Exhibit 1.2
300,000 Limited Partnership Units
($100 per Unit)
REDWOOD MORTGAGE INVESTORS VIII
ADVISORY AGREEMENT
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Gentlemen:
D. Xxxxxxx Xxxxxxx, Xxxxxxx X. Xxxxxxx and Gymno Corporation, a California
corporation are the General Partners of Redwood Mortgage Investors VIII, a
California Limited partnership (the "Partnership") engaged in business as a
mortgage lender. The General Partners, on behalf of the Partnership, propose to
offer and sell to qualified investors, upon the terms and subject to the
conditions set forth in the Prospectus dated __________, 1996 (the
"Prospectus"), limited partnership interests ("Units") of the Partnership at an
offering price of $100 per Unit, with a minimum investment of twenty (20) Units
per purchaser. The offering is for a maximum of 300,000 Units ($30,000,000).
1. Advisory Relationship. You are in the business of advising clients with
respect to certain investments including investments in the Partnership (the
"Advisor"). As an Advisor you do not receive any sales commissions or other
compensation from the Partnership, but instead receive your fees directly from
your client. You do not act as a broker dealer and investments in the
Partnership are made directly by the Investor.
2. Eligible Purchasers of Units. You agree not to advise to any client to
invest in Units who does not meet the suitability standards set forth in the
Prospectus. You agree that you will deliver and cause each prospective purchaser
to complete and execute a Subscription Agreement, and return it to the
undersigned together with such other documents, instruments or information as
the General Partners may request together with a check in the full amount of the
purchase price for the number of Units subscribed for. You agree to inform
purchasers that a purchaser's check shall be made payable to "Redwood Mortgage
Investors VIII" and remitted directly to Redwood Mortgage Investors VIII, 000 Xx
Xxxxxx Xxxx, Xxxxx X, Xxxxxxx Xxxx, Xxxxxxxxxx 00000, Attention: D. Xxxxxxx
Xxxxxxx. You shall ascertain that each Subscription Agreement sent in by a
prospective purchaser of Units has been fully completed and properly executed by
such prospective purchaser.
3. No Compensation. As an Advisor to the Investor you will receive no
compensation from the Partnership in connection with any Units purchased by a
client who you have advised to invest in the Partnership.
4. Further Agreements of Advisor.
(a) You covenant and agree to comply with any applicable requirements of
the Securities Exchange Act of 1934, the Securities Act of 1933, the California
Corporations Code, the laws of the state in which you are advising clients, the
published rules and regulations of the Securities and Exchange Commission, and
any other applicable agency. Furthermore, you specifically covenant and agree
not to deliver the Partnership's sales literature, if any, to any person unless
such sales literature is accompanied or preceded by a copy of the Prospectus.
5. Further Agreements of Advisor.
(a) You covenant and agree to comply with any applicable requirements of
the Securities Exchange Act of 1934, the Securities Act of 1933, the California
Corporations Code, the laws of the state in which you are advising clients, the
published rules and regulations of the Securities and Exchange Commission, and
any other applicable agency. Furthermore, you specifically covenant and agree
not to deliver the Partnership's sales literature, if any, to any person unless
such sales literature is accompanied or preceded by a copy of the Prospectus.
(b) You will not give any information or make any representations or
warranties in connection with the offering of Units other than, or inconsistent
with, those contained in the Prospectus and any sales material approved in
writing by the General Partners of the Partnership. You will deliver a copy of
the Prospectus to each investor to whom you are advising. You will not deliver
the approved sales material to any person unless such sales material is
accompanied or preceded by the Prospectus. You expressly agree not to prepare or
use any sales literature, advertisements or other materials in connection with
your advisory services. You agree that to the extent information is provided to
you marked "For Broker-Dealer and/or Advisor Use Only", you will not provide
such information to prospective investors.
(c) You will only advise eligible purchasers of Units to invest in the
Partnership as described in the Prospectus under "INVESTOR SUITABILITY STANDARDS
- Minimum Unit Purchase."
(d) You agree to make diligent inquiries and maintain a record thereof for
a period of at least six years of all clients who you advise to purchase Units
in, in order to ascertain whether the purchase of Units represents a suitable
investment for such purchaser, and whether the purchaser is otherwise eligible
to purchase Units in accordance with the terms of the offering. Accordingly, you
shall satisfy the following requirements:
(i) In recommending to a prospective investor the purchase of Units, you
shall have reasonable grounds to believe, on the basis of information obtained
from the investor concerning his investment objectives, other investments,
financial situation and needs, and any other information known by you or your
representatives, that the investor (or, if the investor is acting as trustee or
custodian of a trust or other entity, that such other trust or entity) is or
will be in a financial position to realize to a significant extent the benefits
described in the Prospectus, that such investor has a fair market net worth
sufficient to sustain the risks inherent in the purchase of Units, including
loss of investment and lack of liquidity, and that Units are otherwise suitable
as an investment.
(ii) You shall also maintain in your files documents disclosing the basis
upon which your determination of suitability was reached as to each investor.
(e) In connection with your advisory activity, you agree to comply with all
of the applicable requirements under the Securities Act of 1933, as amended
(hereinafter referred to as the "Act"), the Securities Exchange Act of 1934, as
amended, the "Securities Exchange Act"). We have no due diligence obligation to
you.
(f) You agree to diligently make inquiries as required by law of all
clients who you recommend to purchase Units in order to ascertain whether an
investment in Units is suitable for each such purchaser, and not rely solely on
information supplied by each purchaser. You shall retain all records relating to
investor suitability as to each purchaser for a period of six years. Upon
reasonable notice to you, the General Partners, or their designated agents,
shall have the right to inspect such records.
(g) By executing this Agreement, you represent and warrant that you have
reasonable grounds to believe (based on information made available to you by the
General Partners of the Partnership through the Prospectus and other materials,
or otherwise obtained as a result of inquiries conducted by you) that all
material facts concerning the Partnership are adequately and accurately
disclosed and provide a basis for evaluating the Partnership, including facts
relating to items of compensation, physical properties, tax aspects, financial
stability and experience of the sponsor, conflicts of interest and risk factors,
and appraisals or other reports.
5. Termination. Either party may terminate this Agreement at any time,
effective immediately, by giving written notice to other party.
6. Expenses. You shall bear all your own expenses incurred in connection
with your advisory activities and shall not be entitled to any reimbursement.
7. Indemnification.
(a) The Partnership and the General Partners agree to indemnify against
losses, claims, damages or liabilities (including reasonable attorneys' fees) to
which you or such other persons may become subject, under federal or state
securities laws or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement of a material fact contained in the Prospectus or the omission
to state therein, material fact required to be stated therein or necessary to
make the statements therein in light of the circumstances under which they were
made not misleading. The foregoing indemnity shall include reimbursement of any
legal or other expenses reasonably incurred in connection with investigation or
defending any such loss, claim, damage, liability or action, and shall be paid
by you as such expenses are incurred.
(b) You agree to indemnify and hold harmless the Partnership, its General
Partners, their affiliated mortgage company (Redwood Mortgage), against any
losses, claims, damages or liabilities (including reasonable attorneys' fees) to
which any of such persons may become subject, under federal or state securities
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any statements,
actions or omissions by you or any person controlled by you or acting on your
behalf, which statement, action or omission is untrue or is inconsistent with or
in violation of any provision of federal or state securities laws, the rules and
regulations of the Securities and Exchange Commission, or other applicable
agency. The foregoing indemnity shall include reimbursement of any legal or
other expenses reasonably incurred in connection with investigation or defending
any such loss, claim, damage, liability or action, and shall be paid by you as
such expenses are incurred.
8. Arbitration.
(a) As between the parties hereto, all questions as to rights and
obligations arising under the terms of this Agreement are subject to
arbitration, including any question concerning any right or duty under the
Securities Act of 1933, the Securities Exchange Act of 1934, and the securities
laws of any state in which Units are offered, and such arbitration shall be
governed by the rules of the American Arbitration Association.
(b) If a dispute should arise under this Agreement, any Party may within 60
days make a demand for arbitration by filing a demand in writing for the other.
(c) The parties may agree upon one arbitrator, but in the event that they
cannot agree, there shall be three, one named in writing by each of the parties
within five (5) days after demand for arbitration is given and a third chosen by
the two appointed. Should either party refuse or neglect to join in the
appointment of the arbitrator(s) or to furnish the arbitrator(s) with any papers
or information demanded, the arbitrator(s) are empowered by both parties to
proceed ex parte.
(d) Arbitration shall take place in San Mateo, California, and the hearing
before the arbitrator(s) of the matter to be arbitrated shall be at the time and
place within said city as is selected by the arbitrator(s). The arbitrator(s)
shall select such time and place promptly after his (or their) appointment and
shall give written notice thereof to each party at least sixty (60) days prior
to the date so fixed. At the hearing any relevant evidence may be presented by
either party, and the formal rules of evidence applicable to judicial
proceedings shall not govern. Evidence may be admitted or excluded in the sole
discretion of the arbitrator(s). Said arbitrator(s) shall hear and determine the
matter and shall execute and acknowledge their award in writing and cause a copy
thereof to be delivered to each of the parties.
(e) If there is only one arbitrator, his decision shall be binding and
conclusive on the parties, and if there are three arbitrators the decision of
any two shall be binding and conclusive. The submission of a dispute to the
arbitrator(s) and the rendering of his (or their) decision shall be a condition
precedent to any right of legal action on the dispute. A judgment confirming the
award of the arbitrator(s) may be rendered by any Court having jurisdiction; or
such Court may vacate, modify, or correct the award in accordance with the
prevailing sections of California State Law.
(f) If three arbitrators are selected under the foregoing procedure but two
of the three fail to reach an Agreement in the determination of the matter in
question, the matter shall be decided by three new arbitrators who shall be
appointed and shall proceed in the same manner, and the process shall be
repeated until a decision is finally reached by two of the three arbitrators
selected.
(g) The costs of such arbitration shall be borne by the losing party or in
such proportions as the arbitrator(s) shall determine.
9. Authority. It is understood that your relationship with the Partnership
is as an independent contractor and that nothing herein shall be construed and
creating a relationship of partnership, joint venturers, employer and employee
or any other agency relationship between you and the Partnership.
10. Survival of Indemnities, Warranties and Representations. The indemnity
agreements and the representations and warranties of the parties as set forth
herein shall remain operative and in full force and effect, regardless of any
termination or cancellation of this Agreement, and shall survive the delivery of
any payment for Units.
11. Notices. All communications hereunder shall be in writing and shall be
mailed, hand delivered or telegraphed, all charges prepaid, to the respective
parties at the addresses set forth herein. The address of the Partnership and
its General Partners is 000 Xx Xxxxxx Xxxx, Xxxxx X, Xxxxxxx Xxxx, Xxxxxxxxxx
00000 (telephone: (000) 000-0000), until changed by written notice.
12. Successors and Assigns. This Agreement and the terms and provisions
hereof shall inure to the benefit of and shall be binding upon the successors
and assigns of the parties hereto; provided, however, that in no in event shall
the term "successors and assigns" as used herein include any purchaser, as such,
of any Units. In addition, and without limiting the generality of the foregoing,
the indemnity agreements contained herein shall inure to the benefit of the
successors and assigns of the parties hereto, and shall be valid irrespective of
any investigation made or not made by or on behalf of any party hereto.
13. Applicable Law. This Agreement shall be governed and construed in
accordance with the laws of the State of California and the appropriate courts
in the County of San Mateo, California should be the forum for any litigation
arising hereunder.
Please confirm your Agreement with the General Partners to the terms
contained herein and return a fully executed copy of this Advisory Agreement to
us.
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D. Xxxxxxx Xxxxxxx, General Partner
ADVISOR ACCEPTANCE:
ACCEPTED this day of
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199
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By:
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(Print Name)
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(Signature)
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Title
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Taxpayer I.D. No.
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(Telephone Number)
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Type of Entity:
(corporation, partnership or proprietorship)
