TRILOGY MULTIFAMILY INCOME & GROWTH HOLDINGS I, LLC RIA CLIENT INTRODUCTION AGREEMENT
Exhibit (1)(c)
TRILOGY
MULTIFAMILY INCOME & GROWTH HOLDINGS I, LLC
The
undersigned, Arete Wealth Management, LLC, an Illinois limited
liability company (the “Managing Broker Dealer”), has
entered into an agreement (the “Managing Broker Dealer
Agreement”) with Trilogy Multifamily Income & Growth
Holdings I, LLC, a Delaware limited liability company (the
“Issuer”), for the sale of up to 50,000 Bonds of the
Issuer (the “Securities”) for a maximum offering of up
to $50,000,000. The Managing Broker Dealer has agreed to use its
best efforts to form and manage a group of broker dealers (the
“Selling Group Members”) and registered investment
advisers (“Introducing RIAs”) for the purpose of
soliciting offers for the purchase of the Securities. The terms of
the Offering are set forth in the Issuer’s offering circular
dated {OFFERING CIRCULAR DATE}, as may be supplemented or amended
from time to time (the “Offering Circular”). The
Securities will be offered during a period commencing on the date
of the Offering Circular and continuing until the offering
termination date as defined in the Offering Circular (the
“Offering Termination Date”, with such interval
defining the “Offering Period”); provided however, that
the Issuer in its sole discretion may terminate the Offering at any
time. Terms used but not otherwise defined in this RIA Client
Introduction Agreement (this “Agreement”) have the same
meanings as in the Offering Circular.
You
(the Introducing RIA indicated on the signature page, or
“You” or “Your”) are invited to become an
Introducing RIA and by your confirmation hereof you agree to act in
such capacity. On the basis of the representations, warranties, and
covenants contained herein, but subject to the terms and conditions
set forth herein, the Issuer and Managing Broker Dealer hereby make
the Securities available for purchase by the clients of the
Introducing RIA (the “Investor” or
“Investors”). By your acceptance of this Agreement, you
will become one of the Introducing RIAs and will be entitled to and
subject to the terms and conditions in this Agreement.
Investors
introduced by the Introducing RIA may purchase Securities in the
Offering net of 7.0% of brokerage commissions.
1. Representations
and Warranties of the Introducing RIA.
1.1 You hereby confirm
that the Introducing RIA is duly organized, validly existing, and
in good standing under the laws of its registered state with full
power and authority to conduct its business. Introducing RIA is
qualified, registered, and/or licensed to conduct its business in
the jurisdictions that the conduct of its business requires such
qualification, registration, or license, and that the Introducing
RIA will take all steps necessary to ensure that at all times
during the Offering that it remains in good standing and qualified,
registered, and/or licensed to do business in such
jurisdictions.
1.2 You hereby confirm
that this Agreement, when executed by Introducing RIA, will have
been duly and validly authorized, executed and delivered by the
Introducing RIA, and will be a valid and binding agreement of the
Introducing RIA, enforceable in accordance with its
terms.
1.3 You hereby confirm
that the Introducing RIA (i) is qualified and duly registered to
act as a registered investment adviser within all states in which
you will sell the Securities, (ii) is a registered investment
adviser duly registered with either a state authority or the U.S.
Securities and Exchange Commission (the “SEC”) pursuant
to the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), (iii) will maintain all such
registrations and qualifications in good standing for the duration
of your involvement in the Offering, (iv) has not received any
notice of proceedings relating to the revocation or modification of
its registration which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling, or finding, would reasonably be
expected to have a material adverse effect on the condition
(financial or otherwise), prospects, net worth, earnings, cash
flows, business, operations or properties of the Introducing RIA,
(v) will comply with all applicable federal and state laws, rules,
and regulations, (vi) has all required licenses and permits, and
will immediately notify the Managing Broker Dealer and the Issuer
in writing (a) if any such registration, qualification, license, or
permit is terminated or suspended, or (b) if notice of any
proceeding relating to the revocation or modification of your
registration is received by the Introducing RIA.
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1.4 You hereby confirm
that any independent contractors and investment adviser
representatives acting on behalf of the Introducing RIA have the
appropriate securities registrations and licenses to offer and
solicit purchasers for the Securities, and that the Introducing RIA
will provide to the Managing Broker Dealer and the Issuer an
updated list of investment adviser representatives approved to
offer and solicit purchasers for the Securities upon
request.
1.5 You hereby confirm
that the consummation of the transactions contemplated herein and
those contemplated by the Offering Circular will not conflict with
or result in a breach or violation of (a) the charter, bylaws or
similar organizational documents of the Introducing RIA, (b) any
order, rule or regulation directed to the Introducing RIA by any
court or any federal or state regulatory body or administrative
agency having jurisdiction over the Introducing RIA or its
affiliates, or (c) the terms of any indenture, mortgage, deed of
trust, loan or credit agreement, promissory note, lease, statutory
trust, servicing agreement, contract, arrangement, understanding,
document or any other instrument to which the Introducing RIA is a
party or by which it is bound or pursuant to which its assets are
subject.
1.6 You hereby confirm
that there is no claim, action, suit, controversy, audit,
arbitration, mediation or proceeding (collectively, any
“Action”), before or by any regulatory authority,
pending or, to the knowledge of Introducing RIA, threatened, that
adversely affects the Offering, to which the Introducing RIA is a
party, or to which any of its assets is subject, that would prevent
or restrict the consummation of the transactions contemplated by
this Agreement. For purposes of this provision, a “regulatory
authority” means any of FINRA, the SEC, a U.S. national
securities exchange, the United States, any state or other
political subdivision thereof and any other foreign or domestic
entity or government exercising or having the authority to exercise
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
1.7 You agree that
before participating in the Offering, you will have reasonable
grounds to believe that based on information made available to you
by the Managing Broker Dealer and/or the Issuer through the
Offering Circular that all material facts are adequately and
accurately disclosed in the Offering Circular and provide a basis
for evaluating the Issuer and the Securities.
1.8 Unless otherwise
licensed as such, the Introducing RIA shall not act as a broker or
dealer, or take any action that would require it to register as a
broker or dealer, in connection with the purchase of Securities by
Investors. The Introducing RIA is not an agent of the Issuer or the
Managing Broker Dealer and shall have no obligation to advise its
clients to purchase the Securities. The Introducing RIA’s fee
arrangements with any Investor would not be deemed excessive under
applicable regulations.
1.9 The Introducing RIA
hereby represents and warrants as of the date of this Agreement,
the date of the filing of the offering statement, and at the time
of any sale of the Securities (collectively the “Applicable
Date”) to the Managing Broker Dealer and to the Issuer that
neither the Introducing RIA nor any of its executive officers,
directors, general partners, managing members, or officers involved
in the offering, investment adviser representatives acting on
behalf of the Introducing RIA or persons who own 20.0% or more of
the Introducing RIA or any person receiving any direct or indirect
compensation from the Introducing RIA with respect to the
Offering:
1.9.1 Has
been convicted, within ten (10) years of any Applicable Date of any
felony or misdemeanor that was:
(a) In connection with
the purchase or sale of any security;
(b) Involving or making
of any false filing with the SEC; or
(c) Arising out of the
conduct of the business of an underwriter, broker, dealer,
municipal securities dealer, investment adviser or paid solicitor
of purchasers of securities.
1.9.2 Is
subject to any order, judgment or decree of any court of competent
jurisdiction, entered within five (5) years before any Applicable
Date, that, as of such Applicable Date, restrains or enjoins such
person from engaging or continuing in any conduct or
practice:
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(a) In connection with
the purchase or sale of any security;
(b) Involving the
making of any false filing with the SEC; or
(c) Arising out of the
conduct of the business of an underwriter, broker, dealer,
municipal securities dealer, investment adviser or paid solicitor
of purchasers of securities.
1.9.3 Is
subject to a final order of a state securities commission (or an
agency or officer of a state performing like functions), a state
authority that supervises or examines banks, savings associations
or credit unions, a state insurance commission (or an agency or
officer of a state performing like functions), an appropriate
federal banking agency, the U.S. Commodity Futures Trading
Commission or the National Credit Union Administration
that:
(a) As of any
Applicable Date, bars the person from:
(i) Association with an
entity regulated by such commission, authority, agency or
officer;
(ii) Engaging
in the business of securities, insurance or banking;
or.
(iii) Engaging
in savings association or credit union activities.
(b) Constitutes a final
order based on a violation of any law or regulation that prohibits
fraudulent, manipulative or deceptive conduct entered within ten
(10) years before any Applicable Date.
1.9.4 Is
subject to an order of the SEC pursuant to sections 15(b) or 15B(c)
of the Exchange Act or section 203(e) or (f) of the Investment
Advisers Act of 1940 (the “Investment Advisers Act”)
that, as of any Applicable Date:
(a) Suspends or revokes
such person’s registration as a broker, dealer, municipal
securities dealer or investment adviser;
(b) Places limitations
on the activities, functions or operations of such person;
or
(c) Bars such person
from being associated with any entity or from participating in the
offering of any xxxxx stock.
1.9.5 Is
subject to any order of the SEC entered within five (5) years
before any Applicable Date, that as of such Applicable Date, orders
the person to cease and desist from committing or causing a
violation or future violation of:
(a) Any scienter-based
anti-fraud provisions of the federal securities laws including,
without limitation, section 17(a)(1) of the Securities Act of 1933
(the “Securities Act”), section 10(b) of the Exchange
Act and 17 CFR 240.10b-5, section 15(c)(1) of the Exchange Act and
section 206(1) of the Investment Advisers Act, or any other rule or
regulation thereunder; or
(b) Section 5 of the
Securities Act.
1.9.6 Is
suspended from membership in, or suspended or barred from
association with, a member of a registered national securities
exchange or a registered national or affiliated securities
association for any act or omission to act constituting conduct
inconsistent with just and equitable principles of
trade;
1.9.7 Has
filed (as a registrant or issuer), or was or was named as an
underwriter in, any registration statement or Regulation A offering
statement filed with the SEC that, within five (5) years of any
Applicable Date, was the subject of a refusal order, stop order or
order suspending the Regulation A exemption or, is, as of any
Applicable Date, the subject of an investigation or proceeding to
determine whether a stop order or suspension order should be
issued.
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1.9.8 Is
subject to a United States Postal Service false representation
order entered within five (5) years before any Applicable Date, or
is, as of any Applicable Date, subject to a temporary restraining
order or preliminary injunction with respect to conduct alleged by
the United States Postal Service to constitute a scheme or device
for obtaining money or property through the mail by means of false
representations.
1.9.9 The
representations and warranties made in this Section 1 are made as
of the date of this Agreement and shall be continuing
representations and warranties throughout the term of the Offering.
In the event that any of these representations or warranties
becomes untrue, the Introducing RIA will immediately notify the
Managing Broker Dealer in writing of the fact which makes the
representation or warranty untrue.
1.9.10 The
Introducing RIA may rely upon the representations and warranties
made by the Issuer and Managing Broker Dealer in sections 2 and 4
of the Managing Broker Dealer Agreement.
2. Duties and Obligations of the
Introducing RIA.
2.1 You hereby agree to
solicit persons acceptable to the Issuer to purchase the Securities
pursuant to the subscription agreement (the “Subscription
Agreement”) in the form attached to the Offering Circular and
in accordance with the terms of the Offering Circular, and to
diligently make inquiries as required by this Agreement, the
Offering Circular, or applicable law with respect to prospective
Investors in order to ascertain whether a purchase of the
securities is suitable for the Investor. Notwithstanding the
foregoing, the Introducing RIA is under no obligation to actually
consummate on behalf of Investors any transaction or transactions
in Securities. In accordance with the instructions set forth in the
Subscription Agreement, all complete Subscription Agreements and
customer funds for the purchase of the Securities received by you
with respect to any Subscription Agreement shall be transmitted as
provided in in this Agreement. No Subscription Agreement shall be
effective unless and until accepted by the Issuer.
2.2 Upon authorization
by the Managing Broker Dealer, you may offer the Securities at the
Offering price set forth in the Offering Circular, or as amended or
superseded in this Agreement, subject to the terms and conditions
thereof, and you agree to comply in all respects with the purchase
procedures and plan of distribution set forth in the Offering
Circular.
2.3 You will provide
each prospective Investor with a copy of the Offering Circular and
exhibits and appendices thereto during the course of the Offering
and before sale, and advise each such prospective Investor at the
time of the initial offering to him or her that the Issuer and/or
its agents and consultants will, during the course of the Offering
and prior to any sale, accord said Investor and his or her
purchaser representative, if any, the opportunity to ask questions
of and to receive answers from the Issuer and/or its agents and
consultants concerning the terms and conditions of the Offering and
to obtain any additional information, which information is
possessed by the Issuer or may be obtained by it without
unreasonable effort or expense and which is necessary to verify the
accuracy of the information contained in the Offering
Circular.
2.4 All subscriptions
solicited by you will be strictly subject to confirmation by the
Managing Broker Dealer and acceptance thereof by the Issuer. The
Managing Broker Dealer and the Issuer reserve the right in their
absolute discretion to reject any subscription for any reason.
Neither you nor any other person is authorized to and neither you
nor any of your employees, agents, or representatives shall give
any information or make any representation other than those
contained in the Offering Circular or in any supplemental sales
literature furnished by the Managing Broker Dealer or the Issuer
for use in making solicitations in connection with the offer and
sale of the Securities.
2.5 The Issuer or the
Managing Broker Dealer will provide you with such number of copies
of the Offering Circular and such number of copies of amendments
and supplements thereto as you may reasonably request. You will be
responsible for correctly placing orders of such materials and will
reimburse the Issuer or the Managing Broker Dealer for any costs
incurred in connection with unreasonable or mistaken orders. The
Managing Broker Dealer also understands that the Issuer may provide
you with certain supplemental sales material to be used by you in
connection with the solicitation of purchases of the Securities. If
you elect to use such supplemental sales material, you agree that
such material shall not be used in connection with the solicitation
or purchase of the Securities unless accompanied or preceded by the
Offering Circular, as then currently in effect, and as it may be
amended or supplemented in the future.
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2.6 You agree not to
execute any transaction in which an Investor invests in the
Securities in a discretionary account without prior written
approval of the transaction by the Investor.
2.7 You will
immediately bring to the attention of the Issuer and the Managing
Broker Dealer any circumstance or fact which causes you to believe
the Offering Circular, or any other literature distributed pursuant
to the Offering, or any information supplied to prospective
Investors in their purchase materials, may be inaccurate or
misleading.
2.8 You will limit the
offering of the Securities to persons whom you have reasonable
grounds to believe, and in fact believe, after conducting a
reasonable inquiry and due diligence of the Offering, meet the
financial suitability and other Investor requirements set forth in
the Offering Circular.
2.9 You agree that in
recommending to an Investor the purchase or sale of the Securities,
you shall have reasonable grounds to believe, on the basis of
information obtained from the prospective Investor concerning his
or her investment objectives, other investments, financial
situation and needs, and any other information known by you,
that:
2.9.1 The
prospective Investor meets the suitability requirements set forth
in the Offering Circular and documents associated with the
Offering, and the acquisition of Securities by the Investor is a
suitable investment for such Investor as may be required by all
applicable laws, rules and regulations;
2.9.2 The
prospective Investor is in a financial position appropriate to
enable him or her to realize to a significant extent the benefits
described in the Offering Circular;
2.9.3 The
prospective Investor has a financial net worth sufficient to
sustain the risks inherent in an investment in the Securities,
including, but not limited to, the total loss of the investment,
lack of liquidity, and other risks described in the Offering
Circular;
2.9.4 The
information contained in each completed Subscription Agreement is
true and correct in all material respects with respect to such
Investor; and
2.9.5 Such
Investor will be acquiring the Securities for investment and not
with a view a toward distribution.
2.10 You
agree to retain in your records and make available to the Managing
Broker Dealer and to the Issuer, for a period of at least six (6)
years following the Offering Termination Date, a record of the
information obtained pursuant to your engagement hereunder,
including without limitation all of the information used by you to
determine that (i) each person who purchases the Securities
pursuant to a Subscription Agreement solicited by you is within the
permitted class of Investors under the requirements of the
jurisdiction in which such Investor is a resident, (ii) each such
person met the suitability requirements set forth in the Offering
Circular and the Subscription Agreement (both at the time of the
initial purchase and at the time of any additional purchases),
(iii) each such person is suitable for such investment and the
basis on which such suitability determination was made, and (iv) a
representation of each such person that it is investing for
investment and not with a view toward distribution.
2.11 You
agree that upon request by the Managing Broker Dealer, you will
furnish a complete list of all persons who have been offered the
Securities and such persons’ place of residence.
2.12 You
agree that before executing a purchase transaction in the
Securities, you will inform the prospective Investor and his or her
purchaser representative, if any, of all pertinent facts relating
to the liquidity and marketability of the Securities, as
appropriate, during the term of the investment.
2.13 You
hereby undertake and agree to comply with all obligations
applicable to you including, but not limited to, any new
suitability and filing requirements.
2.14 You
will refrain from making any representations to any prospective
Investor other than those contained in the Offering Circular, and
will not allow any other written materials to be used to describe
the potential investment to prospective Investors other than the
Offering Circular or factual summaries and sales brochures of the
Offering prepared by the Issuer.
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2.15 You
will refrain from distributing any material to prospective
Investors that is marked “Financial Advisor Use Only”,
“Broker Dealer Use Only,” or with similar language or
disclosures or any other due diligence material related to the
Offering received by You.
2.16 The
Managing Broker Dealer shall have full authority to take such
action as it may deem advisable with respect to all matters
pertaining to the Offering. The Managing Broker Dealer shall be
under no liability to you except for gross negligence or willful
misconduct and for obligations expressly assumed by it in this
Agreement. Nothing contained in this section is intended to operate
as, and the provisions of this section shall not constitute a
waiver by you, of compliance with any provision of the Securities
Act, the Exchange Act, and any other applicable federal or state
law, rule, and regulations thereunder.
2.17 Solicitation.
2.17.1 In
soliciting persons to acquire the Securities, you agree to comply
with any applicable requirements of federal and state securities
laws, the published rules and regulations thereunder and, in
particular, you agree that you will not give any information or
make any representations other than those contained in the Offering
Circular and in any supplemental sales literature furnished to you
by the Managing Broker Dealer or the Issuer for use in making such
solicitations.
2.17.2 You
will conduct all solicitation and sales efforts in conformity with
Regulation A promulgated under the Securities Act and exemptions
available under applicable state law.
2.18 Anti-Money
Laundering Compliance Programs.
2.18.1 You
will conduct reasonable investigation to ensure that all
prospective Investors are not (i) listed on the Specially
Designated Nationals and Blocked Persons List maintained by the
Office of Foreign Asset Control, Department of the Treasury
(“OFAC”) and/or on any other list of terrorists or
terrorist organizations maintained pursuant to any of the rules and
regulations of OFAC or pursuant to any other applicable enabling
legislation or other Executive Orders in respect thereof (such
lists are collectively referred to as “Lists”) or (ii)
owned or controlled by, nor act for or on behalf of, any person or
entity on the Lists.
2.18.2 Each
Introducing RIA’s acceptance of this Agreement constitutes a
representation to the Managing Broker Dealer that the Introducing
RIA has established and implemented an anti-money laundering
(“AML”) compliance program (“AML Program”),
in accordance with 31 U.S.C. 5318(h) and Section 352 of the Money
Laundering Abatement Act and Section 326 of the Patriot Act of
2001, which are reasonably expected to detect and cause reporting
of suspicious transactions in connection with the sale of
Securities. In addition, the Introducing RIA represents that it has
established and implemented a program (“OFAC Program”)
for compliance with OFAC and will continue to maintain its OFAC
Program during the term of this Agreement. Upon request by the
Managing Broker Dealer at any time, the Introducing RIA hereby
agrees to (i) furnish a copy of its AML Program and OFAC Program to
the Managing Broker Dealer for review and (ii) furnish a copy of
the findings and any remedial actions taken in connection with the
Introducing RIA’s most recent independent testing of its AML
Program and/or its OFAC Program.
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2.18.3 The
parties acknowledge that for the purposes of the FINRA rules the
Investors who purchase Securities through the Introducing RIA are
“Customers” of the Introducing RIA and not the Managing
Broker Dealer. Nonetheless, to the extent that the Managing Broker
Dealer deems it prudent, the Introducing RIA shall cooperate with
the Managing Broker Dealer’s auditing and monitoring of the
Introducing RIA’s AML Program and its OFAC Program by
providing, upon request, information, records, data and exception
reports, related to Investors introduced to, and serviced by, the
Introducing RIA (the “Customers”). Such documentation
could include, among other things: (i) copies of Introducing
RIA’s AML Program and its OFAC Program; (ii) documents
maintained pursuant to the Introducing RIA’s AML Program and
its OFAC Program related to the Customers; (iii) any suspicious
activity reports filed related to the Customers; (iv) audits and
any exception reports related to the Introducing RIA’s AML
activities; and (v) any other files maintained related to the
Customers. In the event that such documents reflect, in the opinion
of the Managing Broker Dealer, a potential violation of the
Managing Broker Dealer’s obligations in respect of its AML or
OFAC requirements, the Introducing RIA will permit the Managing
Broker Dealer to further inspect relevant books and records related
to the Customers (with respect to the Offering) and/or the
Introducing RIA’s compliance with AML or OFAC requirements.
Notwithstanding the foregoing, the Introducing RIA shall not be
required to provide to the Managing Broker Dealer any documentation
that, in the Introducing RIA’s reasonable judgment, would
cause the Introducing RIA to lose the benefit of attorney-client
privilege or other privilege which it may be entitled to assert
relating to the discoverability of documents in any civil or
criminal proceedings. The Introducing RIA hereby represents that it
is currently in compliance with all AML rules and all OFAC
requirements, specifically including, but not limited to, the
Customer Identification Program requirements under Section 326 of
the USA PATRIOT Act. The Introducing RIA hereby agrees, upon
request by the Managing Broker Dealer to (i) provide an annual
certification to the Managing Broker Dealer that, as of the date of
such certification (A) its AML Program and its OFAC Program are
consistent with the AML Rules and OFAC requirements, (B) it has
continued to implement its AML Program and its OFAC Program and (C)
it is currently in compliance with all AML Rules and OFAC
requirements, specifically including, but not limited to, the
Customer Identification Program requirements under Section 326 of
the USA PATRIOT Act and (ii) perform and carry out, on behalf of
both the Managing Broker Dealer and the Issuer, the Customer
Identification Program requirements in accordance with Section 326
of the USA PATRIOT Act and applicable SEC and Treasury Department
Rules thereunder.
2.19 Due
Diligence.
2.19.1 You
agree not to rely upon the efforts of the Managing Broker Dealer in
(i) performing due diligence related to the Issuer (including its
members, managers, officers, directors, employees and Affiliates),
the Securities, or the suitability thereof for any Investors and
(ii) determining whether the Issuer has adequately and accurately
disclosed all material facts upon which to provide a basis for
evaluating the Issuer to the extent required by federal and state
law, rules, and regulations. You further agree that you are solely
responsible for performing adequate due diligence, and you agree to
perform adequate due diligence as required by federal and state
law, rules, and regulations.
2.19.2 The
Issuer will authorize a collection of information regarding the
Offering (the “Due Diligence Information”), which
collection the Issuer may amend and supplement from time to time,
to be delivered to the Introducing RIA (or their agents performing
due diligence) in connection with its due diligence review of the
Offering. In the event the Introducing RIA (or its agent performing
due diligence) requests access to additional information or
otherwise wishes to conduct additional due diligence regarding the
Offering, the Issuer will reasonably cooperate with the Introducing
RIA to accommodate such request. All Due Diligence Information
received by the Introducing RIA in connection with its due
diligence review of the Offering is confidential and shall be
maintained as confidential and not disclosed by the Introducing
RIA, except to the extent such information is disclosed in the
Offering Circular.
2.20 Electronic
Delivery of Information; Electronic Processing of
Subscriptions.
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2.20.1 Pursuant
to the Managing Broker Dealer Agreement, the Issuer has agreed to
confirm all orders for the purchase of Securities accepted by the
Issuer. In addition, the Issuer, the Managing Broker Dealer and/or
third parties engaged by the Issuer or the Managing Broker Dealer
may, from time to time, provide to the Introducing RIA copies of
investor letters, annual reports and other communications provided
to the Issuer investors. The Introducing RIA agrees that, to the
extent practicable and permitted by law, all confirmations,
statements, communications and other information provided to or
from the Issuer, the Managing Broker Dealer, the Introducing RIA
and/or their agents or customers may be provided electronically, as
a preference but not as a requirement.
2.20.2 With
respect to Securities held through custodial accounts, the
Introducing RIA agrees and acknowledges that to the extent
practicable and permitted by law, all confirmations, statements,
communications and other information provided from the Issuer, the
Managing Broker Dealer and/or their agents to Issuer investors may
be provided solely to the custodian that is the registered owner of
the Securities, rather than to the beneficial owners of the
Securities. In such case it shall be the responsibility of the
custodian to distribute the information to the beneficial owners of
Securities.
2.20.3 The
Introducing RIA agrees and acknowledges that the Managing Broker
Dealer may, as a preference but not as a requirement, use an
electronic platform to process subscriptions, including but not
limited to the Depository Trust Company (DTC) model. If an
electronic platform is used, the Introducing RIA agrees to
cooperate with the processing of subscriptions through such an
electronic platform if reasonably practical.
3. Duties
and Obligation of the Managing Broker Dealer.
3.1 Notifications. Managing Broker
Dealer shall provide prompt written notice to the Introducing RIAs
of any material changes to the Managing Broker Dealer that in its
judgment could materially and adversely affect an Introducing RIA
with respect to this Offering.
4. Compensation and
Expenses.
4.1 Introducing RIA
shall not receive compensation from the Issuer for introducing
Investors to the Issuer or facilitating the purchase of Securities
by Investors. Notwithstanding the foregoing, the Issuer, in its
sole discretion, may elect to reimburse the Introducing RIA for
bona fide due diligence expenses in conjunction with reviewing the
Offering and other reasonable marketing costs, but in no
circumstances may this constitute transaction-based
compensation.
4.2 All other expenses
incurred by you in the performance of your obligations hereunder,
including, but not limited to, expenses related to the Offering and
any attorneys’ fees, shall be at your sole cost and expense,
and the foregoing shall apply notwithstanding the fact that the
Offering is not consummated for any reason.
5. Relationship of Parties.
Nothing herein shall constitute the Introducing RIAs as an
association, partnership, unincorporated business, or other
separate entity. The Managing Broker Dealer shall be under no
liability to make any payment to you except out of the funds
received by it from the Issuer as hereinabove provided. The
Managing Broker Dealer shall not be under any liability for, or in
respect of the value or validity of the Subscription Agreement, the
Securities or the performance by anyone of any agreement on its
part, or for, or in respect of any matter connected with this
Agreement, except for gross negligence or willful misconduct by the
Managing Broker Dealer and for obligations expressly assumed by the
Managing Broker Dealer in this Agreement.
6. Privacy Act. To protect
Customer Information (as defined below) and to comply as may be
necessary with the requirements of the Xxxxx-Xxxxx-Xxxxxx Act, the
relevant state and federal regulations pursuant thereto and state
privacy laws, the parties wish to include the confidentiality and
non-disclosure obligations set forth herein.
8
6.1 Customer Information.
“Customer Information” means any information contained
on a customer’s application or other form and all nonpublic
personal information about a customer that a party receives from
the other party. Customer Information shall include, but not be
limited to, name, address, telephone number, social security
number, health information and personal financial information
(which may include consumer account number).
6.2 Usage and Nondisclosure. The
parties understand and acknowledge that they may be financial
institutions subject to applicable federal and state customer and
consumer privacy laws and regulations, including Title V of the
Xxxxx-Xxxxx-Xxxxxx Act (15 U.S.C. 6801, et seq.) and regulations
promulgated thereunder (collectively, the “Privacy
Laws”), and any Customer Information that one party receives
from the other party is received with limitations on its use and
disclosure. The parties agree that they are prohibited from using
the Customer Information received from the other party other than
(i) as required by law, regulation or rule or (ii) to carry out the
purposes for which one party discloses Customer Information to the
other party pursuant to this Agreement, as permitted under the use
in the ordinary course of business exception to the Privacy
Laws.
6.3 Safeguarding Customer
Information. The parties shall establish and maintain
safeguards against the unauthorized access, destruction, loss, or
alteration of Customer Information in their control which are no
less rigorous than those maintained by a party for its own
information of a similar nature. In the event of any improper
disclosure of any Customer Information, the party responsible for
the disclosure will immediately notify the other
party.
7. Indemnification by the
Issuer.
7.1 Subject to the
conditions set forth below, the Issuer, with respect to the
Offering, agrees to indemnify and hold harmless the Introducing RIA
and its respective owners, managers, members, partners, directors,
officers, employees, agents, attorneys, and accountants
(collectively the “Selling Parties” and each a
“Selling Party”), against any and all loss, liability,
claim, damage and expense whatsoever (“Loss”) arising
out of or based upon:
7.1.1 Any
untrue statement or alleged untrue statement of a material fact
contained in the Offering Circular (as amended and supplemented
from time to time) or in any application or other document filed in
any jurisdiction in order to qualify the Securities under, or
exempt the Offering of the Securities from, the registration or
qualification requirements of the securities laws
thereof;
7.1.2 The
omission or alleged omission from the Offering Circular (as amended
and supplemented from time to time) of a material fact required to
be stated therein or necessary to make the statements therein not
misleading;
7.1.3 The
failure of the Issuer to comply with any provisions of federal and
state securities law, rules, and regulations, including Regulation
A;
7.1.4 Any
verbal or written representations made in connection with the
Offering made by the Issuer, its agents (other than by the Selling
Parties or any of its employees or affiliates), employees, or
affiliates in violation of federal and state securities law, rules,
and regulations, including Regulation A; or
7.1.5 The
breach by the Issuer of any term, condition, representation,
warranty, or covenant in this Agreement.
7.2 If any action is
brought against any of the Selling Parties in respect of which
indemnity may be sought hereunder, the Selling Party shall promptly
notify the party or parties against whom indemnification is to be
sought in writing of the institution of such action, and the Issuer
shall assume the defense of such action. The affected Selling
Parties shall have the right to employ counsel in any such case.
The reasonable fees and expenses of such counsel shall be at the
Issuer’s expense and authorized in writing by the
Issuer.
9
7.3 The Issuer agrees
to promptly notify the Introducing RIA of the commencement of any
litigation or proceedings against the Issuer or any of its
respective officers, directors, members, managers, partners,
employees, attorneys, accountants, or agents in connection with the
Offering of the Securities or in connection with the Offering
Circular.
7.4 The indemnity
provided to the Selling Parties pursuant to this Section 7 shall
not apply to the extent that any Loss arises out of or is based
upon (i) any untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Issuer by the
Introducing RIA specifically for use in the preparation of the
Offering Circular (or any amendment or supplement thereto) or any
sales literature, (ii) the failure to qualify the offer and sale of
Securities for an exemption from registration under the Securities
Act and applicable state securities laws, rules or regulations
caused by an action or omission of the Introducing RIA, (iii) the
offer or sale by the Introducing RIA of a Security to a person who
fails to meet the standards regarding suitability under any
applicable federal and state laws, rules, and regulations or (iv)
the breach by the Introducing RIA of its representations,
warranties, or obligations hereunder.
8. Indemnification by the Introducing
RIA.
8.1 Subject to the
conditions set forth below, the Introducing RIA agrees to indemnify
and hold harmless the Issuer, the Managing Broker Dealer, their
affiliates, and their respective general partners, stockholders,
partners, directors, officers, managers, employees, members and
agents, each controlling person and each of their respective
attorneys and accountants (“Issuer Parties”), against
any and all Loss arising out of or based upon:
8.1.1 Any
verbal or written representations made in connection with the
Offering made by the Introducing RIA (other than by the Issuer
Parties), employees, or affiliates in violation of the Securities
Act, the Exchange Act, Regulation A, the regulations thereunder, or
any applicable federal or state securities laws and regulations or
the RIA Client Introduction Agreement;
8.1.2 The
Introducing RIA’s failure to comply with any of the
applicable provisions of the Securities Act, the Exchange Act,
Regulation A, the regulations thereunder, or any applicable federal
or state securities laws and regulations, other than any failure to
comply which directly results from acts of the Issuer;
8.1.3 The
breach by the Introducing RIA of any term, condition,
representation, warranty, or covenant of the RIA Client
Introduction Agreement; or
8.1.4 The
failure by any Investor to comply with the suitability requirements
set forth in the Offering Circular.
8.1.5 Any
fault in electronic signatures and/or stamped signatures in any
form which have been used, obtained or relied upon by the
Introducing RIA with respect to this Agreement or any Subscription
Agreement.
8.2 If any action is
brought against any of the Issuer Parties in respect of which
indemnity may be sought hereunder, the Issuer Party shall promptly
notify the Introducing RIA in writing of the institution of such
action, and the Introducing RIA shall assume the defense of such
action. The Issuer Parties shall have the right to employ counsel
in any such case. The reasonable fees and expenses of such counsel
shall be at the Introducing RIA’s expense, provided that the
Introducing RIA will not be obligated to pay for legal fees and
expenses for more than one law firm in connection with the defense
of similar claims arising out of the same alleged acts or
omissions.
8.3 The Introducing RIA
agrees to promptly notify the Issuer of the commencement of any
litigation or proceedings against the Introducing RIA or any of the
Introducing RIA’s managers, members, officers, directors,
partners, employees, affiliates, attorneys, accountants, or agents
in connection with the Offering of the Securities or in connection
with the Offering Circular.
10
8.4 The indemnity
provided to the Issuer Parties pursuant to this Section 8 shall not
apply to the extent that any Loss arises out of or is based upon
any untrue statement or alleged untrue statement of material fact
made by the Issuer Parties or any of its agents (other than the
Introducing RIA), or any omission or alleged omission of a material
fact required to be disclosed by the Issuer or any of its agents
(other than the Introducing RIA).
9. Contribution. In order to
provide for just and equitable contribution in circumstances in
which the indemnification provided pursuant to Sections 8 and
9 is for any reason held to be unavailable from the Issuer or the
Introducing RIA, the parties shall contribute to the aggregate
Loss, liabilities, claims, damages and expenses (including any
amount paid in settlement of any action, suit, or proceeding or any
claims asserted) in such amounts as a court of competent
jurisdiction may determine (or in the case of settlement, in such
amounts as may be agreed upon by the parties) in such proportion to
reflect the relative fault of the each party in connection with the
events described in Sections 8 and 9, which resulted in such
Loss, liabilities, claims, damages or expenses, as well as any
other equitable considerations. The relative fault of the parties
shall be determined by reference to, among other things, whether
any untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Issuer or the Introducing RIA and the
parties’ relative intent, knowledge, access to information,
and opportunity to correct or prevent such omission or
statement.
10. Suspension, Termination, and
Survival. The Introducing RIA will suspend or terminate the
Offering upon request of the Issuer or the Managing Broker Dealer
at any time and will resume the Offering upon the subsequent
request of the Issuer or the Managing Broker Dealer. This Agreement
may be terminated by the Managing Broker Dealer at any time upon
written notice to the Introducing RIA. Except as the context
otherwise requires, all representations, warranties, and agreements
contained in this Agreement shall be deemed to be representations,
warranties, and agreements at and as of the Offering Termination
Date. Furthermore, the indemnity and contribution agreements
contained in Sections 7, 8, and 9 shall remain operative and in
full force and effect regardless of any investigation made by the
Managing Broker Dealer, the Issuer, and/or any controlling person,
and shall survive the sale of, and payment for, the
Securities.
11. Governing Law; Venue. This
Agreement shall be governed by, subject to and construed in
accordance with the laws of the State of Illinois without regard to
conflict of law provisions and any dispute between the parties
concerning this Agreement shall come within the jurisdiction of the
courts of Illinois.
12. Severability. If any portion of
this Agreement shall be held invalid or inoperative, then so far as
is reasonable and possible the remainder of this Agreement shall be
considered valid and operative and effect shall be given to the
intent manifested by the portion held invalid or
inoperative.
13. Counterparts. This Agreement
may be executed in multiple counterparts, each of which shall be
deemed to be an original, and together which shall constitute one
and the same instrument.
14. Modification or Amendment. This
Agreement may not be modified or amended except by written
agreement executed by the parties hereto.
15. Notices. All communications
hereunder, except as herein otherwise specifically provided, shall
be in writing
and delivered as follows:
if sent
to the Managing Broker Dealer, it shall be mailed or delivered
to:
Arete
Wealth Management, LLC
0000 X.
Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, XX
00000
if sent
to the Issuer, it shall be mailed or delivered to:
Trilogy
Multifamily Income & Growth Holdings I, LLC
000
Xxxx Xxxx Xxxxxx
Xxxxxxx, XX
00000
if sent
to you, it shall be mailed or delivered to your address set forth
below. The notice shall be deemed to be received on the date of its
actual receipt by the party entitled thereto.
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16. Parties. This Agreement shall
be binding upon and inure solely to the benefit of the parties
hereto, the persons referred to in Sections 7, 8, and 9 herein,
their respective successors, legal representatives, heirs and
assigns, and no other person shall have or be construed to have any
legal or equitable right, remedy or claim under, in respect of, or
by virtue of, this Agreement or any provision herein
contained.
17. Delay. Neither the failure nor
any delay on the part of any party to this Agreement to exercise
any right, remedy, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall a waiver of any right,
remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power, or privilege
with respect to any subsequent occurrence.
18. Recovery of Costs. If any legal
action or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party shall be entitled to
recover reasonable attorneys’ fees and other costs incurred
in that action or proceeding (and any additional proceeding for the
enforcement of a judgment) in addition to any other relief to which
it or they may be entitled.
19. Entire Agreement. This
Agreement, along with the applicable provisions of the Managing
Broker Dealer Agreement, constitute the entire understanding
between the parties hereto and supersede any prior understandings
or written or oral agreements between them respecting the subject
matter hereof.
IN
WITNESS WHEREOF, this Agreement has been executed as of the date
indicated below but shall only be in effect once ALL parties have
appended appropriate signatures indicating agreement.
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Trilogy
Multifamily Income & Growth Holdings I, LLC,
By:
{ISSUER ELECTRONIC
SIGNATURE}
Name: {NAME
OF SIGNATORY}
Title:
{TITLE OF SIGNATORY}
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TRILOGY
MULTIFAMILY INCOME & GROWTH HOLDINGS I, LLC
RIA
CLIENT INTRODUCTION AGREEMENT SIGNATURE PAGE
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