SOLICITING DEALER AGREEMENT STRATSTONE/BLUEGREEN SECURED INCOME FUND, LLC
Ladies
and Gentlemen:
Stratstone
Securities, LLC (the “Dealer Manager”) has
entered into a dealer manager agreement (the “Dealer Manager
Agreement”) which is a part hereof and attached hereto, with
Stratstone/Bluegreen Secured Income Fund, LLC, a Delaware Limited Liability
Company (the “Company”), under
which the Dealer Manager has agreed to use the Dealer Manager’s best efforts to
solicit subscriptions for the units of the Company’s membership interests (the
“Units”). The
Company is offering to the public an aggregate maximum of up to $500,000,000 in
Units at a price of $10.00 per Unit on a “best efforts” basis (the “Primary Offering”),
and up to $70,000,000 in Units issued pursuant to the distribution reinvestment
program (“DRP”)
at a price equal to $9.10 per
Unit (subject to the right of the Company to reallocate the Units between
the Primary Offering and the DRP) (the “Offering”). Unless
otherwise defined, capitalized terms used herein shall have the same meaning as
in the Dealer Manager Agreement.
In
connection with the performance of the Dealer Manager’s obligations under
Section 3 of the Dealer Manager Agreement, the Dealer Manager is authorized to
retain the services of securities dealers (the “Soliciting Dealers”)
who are members of the Financial Industry Regulatory Authority (“FINRA”) to solicit
subscriptions. You are hereby invited to become a Soliciting Dealer
and, as such, to use your best efforts to solicit subscribers for Units, in
accordance with the following terms and conditions:
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1.
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Registration
Statement.
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(a) A
registration statement on Form S-11 (File No. ____________), including a
preliminary prospectus, was filed with the Securities and Exchange Commission
(the “Commission”) on
[________, 2009], in accordance with the applicable requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and
the applicable rules and regulations of the Commission promulgated thereunder
(the “Securities Act
Rules and Regulations”) for the registration of the Offering. The Company
has prepared and filed such amendments thereto, if any, and such amended
prospectus, if any, as may have been required to the date hereof, and will file
such additional amendments and supplements thereto as may hereafter be
required. The prospectus, as amended or supplemented, on file with
the Commission at the Effective Date (as defined below) of the registration
statement (including financial statements, exhibits and all other documents
related thereto filed as a part thereof or incorporated therein), is hereinafter
referred to as the “Prospectus,” except that if the Prospectus is amended or
supplemented after the Effective Date, the term “Prospectus” shall refer to the
Prospectus as amended or supplemented to date, and if the Prospectus filed by
the Company pursuant to Rule 424(b) or 424(c) of the Securities Act Rules
and Regulations shall differ from the Prospectus on file at the time the
registration statement or any post-effective amendment to the registration
statement shall become effective, the term “Prospectus” shall refer to the
Prospectus filed pursuant to either Rule 424(b) or 424(c) of the Securities Act
Rules and Regulations from and after the date on which it shall have been filed
with the Commission. As used in this agreement, the term
“Registration Statement” means the Registration Statement, as amended through
the date hereof, except that, if the Company files any post-effective amendments
to the Registration Statement, “Registration Statement” shall refer to the
Registration Statement as so amended by the last post-effective amendment
declared effective, and the term “Effective Date” means the applicable date upon
which the Registration Statement or any post-effective amendment thereto is or
was first declared effective by the Commission.
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(b) The
Units and the Offering are more particularly described in the enclosed
Prospectus. Additional copies of the Prospectus will be supplied to the
Soliciting Dealer in reasonable quantities upon request. The Dealer Manager will
also provide the Soliciting Dealer with reasonable quantities of any
supplemental literature prepared by the Company in connection with the
Offering.
2.
Compliance with Applicable
Rules and Regulations; License and Association Membership.
Solicitation
and other activities by the Soliciting Dealers hereunder shall be undertaken
only in accordance with the Dealer Manager Agreement, this Agreement, the
Securities Act, the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the
applicable rules and regulations of the Commission, the Blue Sky Survey
delivered to the Dealer Manager by the Company (the “Blue Sky Survey”),
the Rules of FINRA, specifically including, but not in any way limited to, FINRA
Rules 2340, 2420, 2730, 2740, 2750, and 2810 of the FINRA Conduct Rules, and the
provisions of Article III.C. of the NASAA Mortgage Program Guidelines (the
“NASAA
Guidelines”).
Upon the
effectiveness of this Agreement, the undersigned dealer will become one of the
“Soliciting Dealers” referred to in the Dealer Manager
Agreement. Soliciting Dealer’s acceptance of this Agreement
constitutes a representation to the Company and to the Dealer Manager that
Soliciting Dealer is a properly registered or licensed broker-dealer, duly
authorized to sell Units under federal and state securities laws and regulations
in all states where it offers or sells Units, and that it is a member in good
standing of FINRA. Soliciting Dealer represents and warrants that it
is currently licensed as a broker-dealer in the jurisdictions identified on
Schedule 1 to this Agreement and that its independent contractors and registered
representatives have the appropriate licenses(s) to offer and sell the Units in
such jurisdictions. This Agreement shall automatically terminate if Soliciting
Dealer ceases to be a member in good standing of FINRA, or with the securities
commission of the state in which Soliciting Dealer’s principal office is
located. Soliciting Dealer agrees to notify the Dealer Manager
immediately if Soliciting Dealer ceases to be a member in good standing of FINRA
or with the securities commission of any state in which Soliciting Dealer is
currently registered or licensed.
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3.
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Limitation of Offer;
Investor Suitability.
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(a) The
Soliciting Dealer will 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 by the Company, the FINRA Rules
and NASAA Guidelines. In offering the sale of Units to any person,
each Soliciting Dealer shall have reasonable grounds to believe (based on such
information obtained from the investor concerning the investor’s age, investment
objectives, other investments, financial situation, needs or any other
information known by the Soliciting Dealer after due inquiry) that: (i) such
person is in a financial position appropriate to enable such person 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; (ii) 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; (iii) the
purchase of the Units is otherwise suitable for such person; and (iv) such
person has either: (a) a minimum annual gross income of $70,000 and a minimum
net worth (exclusive of home, home furnishings and automobiles) of $70,000; or
(b) a minimum net worth (determined with the foregoing exclusions) of $250,000
and meets the higher suitability standards, if applicable, imposed by the state
in which the investment by such investor is made. In making the
determinations as to financial qualifications and as to suitability required by
the NASAA Guidelines, a Soliciting Dealer may rely on (i) representations from
investment advisers who are not affiliated with the Soliciting Dealer, banks
acting as trustees or fiduciaries and (ii) information it has obtained from a
prospective investor, including such information as the investment objectives,
other investments, financial situation and needs of the person or any other
information known by the Soliciting Dealer after due
inquiry. Notwithstanding the foregoing, the Soliciting Dealer shall
not execute any transaction in the Company in a discretionary account without
prior written approval of the transaction by the customer.
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(b) Each
Soliciting Dealer shall 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. A Soliciting Dealer can satisfy its obligation by contractually
requiring such information to be maintained by the investment advisers or banks
discussed above. Each Soliciting Dealer further agrees to comply with
the record keeping requirements of the Exchange Act, including by not limited to
Rules 17a-3 and 17a-4 promulgated under the Exchange Act. Each
Soliciting Dealer agrees to make such documents and records available to the
Dealer Manager and the Company upon request and representatives of the
Commission, FINRA and applicable state securities administrators upon Soliciting
Dealer’s receipt of an appropriate document subpoena or other appropriate
request for documents from any such agency.
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4.
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Delivery of Prospectus
and Approved Sales
Literature.
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(a) Each
Soliciting Dealer agrees: (i) to deliver to each person who subscribes for the
Units, a Prospectus, as then supplemented or amended, prior to the tender of his
subscription agreement (the “Subscription
Agreement”); (ii) to comply promptly with the written request of any
person for a copy of the Prospectus during the period between the effective date
of the Registration Statement and the termination of the Offering; (iii) to
deliver in accordance with applicable law or as prescribed by any state
securities administrator to any person a copy of any prescribed document
included within the Registration Statement and any supplements thereto during
the course of the Offering; (iv) not to use any sales materials in connection
with the solicitation of purchasers of the Units except materials provided or
approved in writing by the Company (“Approved Sales
Literature”); (v) to the extent the Company provides Approved Sales
Literature, not to use such materials unless accompanied or preceded by the
Prospectus, as then currently in effect, and as may be supplemented in the
future; and (vi) not to give or provide any information or make any
representation other than those contained in the Prospectus or the Approved
Sales Literature.
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(b) Neither
the Soliciting Dealer nor any other person is authorized by the Company or by
the Dealer Manager to give any information or make any representations in
connection with this Agreement or the offer of Units other than those contained
in the Prospectus, as then amended or supplemented, or any Approved Sales
Literature. Each Soliciting Dealer agrees not to publish, circulate or otherwise
use any other advertisement or solicitation material in connection with the
Offering without the Dealer Manager’s prior written approval.
(c) Nothing
in this Agreement shall be deemed or construed to make Soliciting Dealer an
employee, agent, representative, or partner of the Dealer Manager or the
Company, and Participating Dealer is not authorized to act for the Dealer
Manager or the Company.
(d) Each
Soliciting Dealer agrees that it will not send or give supplements to the
Prospectus or any Authorized Sales Materials to any investor unless it has
previously sent or given a Prospectus and all supplements thereto with such
Prospectus supplement or Authorized Sales Materials.
(e) Each
Soliciting Dealer agrees that it will not show or give to any investor or
reproduce any material or writing which is supplied to it by the Dealer and
marked “broker-dealer use only” or otherwise bearing a legend denoting that it
is not to be used in connection with the offer or sale of Units to members of
the public.
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5.
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Submission of
Orders.
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(a) Subject
to any individual state requirements and except for units issued to the
Company’s existing investors, including pursuant to the DRP or the Company’s
automatic investment plan, the Company will sell Units only to investors who
purchase a minimum of 250 units for an aggregate price of $2,500. In order to
satisfy the purchase requirements for retirement plans, a husband and wife may
jointly contribute funds from their separate IRAs, provided that each such
contribution is made in increments of $500. An investment in Units shall not,
itself, create a retirement plan, and in order to create a retirement plan an
investor must comply with all applicable provisions of the Internal Revenue
Code. Following the initial minimum investment, an investor shall not be
permitted to transfer, fractionalize or subdivide such units so as to retain
less than 250 units.
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(b) With
respect to the Soliciting Dealer’s participation in any resales or transfers of
the Units, the Soliciting Dealer agrees to comply with any applicable
requirements set forth in Section 2 and to fulfill the obligations pursuant to
FINRA Rule 2810.
(c) Payments
for Units shall be made by checks payable to “[_____________]” and forwarded
together with a copy of the Subscription Agreement, executed and
initialed by the subscriber as provided for in the Subscription Agreement, to
the Company’s escrow agent (the “Escrow
Agent”). Funds will be deposited into an escrow account no
later than noon of the next business day after receipt of such Subscription
Agreement and check (when the Soliciting Dealer’s internal supervisory
procedures are completed at the site at which the Subscription Agreement and
check were received by the Soliciting Dealer) or, when the Soliciting Dealer’s
internal supervisory procedures are performed at a different location (the
“Final Review
Office”), the Soliciting Dealer shall transmit the check and Subscription
Agreement to the Final Review Office by the noon of the next business day
following the Soliciting Dealer’s receipt of the Subscription Agreement and
check. The Final Review Office will, by the noon of the next business day
following its receipt of the Subscription Agreement and check, forward both the
Subscription Agreement and check to the Escrow Agent. If any
Subscription Agreement solicited by the Soliciting Dealer is rejected by the
Dealer Manager or the Company, the Subscription Agreement and check will be
returned to the rejected subscriber within 10 business days from the date of
rejection.
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6.
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Soliciting Dealer
Compensation.
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(a) Subject
to the terms and conditions set forth herein and in the Dealer Manager Agreement
and except as described in or as otherwise provided for in the “Plan of
Distribution” section of the Prospectus, the Dealer Manager shall pay to the
Soliciting Dealer a selling commission of 7.0% of the selling price of each Unit
for which a sale is completed (except for certain sales for which commissions
may be reduced or eliminated in accordance with the terms of the Prospectus and
as set forth below) from the up to $500,000,000 in Units offered in the Primary
Offering on a “best efforts” basis for which the Soliciting Dealer have acted as
Soliciting Dealer pursuant to this Agreement.
(b) Purchasers
(as defined below) purchasing more than $500,000 in Units will be entitled to a
reduced Unit purchase price and a reduction in selling commissions payable
described in or as otherwise provided in the “Plan of Distribution” section of
the Prospectus. The discounts will be applied on a transaction-by
transaction basis and in a progressive fashion.
(c) For
the purposes of such volume discounts, the term “purchaser” includes: (a) an
individual, his or her spouse and their children under the age of 21 who
purchase the units for his, her or their own accounts; (b) a corporation,
partnership, association, joint-stock company, trust fund or any organized group
of persons, whether incorporated or not; (c) an employees’ trust, pension,
profit sharing or other employee benefit plan qualified under Section 401(a) of
the Internal Revenue Code; and (d) all commingled trust funds maintained by a
given bank.
(d) No
selling commissions will be paid, and the per Unit price shall be reduced to
$[_______], in connection with Units sold in the offering of up to $500,000,000
in Units in the event the investor has engaged the services of a registered
investment advisor or other financial advisor, paid on a fee-for-service basis
by the investor.
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(e) No
selling commissions will be paid, and the per Unit price shall be reduced to
$[______], in connection with Units sold to (i) retirement plans of the
Soliciting Dealer, (ii) the Soliciting Dealer in its individual capacity, (iii)
IRAs and qualified plans of Soliciting Dealer’s registered representatives or
(iv) any one of Soliciting Dealer’s registered representatives in their
individual capacities.
(f) No
selling commissions will be paid for sales of Units under the Company’s
DRP.
(g) Notwithstanding
the foregoing, it is understood and agreed that no commission shall be payable
with respect to particular Units if the Company rejects a proposed subscriber’s
Subscription Agreement, which it may do, as provided in the form of Subscription
Agreement for any reason or for no reason. Accordingly, the
Soliciting Dealer shall have no authority to issue a confirmation (pursuant to
Exchange Act Rule 10b-10) to any subscriber; such authority residing solely in
the Dealer Manager, as the Dealer Manager and processing
broker-dealer.
(h) Notwithstanding
anything to the contrary contained herein, in the event that the Dealer Manager
pays any selling commission to the Soliciting Dealer for sale by 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 Dealer Manager 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 6(a), 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 Soliciting
Dealer after such withdrawal occurs, the Soliciting Dealer shall pay the amount
specified in the preceding sentence to the Dealer Manager 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.
(i) The
Dealer Manager may, in its sole discretion, re-allow to the Soliciting Dealers,
a portion of the dealer manager fee received by it. In addition,
pursuant to the Dealer Manager Agreement, the Soliciting Dealer may be
reimbursed by the Company for reasonable accountable bona fide due diligence
expenses, provided such expenses are supported by detailed and itemized
invoices. Certain marketing expenses such as Soliciting Dealer
conferences may be advanced to a Soliciting Dealer and later deducted from the
portion of the dealer manager fee reallowed to that Soliciting
Dealer. If the Offering is not consummated, the Soliciting Dealer
will repay any such advance to the extent not expended on marketing expenses.
Any such advance shall be deducted from the maximum amount of the dealer manager
fee that may otherwise be re-allowable to the Soliciting Dealer.
(j) The
Company will not be liable or responsible to any Soliciting Dealer for the
payment of any selling commissions or any reallowance of fees to the Soliciting
Dealer, it being the sole and exclusive responsibility of the Dealer Manager for
the payment of selling commissions or any reallowance to Soliciting
Dealers.
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7.
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Reserved
Units.
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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. The Dealer Manager reserves the right to notify the
Soliciting Dealer by United States mail or by other means of the number of Units
reserved for sale by the Soliciting Dealer, if any. Such Units will be reserved
for sale by the Soliciting Dealer until the time specified in the Dealer
Manager’s notification to the Soliciting Dealer. Sales of any reserved Units
after the time specified in the notification to the Soliciting Dealer or any
requests for additional Units will be subject to rejection in whole or in
part.
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8.
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Blue Sky
Qualification.
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(a) The
Dealer Manager will inform the Soliciting Dealer as to the jurisdictions in
which the Dealer Manager has been advised by the Company that the Units have
been qualified for sale or are exempt under the respective securities or “blue
sky” laws of such jurisdictions; but the Dealer Manager has not assumed and will
not assume any obligation or responsibility as to the Soliciting Dealer’s right
to act as a broker and/or dealer with respect to the Units in any such
jurisdiction. The Soliciting Dealer agrees that the Soliciting Dealer will not
make any offers or sell any Units except in states in which the Dealer Manager
may advise the Soliciting Dealer that the Offering has been qualified or is
exempt and in which the Soliciting Dealer is legally qualified to make offers
and further agrees to assure that each person to whom the Soliciting Dealer
sells Units (at both the time of the initial purchase as well as at the time of
any subsequent purchases) meets any special suitability standards which apply to
sales in a particular jurisdiction, as described in the Blue Sky Survey and the
Subscription Agreement. Neither the Dealer Manager nor the Company
assume any obligation or responsibility in respect of the qualification of the
Units covered by the Prospectus under the laws of any jurisdiction or the
Soliciting Dealer’s qualification to act as a broker and/or dealer with respect
to the Units in any jurisdiction. The Blue Sky Survey which has been or will be
furnished to the Soliciting Dealer indicates the jurisdictions in which it is
believed that the offer and sale of Units covered by the Prospectus is exempt
from, or requires action under, the applicable blue sky or securities laws
thereof, and what action, if any, has been taken with respect
thereto.
(b) It
is understood and agreed that under no circumstances will the Soliciting Dealer,
as a Soliciting Dealer, engage in any activities hereunder in any jurisdiction
in which the Soliciting Dealer may not lawfully so engage in any activities in
any jurisdiction with respect to the Units in which the Soliciting Dealer may
lawfully so engage unless the Soliciting Dealer has complied with the provisions
hereof.
9.
Dealer Manager’s
Authority. Subject to the terms of the Dealer Manager Agreement, the
Dealer Manager shall have full authority to take such action as it may deem
advisable with respect to all matters pertaining to the Offering or arising
thereunder. The Dealer Manager shall not be under any liability to the
Soliciting Dealer (except for (i) its own lack of good faith and (ii) for
obligations expressly assumed by the Dealer Manager hereunder) for or in respect
of the validity or value of or title to, the Units; the form of, or the
statements contained in, or the validity of, the Registration Statement, the
Prospectus or any amendment or supplement thereto, or any other instrument
executed by the Company or by others; the form or validity of the Dealer Manager
Agreement or this Agreement; the delivery of the Units; the performance by the
Company or by others of any agreement on its or their part; the qualification of
the Units for sale under the laws of any jurisdiction; or any matter in
connection with any of the foregoing; provided, however, that nothing in this
paragraph shall be deemed to relieve the Company or the Dealer Manager from any
liability imposed by the Securities Act. No obligations or liability on the part
of the Company or the Dealer Manager shall be implied or inferred
herefrom.
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10.
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Indemnification.
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(a) Under
the Dealer Manager Agreement, the Company has agreed to indemnify the Soliciting
Dealer and the Dealer Manager and each person, if any, who controls the
Soliciting Dealer or the Dealer Manager, in certain instances and against
certain liabilities, including liabilities under the Securities Act in certain
circumstances. The Soliciting Dealer agrees to indemnify the Company and each
person who controls it as provided in the Dealer Manager Agreement and to
indemnify the Dealer Manager to the extent and in the manner that the Soliciting
Dealer agrees to indemnify the Company in such Dealer Manager
Agreement.
(b) In furtherance of, and not in limitation
of the foregoing, the Soliciting Dealer will indemnify, defend and hold harmless
the Dealer Manager and the Company, and their officers, directors, employees,
members, partners, affiliates, agents and representatives (“indemnified
parties”), 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, and each person
who has signed the Registration Statement, from and against any losses, claims,
damages or liabilities to which any of the indemnified parties, and each person
who signed the Registration Statement, 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 representations or
warranties contained in this Agreement or any material breach of a covenant
contained herein by the Soliciting Dealer, 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 other document executed by the
Company or on its behalf specifically for the purpose of qualifying any or all
of the Units for sale under the securities laws of any jurisdiction or based
upon written information furnished by the Company under the securities laws
thereof, 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 or the Dealer Manager by the
Soliciting Dealer specifically for use with reference to the Soliciting Dealer
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 Soliciting Dealer that is not Approved Sales Literature, (e)
any untrue statement made by the Soliciting Dealer or the Soliciting Dealer’s
representatives or agents or omission by the Soliciting Dealer or the Soliciting
Dealer’s 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
Soliciting Dealer 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 Soliciting Dealer 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 Soliciting Dealer may otherwise have.
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(c) Promptly after receipt by any
indemnified party under this Section 10 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 10, 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 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.
(d) An indemnifying party under this
Section 10 of this Agreement shall be obligated
to reimburse an indemnified party for reasonable legal and other expenses as
follows: 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.
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11.
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Contribution.
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If the indemnification provided for in
Section 10 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, the
contributions provisions set forth in Section 8 of the Dealer Manager Agreement
shall be applicable.
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12.
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Company as Third Party
Beneficiary to Agreement.
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The
Company shall be a third party beneficiary of Sections 10 and 11. The
Company shall have all enforcement rights in law and in equity with respect to
those portions of this Agreement as to which it is third party
beneficiary.
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13.
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Privacy
Laws.
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Each
Soliciting Dealer agrees to: (a) 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) the Soliciting Dealer’s own internal privacy policies and procedures,
each as may be amended from time to time; (b) refrain from the use or disclosure
of nonpublic personal information (as defined under the GLB Act) of all
customers, except as necessary to service the customers or as otherwise
necessary or required by applicable law.
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14.
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Anti-Money Laundering
Compliance Programs.
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The
Soliciting Dealer represents to the Dealer Manager and to the Company that the
Soliciting Dealer has established and implemented anti-money laundering
compliance programs in accordance with applicable law, including applicable
FINRA 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 Soliciting
Dealer further represents that the Soliciting Dealer 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 Soliciting Dealer hereby covenants to remain
in compliance with such requirements and shall, upon request by the Dealer
Manager or the Company, provide a certification to the Dealer Manager or the
Company that, as of the date of such certification (a) the Soliciting Dealer’s
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.
10
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15.
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Due
Diligence;
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(a) Prior
to offering the Units for sale, the Soliciting Dealer shall have conducted an
inquiry such that the Soliciting Dealer has reasonable grounds to believe, based
on information made available to the Soliciting Dealer by the Company or the
Advisor through the Prospectus or other materials, that all material facts are
adequately and accurately disclosed and provide a basis for evaluating a
purchase of Units. In determining the adequacy of disclosed facts pursuant to
the foregoing, each Soliciting Dealer may obtain, upon request, information on
material facts relating at a minimum to the following:
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(1)
items of compensation;
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(2)
loans by the Company, if available;
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(3)
tax aspects;
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(4)
financial stability and experience of the Company and the
Advisor;
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(5)
conflicts and risk factors; and
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(6)
appraisals and other pertinent
reports.
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(b) Notwithstanding
the foregoing, each Soliciting Dealer may rely upon the results of an inquiry
conducted by another Soliciting Dealer, provided that:
(i) such
Soliciting Dealer has reasonable grounds to believe that such inquiry was
conducted with due care;
(ii) the
results of the inquiry were provided to the Soliciting Dealer with the consent
of the Soliciting Dealer conducting or directing the inquiry; and
(iii) no
Soliciting Dealer that participated in the inquiry is an affiliate of the
Company.
(c) Prior
to the sale of the Units, each Soliciting Dealer shall inform the prospective
purchaser of all pertinent facts relating to the liquidity and marketability of
the Units during the term of the investment.
11
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16.
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Miscellaneous.
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(a) The
Soliciting Dealer hereby authorizes and ratifies the execution and delivery of
the Dealer Manager Agreement by the Dealer Manager as Dealer Manager for itself
and on behalf of the Soliciting Dealers (including the Soliciting Dealer party
hereto) and authorizes the Dealer Manager to agree to any variation of its terms
or provisions and to execute and deliver any amendment, modification or
supplement thereto. Each Soliciting Dealer hereby agrees to be bound by all
provisions of the Dealer Manager Agreement relating to Soliciting Dealers. The
Soliciting Dealer also authorizes the Dealer Manager to exercise, in the Dealer
Manager’s discretion, all the authority or discretion now or hereafter vested in
the Dealer Manager by the provisions of the Dealer Manager Agreement and to take
all such actions as the Dealer Manager may believe desirable in order to carry
out the provisions of the Dealer Manager Agreement and of this
Agreement.
(b) This
Agreement, except for the provisions of Sections 9, 10, 11, 12 and 13 hereof,
may be terminated at any time by either party hereto by two days prior written
notice to the other party and, in all events, this Agreement shall terminate on
the termination date of the Dealer Manager Agreement, except for the provisions
of Sections 9, 10, 11, 12 and 13 hereof.
(c) Any
communications from the Soliciting Dealer should be in writing addressed to the
Dealer Manager at Stratstone Securities, LLC, [2100 Xxxx Xxxxxxx Xxxxx Xxxx,
Xxxx Xxxxxxxxxx, XX 00000]. Any notice from the Dealer
Manager to the Soliciting Dealer shall be deemed to have been duly given if
mailed, communicated by electronic delivery or facsimile or delivered by
overnight courier to the Soliciting Dealer at the Soliciting Dealer’s address
shown below.
(d) Nothing
herein contained shall constitute the Dealer Manger, the Soliciting Dealer, the
other Soliciting Dealers or any of them as an association, partnership, limited
liability company, unincorporated business or other separate
entity.
(e) The
Company may authorize the Company’s transfer agent to provide information to the
Dealer Manages and each Soliciting Dealer regarding record holder 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 Soliciting Dealer shall not disclose any
password for a restricted website or portion of a website provided to the
Soliciting Dealer in connection with the Offering and shall not disclose to any
person, other than an officer, director, employee or agent of such Soliciting
Dealers, any material downloaded from such restricted website or portion of a
restricted website.
If the
foregoing is in accordance with the Soliciting Dealer’s understanding and
agreement, please sign and return the attached duplicate of this Agreement. The
Soliciting Dealer’s indicated acceptance thereof shall constitute a binding
agreement between the Soliciting Dealer and the Dealer Manager.
12
Very
truly yours,
STRATSTONE
SECURITIES, LLC
By:
Name:
Title:
____________,
2010
13
The
undersigned dealer confirms its agreement to act as a Soliciting Dealer pursuant
to all the terms and conditions of the above Soliciting Dealer Agreement and the
attached Dealer Manager Agreement. The undersigned dealer hereby represents that
the it will comply with the applicable requirements of the Securities Act and
the Exchange Act and the published rules and regulations of the Commission
thereunder, and applicable blue sky or other state securities laws. The
undersigned dealer represents and warrants that the undersigned dealer is duly
registered as a broker-dealer under the provisions of the Exchange Act and the
published rules and regulations of the Commission thereunder or is exempt from
such registration. The undersigned dealer confirms that it and each
salesperson acting on its behalf are members in good standing of FINRA and duly
licensed by each regulatory authority in each jurisdiction in which the
undersigned dealer or such salesperson will offer and sell Units, or are exempt
from registration with such authorities. The undersigned dealer hereby
represents that it will comply with the Rules of FINRA and all rules and
regulations promulgated by FINRA.
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Dated:
____________, 2010
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_____________________________________
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Name
of Soliciting Dealer
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_____________________________________
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Federal
Identification Number
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By:
__________________________________
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Authorized
Signature
|
Kindly
have checks representing commissions forwarded as follows (if different than
above): (Please type or print)
|
Name
of Firm:
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________________________________________
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|
Address:
|
________________________________________
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Street
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________________________________________
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City
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________________________________________
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State
and Zip Code
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________________________________________
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(Area
Code) Telephone No.
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Attention:
|
__________________________________
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14
SCHEDULE
1
TO
STRATSTONE
SECURITIES, LLC
Soliciting
Dealer represents and warrants that it is currently licensed as a broker-dealer
in the following jurisdictions:
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¨
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Alabama
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¨
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Nebraska
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¨
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Alaska
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¨
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Nevada
|
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¨
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Arizona
|
¨
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New
Hampshire
|
|
¨
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Arkansas
|
¨
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New
Jersey
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¨
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California
|
¨
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New
Mexico
|
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¨
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Colorado
|
¨
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New York
|
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¨
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Connecticut
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¨
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North
Carolina
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¨
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Delaware
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¨
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North
Dakota
|
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¨
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District of
Columbia
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¨
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Ohio
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¨
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Florida
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¨
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Oklahoma
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¨
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Georgia
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¨
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Oregon
|
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¨
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Hawaii
|
¨
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Pennsylvania
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¨
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Idaho
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¨
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Puerto
Rico
|
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¨
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Illinois
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¨
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Rhode
Island
|
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¨
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Indiana
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¨
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South
Carolina
|
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¨
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Iowa
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¨
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South
Dakota
|
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¨
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Kansas
|
¨
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Tennessee
|
|
¨
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Kentucky
|
¨
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Texas
|
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¨
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Louisiana
|
¨
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Utah
|
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¨
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Maine
|
¨
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Vermont
|
|
¨
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Maryland
|
¨
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Virgin
Islands
|
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¨
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Massachusetts
|
¨
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Virginia
|
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¨
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Michigan
|
¨
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Washington
|
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¨
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Minnesota
|
¨
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West
Virginia
|
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¨
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Mississippi
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¨
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Wisconsin
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¨
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Missouri
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¨
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Wyoming
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¨
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Montana
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S -
1
