (x) to the Company
by the Dealer Manager or (y) to the Company or the Dealer Manager by or on
behalf of any Soliciting Dealer, in each case expressly for use in the
Registration Statement or any post-effective amendment thereof, or the
Prospectus or any such amendment thereof or supplement thereto. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
Notwithstanding the foregoing, as
required by Section II.D. of the NASAA Guidelines, the indemnification and
agreement to hold harmless provided in this Section
7(b) is further limited to
the extent that no such indemnification by the Company of a Soliciting Dealer or
the Dealer Manager, or their respective Indemnified Parties, shall be permitted
under this Agreement for, or arising out of, an alleged violation of federal or
state securities laws, unless one or more of the following conditions are met:
(a) there has been a successful adjudication on the merits of each count
involving alleged securities law violations as to the particular indemnitee; (b)
such claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the particular indemnitee; or (c) a court of
competent jurisdiction approves a settlement of the claims against the
particular indemnitee and finds that indemnification of the settlement and the
related costs should be made, and the court considering the request for
indemnification has been advised of the position of the Commission and of the
published position of any state securities regulatory authority in which the
securities were offered or sold as to indemnification for violations of
securities laws.
18
(c) DEALER MANAGER INDEMNIFICATION OF THE
COMPANY. The
Dealer Manager will indemnify, defend and hold harmless the Company, its
Indemnified Parties and each person who has signed the Registration Statement,
from and against any losses, claims, damages or liabilities to which any of the
aforesaid parties may become subject, under the Securities Act or the Exchange
Act, or otherwise, insofar as such losses, claims and expenses (including the
reasonable legal and other expenses incurred in investigating and
defending any such claims or liabilities), damages or liabilities (or actions in
respect thereof) arise out of or are based upon (a) in whole or in part, any
material inaccuracy in the representation or warranty contained in Section
2(a) or any material breach of a covenant
contained herein by the Dealer Manager, or (b) any untrue statement or any
alleged untrue statement of a material fact contained (i) in any Registration
Statement or any post-effective amendment thereto or in the Prospectus or any
amendment or supplement to the Prospectus or (ii) in any Approved Sales
Literature or (iii) any Blue Sky Application, or (c) the omission or alleged
omission to state a material fact required to be stated in the Registration
Statement or any post-effective amendment thereof to make the statements therein
not misleading or the omission or alleged omission to state a material fact
required to be stated in the Prospectus or any amendment or supplement to the
Prospectus to make the statements therein, in light of the circumstances under
which they were made, not misleading, provided,
however, that in each case
described in clauses (b) and (c) to the extent, but only to the extent, that
such untrue statement or omission was made in reliance upon and in conformity
with written information furnished to the Company by the Dealer Manager
specifically for use with reference to the Dealer Manager in the preparation of
the Registration Statement or any such post-effective amendments thereof or the
Prospectus or any such amendment thereof or supplement thereto, (d) any use of
sales literature, including “broker dealer use only” materials, by the Dealer
Manager that is not Approved Sales Literature, (e) any untrue statement made by
the Dealer Manager or its representatives or agents (other than the Soliciting
Dealers or their representatives or agents) or omission by the Dealer Manager or
its representatives or agents (other than the Soliciting Dealers or their
representatives or agents) to state a fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading in connection with the offer and sale of the Units in each case,
other than statements or omissions made in conformity with the Registration
Statement, Prospectus, Approved Sales Literature or any other materials or
information furnished by or on behalf of the Company, or (f) any failure by the
Dealer Manager to comply with applicable laws governing money laundry abatement
and anti-terrorist financing efforts in connection with the Offering, including
applicable FINRA Rules, Exchange Act Rules and Regulations and the USA PATRIOT
Act. The Dealer Manager will reimburse the aforesaid parties for any
reasonable legal or other expenses incurred in connection with investigation or
defense of such loss, claim, damage, liability or action. This
indemnity agreement will be in addition to any liability which the Dealer
Manager may otherwise have.
(d) SOLICITING DEALER INDEMNIFICATION OF THE
COMPANY. By
virtue of entering into the Soliciting Dealer Agreement, each Soliciting Dealer
severally will agree to indemnify, defend and hold harmless the Company, the
Dealer Manager, each of their respective Indemnified Parties, and each person
who signs the Registration Statement, from and against any losses, claims,
damages or liabilities to which the Company, the Dealer Manager, or any of their
respective Indemnified Parties, or any person who signed the Registration
Statement, may become subject, under the Securities Act or otherwise, as more
fully described in the Soliciting Dealer Agreement.
19
(e) ACTION AGAINST PARTIES;
NOTIFICATION. Promptly after receipt by
any indemnified party under this Section
7 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section
7, promptly notify the
indemnifying party of the commencement thereof; provided,
however, the failure to
give such notice shall not relieve the indemnifying party of its obligations
hereunder except to the extent it shall have been prejudiced by such
failure. In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to participate in the defense
thereof, with separate counsel. Such participation shall not relieve
such indemnifying party of the obligation to reimburse the indemnified party for
reasonable legal and other expenses (subject to Section
7(f)) incurred by such
indemnified party in defending itself, except for such expenses incurred after
the indemnifying party has deposited funds sufficient to effect the settlement,
with prejudice, of, and unconditional release of all liabilities from, the claim
in respect of which indemnity is sought. Any such indemnifying party
shall not be liable to any such indemnified party on account of any settlement
of any claim or action effected without the consent of such indemnifying party,
such consent not to be unreasonably withheld.
(f) REIMBURSEMENT OF FEES AND
EXPENSES. An
indemnifying party under Section
7 of this Agreement shall
be obligated to reimburse an indemnified party for reasonable legal and other
expenses as follows:
(i) In the case of the Company indemnifying
the Dealer Manager, the advancement of Company funds to the Dealer Manager for
legal expenses and other costs incurred as a result of any legal action for
which indemnification is being sought shall be permissible (in accordance with
Section II.D. of the NASAA Guidelines) only if all of
the following conditions are satisfied: (i) the legal action relates to acts or
omissions with respect to the performance of duties or services on behalf of the
Company; (ii) the legal action is initiated by a third party who is not a member
of the Company or the legal action is initiated by a member of the Company
acting in his or her capacity as such and a court of competent jurisdiction
specifically approves such advancement; and (iii) the Dealer Manager undertakes
to repay the advanced funds to the Company, together with the applicable legal
rate of interest thereon, in cases in which the Dealer Manager is found not to
be entitled to indemnification.
(ii) In any case of indemnification other
than that described in Section
7(f)(i) above, the
indemnifying party shall pay all legal fees and expenses reasonably incurred by
the indemnified party in the defense of such claims or actions; provided,
however, that the indemnifying party shall not be obligated to pay legal
expenses and fees to more than one law firm in connection with the defense of
similar claims arising out of the same alleged acts or omissions giving rise to
such claims notwithstanding that such actions or claims are alleged or brought
by one or more parties against more than one indemnified party. If
such claims or actions are alleged or brought against more than one indemnified
party, then the indemnifying party shall only be obliged to reimburse the
expenses and fees of the one law firm (in addition to local counsel) that has
been participating by a majority of the indemnified parties against which such
action is finally brought; and in the event a majority of such indemnified
parties is unable to agree on which law firm for which expenses or fees will be
reimbursable by the indemnifying party, then payment shall be made to the first
law firm of record representing an indemnified party against the action or
claim. Such law firm shall be paid only to the extent of services
performed by such law firm and no reimbursement shall be payable to such law
firm on account of legal services performed by another law
firm.
20
8. CONTRIBUTION.
(a) If the indemnification provided for in
Section
7 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, the Dealer Manager and the Soliciting
Dealer, respectively, from the proceeds received in Primary Offering pursuant to
this Agreement and the relevant Soliciting Dealer Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, the Dealer
Manager and the Soliciting Dealer, respectively, in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable
considerations.
(b) The relative benefits received by the
Company, the Dealer Manager and the Soliciting Dealer, respectively, in
connection with the proceeds received in the Primary Offering pursuant to this
Agreement and the relevant Soliciting Dealer Agreement shall be deemed to be in
the same respective proportion as the total net proceeds from the Primary
Offering pursuant to this Agreement and the relevant Soliciting Dealer Agreement
(before deducting expenses), received by the Company, and the total selling
commissions and dealer manager fees received by the Dealer Manager and the
Soliciting Dealer, respectively, in each case as set forth on the cover of the
Prospectus bear to the aggregate offering price of the Units sold in the Primary
Offering as set forth on such cover.
(c) The relative fault of the Company, the
Dealer Manager and the Soliciting Dealer, respectively, shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact related to information supplied by the Company, by the Dealer Manager or by
the Soliciting Dealer, respectively, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
21
(d) The Company, the Dealer Manager and the
Soliciting Dealer (by virtue of entering into the Soliciting Dealer Agreement)
agree that it would not be just and equitable if contribution pursuant to this
Section
8 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable contributions referred to above in this Section
8. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section
8 shall be deemed to
include any legal or other expenses reasonably incurred by such Indemnified
Party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission or alleged omission.
(e) Notwithstanding the provisions of this
Section
8, the Dealer Manager and
the Soliciting Dealer shall not be required to contribute any amount by which
the total price at which the Units sold in the Primary Offering to the public by
them exceeds the amount of any damages which the Dealer Manager and the
Soliciting Dealer have otherwise been required to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission.
(f) No party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any party who was not guilty of such
fraudulent misrepresentation.
(g) For the purposes of this Section
8, the Dealer Manager’s
officers, directors, employees, members, partners, agents and representatives,
and each person, if any, who controls the Dealer Manager within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act shall have
the same rights to contribution of the Dealer Manager, and each officers,
directors, employees, members, partners, agents and representatives of the
Company, each officer of the Company who signed the Registration Statement and
each person, if any, who controls the Company, within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution of the Company. The Soliciting Dealers’
respective obligations to contribute pursuant to this Section
8 are several in proportion to the number
of Units sold by each Soliciting Dealer in the Primary Offering and not
joint.
9.
TERMINATION OF
THIS AGREEMENT.
(a) TERM; AUTOMATIC TERMINATION. Except as provided in
Section
11(a), this Agreement shall commence as of
the date hereof and, unless sooner terminated pursuant to this Section
9(a) or by operation of
law, shall expire at the end of the Offering Period. This Agreement
(i) shall automatically terminate at the first occurrence of any of the
following events: (a) the outside date for the Offering Period or (b) the
Company is dissolved or liquidated, (ii) may be terminated by the Company
pursuant to Section
9(b) below, and (iii) may
be terminated by the Dealer Manager pursuant to Section
9(c) below (the date upon
which any of the above occur shall be referred to as the “Termination
Date”). This
Agreement shall continue in full force and effect unless terminated pursuant to
this Section
9 as provided
herein. Termination of this Agreement pursuant to this Section
9 shall be without
liability of any party to any other party other than as provided in Section
7 and Section
8 hereof, which shall survive the
expiration or early termination of this Agreement.
22
(b) TERMINATION BY THE COMPANY. This Agreement may be
terminated at the sole option of the Company, upon at least sixty (60)
days written notice from the Company to the Dealer Manager. The
Company also has the option to terminate this Agreement “for Cause” immediately,
subject to the applicable cure period for a “for Cause” termination, upon
written notice of termination from the Company to Dealer
Manager.
As used above, “Cause” shall mean a material breach of this
Agreement by the Dealer Manager , provided that (i) the Dealer Manager does not
cure any such material breach within thirty (30) days of receiving notice of
such material breach from the Company, or (ii) if such material breach is not of
a nature that can be remedied within such period, the Dealer Manager does not
diligently take all reasonable steps to cure such breach or does not cure such
breach within a reasonable time period.
(c) TERMINATION BY DEALER
MANAGER. This
Agreement may be terminated, at the sole option of the Dealer Manager, upon at
least sixty (60) days written notice from the Dealer Manager to
Company. The Dealer Manager also has the option to terminate this
Agreement upon the occurrence of a “Good Reason Event” immediately, subject to
the applicable cure period for a “Good Reason Event”.
As used above, “Good
Reason Event” shall mean a
material breach of this Agreement by the Company, provided that (i) the Company
does not cure any such material breach within thirty (30) days of receiving
notice of such material breach from the Dealer Manager, or (ii) if such material
breach is not of a nature that can be remedied within such period, the Company
does not diligently take all reasonable steps to cure such breach or does not
cure such breach within a reasonable time period.
11. MISCELLANEOUS
(a) SURVIVAL. The following provisions of
this Agreement shall survive the expiration or termination of this Agreement:
Section
3(d) (Compensation),
Section
6 (Expenses), Section
7 (Indemnification),
Section
8 (Contribution), and Section
11 (Miscellaneous),
provided that expiration or termination shall not relieve a party for liability
for any breach occurring prior to termination or expiration.
(b) NOTICES. All notices or other
communications required or permitted hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be deemed given or
delivered: (i) when delivered personally or by commercial messenger; (ii) one
business day following deposit with a recognized overnight courier service,
provided such deposit occurs prior to the deadline imposed by such service for
overnight delivery; (iii) when transmitted, if sent by facsimile copy, provided
confirmation of receipt is received by sender and such notice is sent by an
additional method provided hereunder, in each case above provided such
communication is addressed to the intended recipient thereof as set forth
below:
23
If to the
Company:
|
||
0000
Xxxx Xxxxxxx Xxxxx Xxxx
|
||
Xxxx
Xxxxxxxxxx, XX 00000
|
||
Facsimile No.:
|
______________
|
|
Attention:
|
______________
|
|
with a copy
to:
|
||
If to the Dealer
Manager:
|
Stratstone Securities,
LLC,
|
|
0000
Xxxx Xxxxxxx Xxxxx Xxxx
|
||
Xxxx
Xxxxxxxxxx, XX 00000
|
||
Facsimile
No.:
|
________________
|
|
Attention:
|
________________
|
|
with a copy
to:
|
||
Proskauer Rose
LLP
|
||
0000
Xxxxxxxx
|
||
Xxx Xxxx, XX
00000
|
||
Attention: Xxxxx
Xxxx
|
Any party
may change its address specified above by giving each party notice of such
change in accordance with this Section
11(b).
(c) SUCCESSORS AND ASSIGNS. No party shall assign (voluntarily, by
operation of law or otherwise) this Agreement or any right, interest or benefit
under this Agreement without the prior written consent of each other party.
Subject to the foregoing, this Agreement shall be fully binding upon, inure to
the benefit of, and be enforceable by, the parties hereto and their respective
successors and assigns.
(d) INVALID PROVISION. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the other provisions hereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provision were
omitted.
(e) APPLICABLE LAW. This Agreement and any
disputes relative to the interpretation or enforcement hereto shall be governed
by and construed under the internal laws, as opposed to the conflicts of laws
provisions, of the state of Delaware.
24
(f) WAIVER. EACH
OF THE DEALER MANAGER AND THE COMPANY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT
OR OTHERWISE) RELATED TO OR ARISING OUT OF THIS AGREEMENT. The Dealer
Manager and the Company each hereby irrevocably submits to the jurisdiction of
the courts of the State of Delaware and the Federal courts of the United States
of America located in Delaware, in respect of the interpretation and enforcement
of the terms of this Agreement, and in respect of the transactions contemplated
hereby, and each hereby waives, and agrees not to assert, as a defense in any
action, suit or proceeding for the interpretation or enforcement hereof, that it
is not subject thereto or that such action, suit or proceeding may not be
brought or is not maintainable in said courts or that the venue thereof may not
be appropriate or that this Agreement may not be enforced in or by such courts,
and the Dealer Manager and the Company each hereby irrevocably agrees that all
claims with respect to such action or proceeding shall be heard and determined
in such a Delaware State or Federal court.
(g) ATTORNEYS FEES. In the event
a dispute arises concerning the performance, meaning or interpretation of any
provision of this Agreement or any document executed in connection with this
Agreement, the prevailing party in such dispute shall be awarded any and all
costs and expenses incurred by the prevailing party in enforcing, defending or
establishing its rights hereunder or thereunder, including, without limitation,
court costs and attorneys and expert witness fees. In addition to the
foregoing award of costs and fees, the prevailing party shall also be entitled
to recover its attorneys’ fees incurred in any post judgment proceedings to
collect or enforce any judgment.
(h) NO PARTNERSHIP. Nothing in this Agreement shall be
construed or interpreted to constitute the Dealer Manager or the Soliciting
Brokers as being in association with or in partnership with the Company or one
another, and instead, this Agreement only shall constitute the Soliciting Dealer
as a broker authorized by the Company to sell and to manage the sale by others
of the Units according to the terms set forth in the Registration Statement, the
Prospectus or this Agreement. Nothing herein contained shall render the Dealer
Manager or the Company liable for the obligations of any of the Soliciting
Brokers or one another.
(i) THIRD PARTY BENEFICIARIES. There shall be no third
party beneficiaries of this Agreement, and no provision of this Agreement is
intended to be for the benefit of any person or entity not a party to this
Agreement, and no third party shall be deemed to be a beneficiary of any
provision of this Agreement. Further, no third party shall by virtue of any
provision of this Agreement have a right of action or an enforceable remedy
against either party to this Agreement.
(j) ENTIRE AGREEMENT. This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof. This Agreement may not be
modified or amended other than by an agreement in
writing.
25
(k) NONWAIVER. The failure of any party to
insist upon or enforce strict performance by any other party of any provision of
this Agreement or to exercise any right under this Agreement shall be construed
as a waiver or relinquishment to any extent of such party’s right to assert or
rely upon any such provision or right in that or any other instance; rather,
such provision or right shall be and remain in full force and
effect.
(l) ACCESS TO INFORMATION. The Company may authorize the
Company’s transfer agent to provide information to the Dealer Manager and each
Soliciting Dealer regarding recordholder information about the clients of such
Soliciting Dealer who have invested with the Company on an on-going basis for so
long as such Soliciting Dealer has a relationship with such client. The Dealer
Manager shall require in the Soliciting Dealer Agreement that Soliciting Dealers
not disclose any password for a restricted website or portion of a restricted
website provided to such Soliciting Dealer in connection with the Offering and
not disclose to any person, other than an officer, director, employee or agent
of such Soliciting Dealers, any material downloaded from such a restricted
website or portion of a restricted website.
(m) COUNTERPARTS. This Agreement may be executed in
counterpart copies, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument comprising this
Agreement.
[Signatures on following
page]
26
If the foregoing is in accordance with
your understanding of our agreement, kindly sign and return it to us, whereupon
this instrument will become a binding agreement between the Dealer Manager and
the Company in accordance with its terms.
a
Delaware limited liability company
By: _________________________________
Name:
Title:
Name:
Title:
Accepted as of the date first above
written:
STRATSTONE SECURITIES,
LLC,
a
Delaware limited liability company
By: ___________________________________
Name:
Title:
Name:
Title:
S -
1
EXHIBIT
A
FORM
OF SOLICITING DEALER AGREEMENT