FORM OF DEALER MANAGER AGREEMENT ] DEALER MANAGER AGREEMENT KEATING CAPITAL, INC. Up to 10,000,000 Shares of Common Stock, $0.001 par value per share
Exhibit
(h)
[
FORM OF DEALER MANAGER AGREEMENT ]
DEALER
MANAGER AGREEMENT
XXXXXXX
CAPITAL, INC.
Up to
10,000,000 Shares of Common Stock, $0.001 par value per
share
[______________],
2009
Xxxxxxx
Securities, LLC
0000 XXX
Xxxxxxx, Xxxxx 0000
Xxxxxxxxx
Xxxxxxx, XX 00000
Ladies and
Gentlemen:
Xxxxxxx Capital, Inc., a Maryland
corporation (the “Company”), has registered for public sale (the “Offering”) a
maximum of 10,000,000 shares of its common stock, $0.001 par value
per share (the “Common Stock”), to be issued and sold to the public on a “best
efforts” basis (the “Offered Shares”) through you as the managing dealer (the
“Dealer Manager”) and the broker-dealers participating in the offering (the
“Selected Dealers”) at an initial offering price of $10.00 per share (subject in
certain circumstances to discounts based upon the volume of shares purchased).
Terms not otherwise defined herein shall have the same meaning as in the
Prospectus, as that term is defined in Section 2.1 below.
The Company has entered into an
Amended and Restarted Investment Advisory and Administrative Services
Agreement, dated as of _____, 2009 (the “Investment Advisory Agreement”),
with Xxxxxxx Investments, LLC, a Delaware limited liability company registered
as an investment adviser (the “Adviser”), under the Investment Advisers Act of
1940, as amended, and the rules and regulations thereunder (collectively, the
“Advisers Act”).
The Company and the Adviser hereby
agree with you, the Dealer Manager, as follows:
1.
Representations and Warranties of the Company and the Adviser.
The Company and the Adviser hereby
represent and warrant to the Dealer Manager and each Selected Dealer with whom
the Dealer Manager has entered into or will enter into a Selected Dealer
Agreement (the “Selected Dealer Agreement”) in the form attached as Exhibit A to
this Agreement that, as of the date hereof and at all times during the Offering
Period, as that term is defined below (provided that, to the extent such
representations and warranties are given only as of a specified date or dates,
the Company and the Adviser only make such representations and warranties as of
such date or dates):
1.1 The Company has prepared and filed
with the Securities and Exchange Commission (the “SEC”) a registration statement
on Form N-2 (No. 333-157217) for the registration of the Offered Shares in
accordance with 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 Regulations”). As used in
this Agreement, the term “Registration Statement” means such registration
statement, as so amended; 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; the term “Prospectus” means
the prospectus in the form constituting a part of the Registration Statement as
well as in the form filed with the Commission pursuant to Rule 424(b) after the
Registration Statement becomes effective, except that the term “Prospectus”
shall also include any supplements thereto; and the term “Filing Date” means the
applicable date upon which the initial Prospectus or any amendment or supplement
thereto is filed with the Commission. As of the date hereof, the Commission has
not issued any stop order suspending the effectiveness of the Registration
Statement and no proceedings for that purpose have been instituted or are
pending before or threatened by the Commission under the Securities
Act.
1.2 The Registration Statement and the
Prospectus, and any further amendments or supplements thereto, will, as of the
applicable Effective Date, comply in all material respects with the Securities
Act and the Securities Act Regulations; the Registration Statement does not, and
any amendments thereto will not, in each case as of the applicable Effective
Date, contain an untrue statement of material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading; provided, however, that the Company and the Adviser make no
warranty or representation with respect to any statement contained in the
Registration Statement or the Prospectus, or any amendments or supplements
thereto, made in reliance upon and in conformity with information furnished in
writing to the Company by the Dealer Manager or any Selected Dealer expressly
for use in the Registration Statement or the Prospectus, or any amendments or
supplements thereto.
1.3 This Agreement and the Investment
Advisory Agreement have been duly authorized, executed and delivered by the
Company.
1.4 The Company is a corporation duly
organized and validly existing under the laws of the State of Maryland, and is
in good standing with the State Department of Assessments and Taxation of
Maryland, with full power and authority to conduct its business as described in
the Registration Statement and the Prospectus and to enter into this Agreement
and to perform the transactions contemplated hereby; this Agreement has been
duly authorized, executed and delivered by the Company and is a legal, valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally, and by general equitable principles, and except to the extent
that the enforceability of the indemnity and/or contribution provisions
contained in Section 5 of this Agreement may be limited under applicable
securities laws.
1.5 Each of the Company and the Adviser
has qualified to do business and is in good standing in every jurisdiction in
which the conduct of its business, as described in the Prospectus, requires such
qualification, except where the failure to do so would not have a material
adverse effect on the condition, financial or otherwise, results of operations
or cash flows of the Company and the Adviser taken as a whole or would
materially and adversely affect the regulatory status of the Adviser such that
the Adviser would be prevented from carrying out its obligations under the
Investment Advisory Agreement (a “Material Adverse Effect”).
1.6 The Adviser is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware with full power and authority to conduct its business as
described in the Registration Statement and the Prospectus and to enter into
this Agreement and to perform the transactions contemplated hereby; this
Agreement has been duly authorized, executed and delivered by the Adviser and is
a legal, valid and binding agreement of the Adviser enforceable against the
Adviser in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally, and by general equitable principles, and except to
the extent that the enforceability of the indemnity and/or contribution
provisions contained in Section 5 of this Agreement may be limited under
applicable securities laws.
1.7 The Offered Shares conform in all
material respects to the description of the Common Stock contained in the
Registration Statement and the Prospectus. The authorized, issued and
outstanding shares of Common Stock as of the date hereof are as set forth in the
Prospectus under the caption “Description of Our Securities.” As of the date
hereof, all the issued and outstanding shares of Common Stock of the Company are
fully paid and non-assessable.
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1.8 The Company is not in violation of
its charter or its bylaws and the execution and delivery of this Agreement, the
issuance, sale and delivery of the Offered Shares, the consummation of the
transactions herein contemplated and compliance with the terms of this Agreement
by the Company will not violate the terms of or constitute a default under: (a)
its charter or bylaws; or (b) any indenture, mortgage, deed of trust, lease, or
other material agreement to which the Company is a party; or (c) any law, rule
or regulation applicable to the Company; or (d) any writ, injunction or decree
of any government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over the Company except, in the cases of clauses (b), (c)
and (d), for such violations or defaults that, individually or in the aggregate,
would not result in a Material Adverse Effect.
1.9 The Adviser is not in violation of
its certificate of organization or its limited liability company agreement and
the execution and delivery of this Agreement, the consummation of the
transactions herein contemplated and compliance with the terms of this Agreement
by the Adviser will not violate the terms of or constitute a default under: (a)
its certificate of organization or limited liability company agreement; or (b)
any indenture, mortgage, deed of trust, lease, or other material agreement to
which the Adviser is a party; or (c) any law, rule or regulation applicable to
the Adviser; or (d) any writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign, having jurisdiction
over the Adviser except, in the cases of clauses (b), (c) and (d), for such
violations or defaults that, individually or in the aggregate, would not result
in a Material Adverse Effect.
1.10 Upon the commencement of the
Offering, the Company will be a non-diversified, closed-end management
investment company that has elected to be treated as a business development
company (“BDC”) under the Investment Company Act of 1940, as amended, (the
“Investment Company Act”), and has not withdrawn such election, and the
Commission has not ordered that such election be withdrawn nor to the Company’s
knowledge have proceedings to effectuate such withdrawal been initiated or
threatened by the Commission.
1.11 The terms of the Investment
Advisory Agreement, including compensation terms, comply in all material
respects with all applicable provisions of the Investment Company Act and the
Advisers Act.
1.12 The approval of the Investment
Advisory Agreement by each of the Board of Directors and the initial
stockholders of the Company has been made in accordance with the requirements of
Section 15 of the Investment Company Act applicable to companies that have
elected to be regulated as BDCs under the Investment Company Act.
1.13 Except as disclosed in the
Registration Statement and the Prospectus, (i) no person is serving or acting as
an officer, director or investment adviser of the Company, except in accordance
with the provisions of the Investment Company Act and the Advisers Act and the
applicable published rules and regulations thereunder, and (ii) to the knowledge
of the Company, no director of the Company is an “affiliated person” (as defined
in the Investment Company Act) of the Dealer Manager.
1.14 The Company’s current business
operations and investments and contemplated business operations and investments
are in compliance in all material respects with the provisions of the Investment
Company Act and the rules and regulations of the Commission thereunder
applicable to BDCs and the rules and regulations of the Commission thereunder,
except as will not result, singly or in the aggregate, in a material adverse
effect on the Company.
1.15 The provisions of the corporate
charter and bylaws of the Company and the investment objectives, policies and
restrictions described in the Prospectus are not inconsistent with the
requirements of the Investment Company Act and the rules and regulations of the
Commission thereunder applicable to a BDC.
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1.16 No consent, approval,
authorization or other order of any governmental authority is required in
connection with the execution or delivery by the Company of this Agreement or
the issuance and sale by the Company of the Offered Shares, except (a)
registration of the Offered Shares under the Securities Act; (b) election to be
regulated as a BDC under the Investment Company Act; (c) registration under the
Advisers Act; (d) any necessary qualification under the securities or blue sky
laws of the jurisdictions in which the Offered Shares are being offered by the
Dealer Manager and the Selected Dealers; and (e) under the conduct rules set
forth in the Financial Industry Regulatory Authority (“FINRA”) rulebook
(the
“FINRA
Rules”).
1.17 There are no actions, suits or
proceedings pending or, to the knowledge of the Company or the Adviser,
threatened against either the Company or the Adviser at law or in equity or
before or by any federal or state commission, regulatory body or administrative
agency or other governmental body, domestic or foreign, which would have a
Material Adverse Effect.
1.18 The issuance and sale of the
Offered Shares have been duly authorized by the Company, and, when issued and
duly delivered against payment therefor as contemplated by this Agreement, will
be validly issued, fully paid and nonassessable, free and clear of any pledge,
lien, encumbrance, security interest or other claim, and the issuance and sale
of the Offered Shares by the Company are not subject to preemptive or other
similar rights arising by operation of law, under the charter or bylaws of the
Company or under any agreement to which the Company is a party or
otherwise.
1.19 The Company has entered into an
escrow agreement (the “Escrow Agreement”) with Xxxxxx Street Bank & Trust as
escrow agent (the “Escrow Agent”) and the Dealer Manager, in the form included
as an exhibit to the Registration Statement, which provides for the
establishment of an escrow account into which subscribers’ funds will be
deposited pursuant to the subscription procedures described in Section 13 below
(the “Escrow Account”).
1.20 The financial statements of the
Company included in the Registration Statement and the Prospectus, together with
the related notes, present fairly the financial position of the Company, as of
the date specified, in conformity with generally accepted accounting principles
applied on a consistent basis and in conformity with Regulation S-X of the
Commission. No additional financial statements are required to be included in
the Registration Statement or the Prospectus.
1.21 Xxxxx Xxxxxxxx, LLP, whose report
on the financial statements of the Company included in the Registration
Statement and Prospectus, are, and during the period covered by the report
included in the Registration Statement and the Prospectus, were independent
registered public accountants as required by the Securities Act and the rules
and regulations of the Public Company Accounting Oversight Board.
1.22 Since the respective dates as of
which information is given in the Registration Statement and the Prospectus or
any amendments or supplements thereto, there has not been any event or
development which could reasonably be seen as having a Material Adverse
Effect.
1.23 There are no contracts or other
documents required by the Securities Act or the Securities Act Regulations to be
described in or incorporated by reference into the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement which have
not been accurately described in all material respects in the Prospectus or
incorporated or filed as required. The agreements to which either the Company or
the Adviser is a party which are described in the Registration Statement and the
Prospectus are valid and enforceable in all material respects by the Company
and/or the Adviser except as enforceability may be limited by bankruptcy,
reorganization, moratorium or similar laws affecting the enforceability of
creditors’ rights generally and rules of law governing specific performance,
injunctive relief and other equitable remedies, and, to the best of the
Company’s and the Adviser’s knowledge, no party thereto is in breach or default
under any of such agreements except where such breach or default would not have
a Material Adverse Effect.
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1.24 The Company has, and, to the
knowledge of the Company, all of the Company’s directors or officers in their
capacities as such have, complied in all material respects with any applicable
provision of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations
promulgated in connection therewith.
1.25 Neither the Company nor, to the
knowledge of the Company, any director, officer, employee or affiliate of the
Company is aware of or has taken any action, directly or indirectly, that would
result in a violation by such persons of the Foreign Corrupt Practices Act of
1977, as amended, and the rules and regulations thereunder.
1.26 Each of the Company and the
Adviser expects to implement and maintain controls and other procedures that
will be designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rules and
forms and is accumulated and communicated to the Company’s management, including
its chief executive officer and chief financial officer, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure; and the Company will make and keep books, records and accounts
which, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company and the Adviser; and the Company and
the Adviser expect to implement and maintain a system of internal accounting
controls sufficient to provide reasonable assurances that: (i) transactions are
executed in accordance with management’s general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences; and, to the Company’s knowledge, neither the Company nor the
Adviser, nor any employee or agent thereof, has made any payment of funds of the
Company or the Adviser, as the case may be, or received or retained any funds,
and no funds of the Company have been set aside to be used for any payment, in
each case in material violation of any law, rule or regulation applicable to the
Company or the Adviser.
1.27 No relationship, direct or
indirect, exists between or among the Company on the one hand, and the
directors, officers, security holders of the Company, the Adviser, or their
respective affiliates, on the other hand, which is required to be described in
the Prospectus and which is not so described.
2.
Covenants of the Company and the Adviser.
The Company and the Adviser hereby
jointly and severally covenant and agree with the Dealer Manager
that:
2.1 The Company will: (a) use
commercially reasonable efforts to cause the Registration Statement and any
subsequent amendments thereto to become effective as promptly as possible; (b)
promptly advise the Dealer Manager of (i) the receipt of any comments of, or
requests for additional or supplemental information from, the Commission, (ii)
the time and date of any filing of any post-effective amendment to the
Registration Statement or any amendment or supplement to the Prospectus, and
(iii) the time and date that any post-effective amendment to the Registration
Statement becomes effective; (c) timely file every amendment or supplement to
the Registration Statement or the Prospectus that may be required by the
Commission or under the Securities Act; and (d) if at any time the Commission
shall issue any stop order suspending the effectiveness of the Registration
Statement, it will promptly notify the Dealer Manager and, to the extent the
Company determines such action is in the best interest of the Company, use its
commercially reasonable efforts to obtain the lifting of such order at the
earliest possible time.
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2.2 In addition to and apart from the
Prospectus, the Company intends to furnish to all appropriate regulatory
agencies and use printed sales literature or other materials in connection with
the Offering prepared by the Company, the Adviser or the Dealer Manager, which
materials are generally described in the Prospectus. Such printed sales
literature or other materials prepared by the Company, the Adviser or the Dealer
Manager, provided that the use of said sales literature and other materials has
been approved for use by the Company in writing and all appropriate regulatory
agencies, are referred to hereinafter as the “Authorized Sales Materials.” In
the event that the Company uses printed materials in connection with the
Offering prepared by the Company, the Adviser or the Dealer Manager, intended
for “broker-dealer use only,” the Dealer Manager shall use such “broker-dealer
use only” materials in accordance with Section 4.3 below.
2.3 The Company will, at no expense to
the Dealer Manager, furnish the Dealer Manager with such number of printed
copies of the Registration Statement, including all amendments and exhibits
thereto, as the Dealer Manager may reasonably request. The Company will
similarly furnish to the Dealer Manager and Selected Dealers designated by the
Dealer Manager as many copies as the Dealer Manager may reasonably request in
connection with the Offering of the Offered Shares of: (a) the Prospectus in
preliminary and final form and every form of supplement to or post-effective
amendment to the Prospectus; and (b) the Authorized Sales
Materials.
2.4 The Company will use its
commercially reasonable efforts to qualify the Offered Shares for offering and
sale under, or to establish the exemption of the offering and sale of the
Offered Shares from qualification or registration under, the applicable state
securities or “blue sky” laws of each jurisdiction designated in Exhibit B
hereto (the “Qualified Jurisdictions”) and to maintain such qualifications or
exemptions in effect throughout the Offering. In connection therewith, the
Company will prepare and file all such reports as may be required by the
securities regulatory authorities in the Qualified Jurisdictions in which the
Offered Shares have been sold, provided that the Dealer Manager shall have
provided the Company with any information required for such filings or reports
that is in the Dealer Manager’s possession. The Company will notify the Dealer
Manager promptly following each date of: (a) the effectiveness of qualification
or exemption of Offered Shares in any additional jurisdiction in which the
offering and sale of Offered Shares has been authorized by appropriate state
regulatory authorities; and (b) a change in the status of the qualification or
exemption of the Offered Shares in any jurisdiction in any respect. The Company
will file and obtain clearance of the Authorized Sales Materials to the extent
required by applicable state securities laws. The Company will furnish to the
Dealer Manager a copy of such papers filed by the Company in connection with any
such qualification.
2.5 If at any time when a Prospectus is
required to be delivered under the Securities Act any event occurs as a result
of which, in the opinion of the Company, the Prospectus would include an untrue
statement of a material fact or omits to state any material fact necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading, the Company will promptly notify the Dealer Manager
thereof (unless the information shall have been received from the Dealer
Manager) and the Dealer Manager and the Selected Dealers shall suspend the
offering and sale of the Offered Shares in accordance with Section 4.3 hereof
until such time as the Company, in its sole discretion (a) instructs the Dealer
Manager to resume the offering and sale of the Offered Shares and (b) has
prepared any required supplement to or post-effective amendment to the
Prospectus as shall be necessary to correct such statement or omission and to
comply with the requirements of Section 10 of the Securities Act.
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2.6 The Company will apply the proceeds
from the sale of the Offered Shares as stated in the Prospectus.
2.7 The Company will engage and
maintain, at its expense, a registrar and transfer agent for the Offered
Shares.
2.8 The Company will use its
commercially reasonable efforts to maintain its status as a BDC under the
Investment Company Act; provided, however, the Company may cease to be,
or withdraw its election as a BDC under the Investment Company Act, with the
approval of its board of directors and a vote of its stockholders as required by
Section 58 of the Investment Company Act, or a successor provision.
2.9 The Company will operate in a
manner so as to enable the Company to qualify as a regulated investment company
under the Code for each taxable year during which it elects to be treated as a
BDC under the Investment Company Act; provided, however, that at the discretion of the
Company’s board of directors, it may elect to not be so treated.
3. Payment
of Expenses and Fees.
3.1 The Company agrees to pay all costs
and expenses incident to the Offering, whether or not the transactions
contemplated hereunder are consummated or this Agreement is terminated,
including expenses, fees and taxes in connection with: (a) the registration fee,
the preparation and filing of the Registration Statement (including without
limitation financial statements, exhibits, schedules and consents), the
Prospectus, and any amendments or supplements thereto, and the printing and
furnishing of copies of each thereof to the Dealer Manager and to Selected
Dealers (including costs of mailing and shipment); (b) the preparation, issuance
and delivery of certificates, if any, for the Offered Shares, including any
stock or other transfer taxes or duties payable upon the sale of the Offered
Shares; (c) all fees and expenses of the Company’s legal counsel and the
independent registered public accounting firm; (d) the qualification of the
Offered Shares for offering and sale under state laws in the states, including
the Qualified Jurisdictions, that the Company shall designate as appropriate and
the determination of their eligibility for investment under state law as
aforesaid and the printing and furnishing of copies of any blue sky surveys or
legal investment surveys to the Dealer Manager; (e) filing for review by FINRA
of all necessary documents and information relating to the Offering and the
Offered Shares (including the reasonable legal fees and filing fees and other
disbursements of counsel relating thereto); (f) the fees and expenses of any
transfer agent or registrar for the Offered Shares and miscellaneous expenses
referred to in the Registration Statement; (g) all costs and expenses incident
to the travel and accommodation of the Company’s employees in making road show
presentations with respect to the offering of the Offered Shares; and (h) the
performance of the Company’s other obligations hereunder.
4.
Obligations and Compensation of Dealer Manager.
The Dealer Manager hereby represents
and warrants to, and covenants and agrees with the Company and the Adviser
(provided that, to the extent representations and warranties of the Company and
the Adviser are given only as of a specified date or dates, the Dealer Manager
only makes such representations and warranties as of such date or dates) as
follows:
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4.1 The Company hereby appoints the
Dealer Manager as its exclusive agent and distributor during the period
commencing with the date hereof and ending on the termination date of the
Offering (the “Termination Date”) described in the Prospectus (the “Offering
Period”) to solicit and to cause Selected Dealers to solicit subscriptions for
the Offered Shares at the subscription price to be paid in accordance with, and
otherwise upon the other terms and conditions set forth in, the Prospectus and
the Subscription Agreement, and the Dealer Manager agrees to use its best
efforts to procure subscribers for the Offered Shares during the Offering
Period. The Offered Shares offered and sold through the Dealer Manager under
this Agreement shall be offered and sold only by the Dealer Manager and, at the
Dealer Manager’s sole option, by any Selected Dealers whom the Dealer Manager
may retain, each of which shall be members of FINRA in good standing, pursuant
to an executed Selected Dealer Agreement with such Selected Dealer. The Dealer
Manager hereby accepts such agency and distributorship and agrees to use its
best efforts to sell the Offered Shares on said terms and conditions. The Dealer
Manager represents to the Company that (i) it is a member of FINRA in good
standing, (ii) it and its employees and representatives have all required
licenses and registrations to act under this Agreement and (iii) it has
established and implemented anti-money laundering compliance programs in
accordance with applicable law, including applicable FINRA rules, Commission
rules and regulations (“Commission Rules”) and the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act (USA PATRIOT Act) of 2001, as amended by the USA Patriot
Improvement and Reauthorization Act of 2005 (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 Offered Shares. In
addition, the Dealer Manager represents that it has established and implemented
a program for compliance with Executive Order 13224 and all regulations and
programs administered by the Treasury Department’s Office of foreign Assets
Control regulations and programs administered by the Treasury Department’s
Office of Foreign Assets Control (“OFAC Program”) and will continue to maintain
its OFAC Program during the term of this Agreement.
The Dealer Manager further represents
that 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 the Dealer Manager
hereby agrees, upon request of the Company, to provide an annual certification
to the Company that, as of the date of such certification (i) its AML Program
and its OFAC Program are consistent with the AML Rules and OFAC requirements,
(ii) it has continued to implement its AML Program and its OFAC Program, and
(iii) 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.
4.2 With respect to its participation
and the participation by each Selected Dealer in the offer and sale of the
Offered Shares (including, without limitation any resales and transfers of
Offered Shares), the Dealer Manager agrees, and, by virtue of entering into the
Selected Dealer Agreement, each Selected Dealer shall have agreed, to comply and
shall comply with any applicable requirements of the Securities Act, the
Exchange Act, the rules promulgated under each, the applicable state securities
or blue sky laws, and FINRA Rules, specifically including, but not in any way
limited to, Rules 2340, 2420, 2740, and 2750 therein. The Dealer Manager agrees,
and each Selected Dealer shall have agreed, to comply and shall comply with any
applicable requirements with respect to its and each Selected Dealer’s
participation in any resales or transfers of the Offered Shares. In addition,
the Dealer Manager agrees, and each Selected Dealer shall have agreed, that
should it or they assist with the resale or transfer of the Offered Shares, it
and each Selected Dealer will fully comply with all applicable FINRA or
Commission Rules or any other applicable Federal or state laws.
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4.3 The Dealer Manager shall cause the
Offered Shares to be offered and sold only in the Qualified Jurisdictions, and
in such additional jurisdictions as may be added thereto in which the offering
and sale of Offered Shares has been authorized by appropriate state regulatory
authorities. No Offered Shares shall be offered or sold for the account of the
Company in any other states. The Dealer Manager shall use and distribute in
conjunction with the offer and sale of any Offered Shares only the Prospectus
and the Authorized Sales Materials. The Authorized Sales Materials may only be
furnished to prospective investors if accompanied or preceded by the Prospectus,
as defined by Section 1.1 of this Agreement. The Dealer Manager represents and
warrants to the Company that it will not use any sales literature not authorized
and approved by the Company or use any “broker-dealer use only” materials with
members of the public in connection with offers or sales or the Offered Shares.
The Dealer Manager agrees, and will cause the Selected Dealers to each agree, to
suspend or terminate offering and sale of the Offered Shares upon request of the
Company at any time and to resume offering and sale of the Offered Shares upon
subsequent request of the Company.
4.4 In consideration for the services
rendered by the Dealer Manager, the Company agrees that it will pay to the
Dealer Manager:
(a) a dealer manager fee in the amount
of 3.0% of the gross proceeds from the sale of the Offered Shares (the “Dealer
Manager Fee”), a portion of which may be reallowed to Selected Dealers (as
described more fully in the Selected Dealer Agreement entered into with such
Selected Dealer), up to an aggregate maximum of 1.5% of the gross proceeds of
the Offered Shares sold, which reallowance, if any, shall be determined by the
Dealer Manager in its discretion based on factors including, but not limited to,
the number of shares sold by such Selected Dealer, the assistance of such
Selected Dealer in marketing the Offering and due diligence expenses incurred,
and the extent to which similar fees are reallowed to selected broker-dealers in
similar offerings being conducted during the Offering Period; provided, however, that no Dealer Manager Fee
shall be payable in respect of the purchase of Offered Shares by an officer,
director or employee of the Company, the Adviser or their respective affiliates;
and
(b) subject to volume discounts and
other special circumstances described in or otherwise provided in the “Plan of
Distribution” section of the Prospectus, selling commissions in the amount of
7.0% of the gross proceeds of the Offered Shares sold, which commissions may be
reallowed in whole or in part to the Selected Dealer who sold the Offered Shares
giving rise to such commissions, as described more fully in the Selected Dealer
Agreement entered into with such Selected Dealer; provided, however, that no commissions described
in this clause (b) shall be payable in respect of the purchase of Offered
Shares: (i) through an investment advisory representative affiliated with a
Selected Dealer who is paid on a fee-for-service basis by the investor; (ii) by
a Selected Dealer (or such Selected Dealer’s registered representative), in its
individual capacity, or by a retirement plan of such Selected Dealer (or such
Selected Dealer’s registered representative), or (iii) by an officer, director,
employee or affiliate of the Company or the Adviser.
4.5 The Company will not be liable or
responsible to any Selected Dealer for direct payment of commissions or the
Dealer Manager Fee to such Selected Dealer, it being the sole and exclusive
responsibility of the Dealer Manager for payment of commissions or the Dealer
Manager Fee to Selected Dealers. Notwithstanding the above, the Company, in its
sole discretion, either directly or through the Escrow Agent, may act as agent
of the Dealer Manager by making direct payment of commissions or the Dealer
Manager Fee to such Selected Dealers without incurring any liability therefor.
The Dealer Manager Fee and all selling commissions payable to the Dealer Manager
with respect to any Offered Shares sold will be paid or offered substantially
concurrently with the acceptance of subscribers for such Offered Shares as
stockholders by the Company.
4.6 The Dealer Manager represents and
warrants to the Company, the Adviser and each person that signs the Registration
Statement that the information regarding the Offering in the Prospectus and all
other information furnished to the Company by the Dealer Manager in writing
expressly for use in the Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment or supplement thereto, does not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading.
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4.7 The Dealer Manager represents and
warrants to the Company and the Adviser that it will not represent or imply that
the Escrow Agent has investigated the desirability or advisability of investment
in the Company, or has approved, endorsed or passed upon the merits of the
Offered Shares or the Company, nor will the Dealer Manager use the name of said
Escrow Agent in any manner whatsoever in connection with the offer or sale of
the Offered Shares other than by acknowledgment that it has agreed to serve as
escrow agent.
5.
Indemnification.
5.1 For the purposes of this Section 5,
an entity’s “Indemnified Parties” shall include such entity’s officers,
directors, employees, members, partners, agents and representatives, and each
person, if any, who controls such entity within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act.
5.2 The Company and the Adviser,
jointly and severally, will indemnify, defend (subject to Section 5.6) and hold
harmless the Selected Dealers and the Dealer Manager, and their respective
Indemnified Parties, from and against any losses, claims (including the
reasonable cost of investigation), damages or liabilities, joint or several, to
which such Selected Dealers or Dealer Manager, or their respective Indemnified
Parties, may become subject, under the Securities Act or the Exchange Act, or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (a) in whole or in part, any
material inaccuracy in a representation or warranty contained herein by either
the Company or the Adviser, any material breach of a covenant contained herein
by either the Company or the Adviser, or any material failure by either the
Company or the Adviser to perform its obligations hereunder or to comply with
state or federal securities laws applicable to the Offering, or (b) any untrue
statement or alleged untrue statement of a material fact contained (i) in the
Registration Statement or any post-effective amendment thereto or in the
Prospectus or any supplement to the Prospectus or (ii) in any Authorized Sales
Materials or (iii) in any blue sky application or other document executed by the
Company or on its behalf specifically for the purpose of qualifying any or all
of the Offered Shares for sale under the securities laws of any jurisdiction or
based upon written information furnished by the Company or the Adviser under the
securities laws thereof (any such application, document or information being
hereinafter called a “Blue Sky Application”), or (c) the omission or alleged
omission to state a material fact required to be stated in the Registration
Statement or any posteffective amendment thereof or in the Prospectus or any
supplement to the Prospectus as necessary to make the statements therein not
misleading, and the Company and the Adviser will reimburse each Selected Dealer
or Dealer Manager, and/or their respective Indemnified Parties, for any legal or
other expenses reasonably incurred by such Selected Dealer or Dealer Manager,
and/or their respective Indemnified Parties, in connection with investigating or
defending such loss, claim, damage, liability or action; provided, however, that the Company or the
Adviser will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of, or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in reliance
upon and in conformity with written information furnished either (x) to the
Company or the Adviser by the Dealer Manager or (y) to the Company, the Adviser
or Dealer Manager by or on behalf of any Selected Dealer expressly for use in
the Registration Statement or any such post-effective amendment thereof, or the
Prospectus or any such supplement thereto. This indemnity agreement will be in
addition to any liability which either the Company or the Adviser may otherwise
have.
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Notwithstanding the foregoing, the
indemnification and agreement to hold harmless provided in this Section 5.2 is
further limited to the extent that no such indemnification by the Company or the
Adviser of a Selected Dealer or the Dealer Manager, or their respective
Indemnified Parties, shall be permitted under this Agreement for, or arising out
of, an alleged violation of federal or state securities laws, unless one or more
of the following conditions are met: (i) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations as to the particular indemnitee; (ii) such claims have been dismissed
with prejudice on the merits by a court of competent jurisdiction as to the
particular indemnitee; or (iii) a court of competent jurisdiction approves a
settlement of the claims against the particular indemnitee and finds that
indemnification of the settlement and the related costs should be made, and the
court considering the request for indemnification has been advised of the
position of the Commission and of the published position of any state securities
regulatory authority in which the securities were offered or sold as to
indemnification for violations of securities laws.
5.3 The Dealer Manager will indemnify,
defend and hold harmless the Company and the Adviser, their respective
Indemnified Parties and each person who has signed the Registration Statement,
from and against any losses, claims, damages or liabilities to which any of the
aforesaid parties may become subject, under the Securities Act or the Exchange
Act, or otherwise, insofar as such losses, claims (including the reasonable cost
of investigation), 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 a
representation or warranty contained herein by the Dealer Manager, any material
breach of a covenant contained herein by the Dealer Manager, or any material
failure by the Dealer Manager to perform its obligations hereunder or (b) any
untrue statement or any alleged untrue statement of a material fact contained
(i) in the Registration Statement or any post-effective amendment thereto or in
the Prospectus or any supplement to the Prospectus or (ii) in any Authorized
Sales Materials or (iii) any Blue Sky Application, or (c) the omission or
alleged omission to state a material fact required to be stated in the
Registration Statement or any post-effective amendment thereof or in the
Prospectus or any supplement to the Prospectus as necessary to make the
statements therein 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 Adviser by the Dealer Manager
specifically for use with reference to the Dealer Manager in the preparation of
the Registration Statement or any such post-effective amendments thereof or the
Prospectus or any such supplement thereto, or (c) any use of sales literature by
the Dealer Manager not authorized or approved by the Company or any use of
“broker-dealer use only” materials with members of the public concerning the
Offered Shares by the Dealer Manager, or (d) any untrue statement made by the
Dealer Manager or its representatives or agents or omission 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 Offered Shares, or (e) any material violation by the Dealer Manager of
this Agreement, or (f) any failure by the Dealer Manager to comply with
applicable laws governing money laundry abatement and anti-terrorist financing
efforts, including applicable FINRA Rules, Commission Rules and the USA PATRIOT
Act, or (g) any other failure by the Dealer Manager to comply with applicable
FINRA or Commission Rules. The Dealer Manager will reimburse the aforesaid
parties in connection with investigation or defense of such loss, claim, damage,
liability or action. This indemnity agreement will be in addition to any
liability which the Dealer Manager may otherwise have.
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5.4 Each Selected Dealer severally will
indemnify, defend and hold harmless the Company, the Adviser, the Dealer
Manager, each of their respective Indemnified Parties, and each person who signs
the Registration Statement, from and against any losses, claims, damages or
liabilities to which the Company, the Adviser, the Dealer Manager, or any of
their respective Indemnified Parties, or any person who signed the Registration
Statement, may become subject, under the Securities Act or otherwise, insofar as
such losses, claims (including the reasonable cost of investigation), 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 a representation or warranty by
the Selected Dealer, any material breach of a covenant by the Selected Dealer,
or any material failure by the Selected Dealer to perform its obligations
hereunder or under the Selected Dealer Agreement, or (b) any untrue statement or
alleged untrue statement of a material fact contained (i) in the Registration
Statement or any posteffective amendment thereto or the Prospectus or any
supplement to the Prospectus or (ii) in any Authorized Sales Materials or (iii)
any Blue Sky Application, or (c) the omission or alleged omission to state a
material fact required to be stated in the Registration Statement or any
post-effective amendment thereof or in the Prospectus or any supplement to the
Prospectus or necessary to make statements therein 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 Adviser or the Dealer Manager by the
Selected Dealer specifically for use with reference to the Selected Dealer in
the Registration Statement or any such post-effective amendments thereof or the
Prospectus or any such supplement thereto, or (d) any use of sales literature by
the Selected Dealer not authorized or approved by the Company or use of
“broker-dealer use only” materials with members of the public concerning the
Offered Shares by such Selected Dealer or Selected Dealer’s representatives or
agents, or (e) any untrue statement made by such Selected Dealer or its
representatives or agents or omission 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 Offered Shares, or
(f) any failure by the Selected Dealer to comply with Section VII or Section X
or any other material violation of the Selected Dealer Agreement, or (f) any
failure of the Selected Dealer to comply with applicable laws governing money
laundry abatement and anti-terrorist financing efforts, including applicable
FINRA Rules, Commission Rules and the USA PATRIOT Act, or (g) any other failure
by the Selected Dealer to comply with applicable FINRA or Commission Rules or
any other applicable Federal or state laws. Each Selected Dealer will reimburse
the aforesaid parties 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 Selected Dealer may otherwise have.
5.5 Promptly after receipt by an
indemnified party under this Section 5 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 5, notify in writing the
indemnifying party of the commencement thereof and the omission to so notify the
indemnifying party will relieve such indemnifying party from any liability under
this Section 5 as to the particular item for which indemnification is then being
sought, but not from any other liability which it may have to any indemnified
party. In case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled, to the extent it may wish, jointly with any other
indemnifying party similarly notified, to participate in the defense thereof,
with separate counsel. Such participation shall not relieve such
indemnifying party of the obligation to reimburse the indemnified party for
reasonable legal and other expenses (subject to Section 5.6) 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 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.
5.6 An indemnifying party under Section
5 of this Agreement shall be obligated to reimburse an indemnified party for
reasonable legal and other expenses as follows:
(a) In the case of the Company and/or
the Adviser indemnifying the Dealer Manager, the advancement of Company funds to
the Dealer Manager for legal expenses and other costs incurred as a result of
any legal action for which indemnification is being sought shall be permissible
only if all of the following conditions are satisfied: (i) the legal action
relates to acts or omissions with respect to the performance of duties or
services on behalf of the Company; (ii) the legal action is initiated by a third
party who is not a shareholder of the Company or the legal action is initiated
by a shareholder of the Company acting in his or her capacity as such and a
court of competent jurisdiction specifically approves such advancement; and
(iii) the Dealer Manager undertakes to repay the advanced funds to the Company,
together with the applicable legal rate of interest thereon, in cases which the
Dealer Manager is found not to be entitled to indemnification.
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(b) In any case of indemnification
other than that described in Section 5.6(a) above, the indemnifying party shall
pay all legal fees and expenses of 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 that has been selected 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.
5.7 The indemnity agreements contained
in this Section 5 shall remain operative and in full force and effect regardless
of: (a) any investigation made by or on behalf of any Selected Dealer, or any
person controlling any Selected Dealer or by or on behalf of the Company, the
Adviser, the Dealer Manager or any officer or director thereof, or by or on
behalf of the Company or the Dealer Manager; (b) delivery of any Offered Shares
and payment therefor; and (c) any termination of this Agreement or any Selected
Dealer Agreement. A successor of any Selected Dealer or of any of the parties to
this Agreement, as the case may be, shall be entitled to the benefits of the
indemnity agreements contained in this Section 5.
5.8 Notwithstanding any other provision
of this Section 5, no party shall be entitled to indemnification or contribution
under this Agreement in violation of Section 17(i) of the Investment Company
Act.
6.
Survival of Provisions.
The respective agreements,
representations and warranties of the Company, the Adviser, and the Dealer
Manager set forth in this Agreement shall remain operative and in full force and
effect until the Termination Date regardless of: (a) any investigation made by
or on behalf of the Dealer Manager or any Selected Dealer or any person
controlling the Dealer Manager or any Selected Dealer or by or on behalf of the
Company, the Adviser or any person controlling the Company; and (b) the delivery
of payment for the Offered Shares. Following the termination of this Agreement,
this Agreement will become void and there will be no liability of any party to
any other party hereto, except for obligations under Sections 5, 6, 7, 9, 10, 11
and 15, all of which will survive the termination of this
Agreement.
7.
Applicable Law; Venue
7.1 This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement, directly or indirectly, shall be governed by
the laws of the State of Colorado applicable to contracts formed and to be
formed entirely within the State of Colorado, without regard to the conflicts of
laws principles and rules thereof, to the extent such principles would require
or permit the application of the laws of another jurisdiction.
13
8.
Counterparts.
This Agreement may be executed in any
number of counterparts. Each counterpart, when executed and delivered, shall be
an original contract, but all counterparts, when taken together, shall
constitute one and the same Agreement.
9. Entire
Agreement.
This Agreement and the Exhibits
attached hereto constitute the entire agreement among the parties and supersede
any prior understanding, whether written or oral, prior to the date hereof with
respect to the Offering.
10.
Successors and Amendment.
10.1 This Agreement shall inure to the
benefit of and be binding upon the Dealer Manager and the Company and the
Adviser and their respective successors and permitted assigns and shall inure to
the benefit of the Selected Dealers to the extent set forth in Sections 1 and 5
hereof. Nothing in this Agreement is intended or shall be construed to give to
any other person any right, remedy or claim, except as otherwise specifically
provided herein.
10.2 This Agreement may be amended only
by the written agreement of the Dealer Manager, the Company and the
Adviser.
10.3 Neither the Company or Adviser,
nor the Dealer Manager may assign or transfer any of such party’s rights or
obligations under this Agreement without the prior written consent of the Dealer
Manager, on the one hand, or the Company and the Adviser, acting together, on
the other hand.
11. Term
and Termination.
11.1 This Agreement may be terminated
by the Dealer Manager, on the one hand, or the Company and the Adviser acting
together, on the other, in the event that (a) the Company or the Adviser, on the
one hand, or the Dealer Manager, on the other, shall have materially failed to
comply with any of the material provisions of this Agreement or (b) the Company
or the Adviser, on the one hand, or the Dealer Manager, on the other, materially
breaches any of its representations and warranties contained in this Agreement
and, in the case of the Company or the Adviser, such breach or breaches,
individually or in the aggregate, would have a Material Adverse Effect; provided, however, that no party may terminate
this Agreement under this sentence unless such failure(s) or breach(es) under
clause (a) or (b) above is or are not cured within thirty (30) days after such
party has delivered notice of intent to terminate under this Section 11.1. In
any case, this Agreement shall expire at the close of business on the
Termination Date.
11.2 The Dealer Manager, upon the
expiration or termination of this Agreement, shall (i) promptly deposit any and
all subscription amounts , if any, in its possession which were received
from investors for the sale of Offered Shares into the appropriate escrow
account, (ii) promptly deliver to the Company all records and documents in its
possession which relate to the Offering and are not designated as dealer copies,
(iii) provide a list of all purchasers and broker-dealers with whom the Dealer
Manager has initiated oral or written discussions regarding the Offering, and
(iv) notify Selected Dealers of such termination. The Dealer Manager, at its
sole expense, may make and retain copies of all such records and documents, but
shall keep all such information confidential. The Dealer Manager shall use its
best efforts to cooperate with the Company to accomplish an orderly transfer of
management of the Offering to a party designated by the Company.
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11.3 Upon expiration or termination of
this Agreement, the Company shall pay to the Dealer Manager all compensation to
which the Dealer Manager is or becomes entitled under Section 4 at such time as
such compensation becomes payable.
12.
Confirmation.
The Company hereby agrees and assumes,
or will arrange for a party designated by it, to assume the duty to confirm, on
its behalf and on behalf of Selected Dealers, all orders for purchase of Offered
Shares accepted by the Company. Such confirmations will comply with the rules of
the Commission and FINRA, and will comply with applicable laws of such other
jurisdictions to the extent the Company is advised of such laws in writing by
the Dealer Manager.
13.
Submission of Orders.
13.1 Each person desiring to purchase
Offered Shares in the Offering will be required to complete and execute a
Subscription Agreement in the form attached as an Appendix to the Prospectus and
to deliver to the Selected Dealer or Dealer Manager, as the case may be (the
“Processing Broker-Dealer”), such completed Subscription Agreement, together
with a check, draft, wire or money order (hereinafter referred to as a
“Subscription Payment”) for the purchase price of the Offered Shares, subject to
any discount that may apply based upon the volume of Offered Shares purchased
pursuant to the schedule of discounts and procedures specified in the
Prospectus. There shall be a minimum initial purchase by any one purchaser
of 500 Offered Shares (except as otherwise indicated in the
Prospectus, or in any letter or memorandum from the Company to the Dealer
Manager). Minimum subsequent purchases of Offered Shares shall be 100 Offered
Shares per transaction. Persons who purchase Offered Shares shall make their
checks payable to “ Xxxxxx Street Bank & Trust, as escrow agent for
Xxxxxxx Capital, Inc .”
The Company will sell the Offered
Shares on a continuous basis at a price of $10.00 per Offered Share, subject to
any adjustment to ensure that Offered Shares are not sold at a price, after
deduction of selling commissions and the Dealer Manager Fee, that is below net
asset value per Offered Share. Each person desiring to purchase Offered Shares
in the Offering must submit subscriptions for a specific amount
of Offered Shares.
The Processing Broker-Dealer receiving
a Subscription Agreement and Subscription Payment not conforming to the
foregoing instructions shall return such Subscription Agreement and Subscription
Payment directly to such subscriber not later than the end of the second
business day following receipt by the Processing Broker-Dealer of such
materials. Subscription Agreements and Subscription Payments received by the
Processing Broker-Dealer which conform to the foregoing instructions shall be
transmitted for deposit pursuant to one of the methods described in this Section
13. Transmittal of received investor funds will be made in accordance with the
following procedures. The Dealer Manager may authorize certain Selected Dealers
that are “$250,000 broker-dealers” to instruct their customers to make their
checks for Offered Shares subscribed for payable directly to the Selected
Dealer. In such case, the Selected Dealer will collect the proceeds of the
subscribers’ checks and issue a check for the aggregate amount of the
subscription proceeds made payable to the order of “Xxxxxx Street Bank &
Trust, as escrow agent for Xxxxxxx Capital, Inc.”
13.2 If the Processing Broker-Dealer
conducts its internal supervisory review at the same location at which
Subscription Agreements and Subscription Payments are received from subscribers,
then, by noon of the next business day following receipt by the Processing
Broker-Dealer, the Processing Broker-Dealer will transmit the Subscription
Agreements and Subscription Payment for deposit with the Escrow Agent, or after
the Minimum Offering has been achieved, to the Company or its designated
agent.
15
13.3 If the Processing Broker-Dealer
conducts its internal supervisory review at a different location (the “Final
Review Office”), Subscription Agreements and Subscription Payments will be
transmitted by the Processing Broker-Dealer to the Final Review Office by noon
of the next business day following receipt by the Processing Broker-Dealer. The
Final Review Office will in turn by noon of the next business day following
receipt by the Final Review Office, transmit such Subscription Agreements and
Subscription Payment for deposit to the Escrow Agent, or after the Minimum
Offering has been achieved, to the Company or its designated agent.
Notwithstanding the foregoing, with
respect to any Offered Shares to be purchased by a custodial account, the
Processing Broker-Dealer shall cause the custodian of such account to deliver a
completed Subscription Agreement and Subscription Payment for such account
directly for deposit to the Escrow Agent. The Processing Broker-Dealer shall
furnish to the Escrow Agent with each delivery of Subscription Payments a list
of the subscribers showing the name, address, tax identification number, state
of residence, amount of Offered Shares subscribed for, and the amount of money
paid.
14.
Suitability of Investors; Compliance with Privacy Laws
14.1 The Dealer Manager will offer
Offered Shares, and in its agreements with Selected Dealers will require that
the Selected Dealers offer Offered Shares, only to those persons who meet the
suitability standards set forth in the Prospectus or in any suitability letter
or memorandum sent by the Company and will only make offers to persons in the
jurisdictions in which it is advised in writing that the Offered Shares are
qualified for sale or that such qualification is not required. Notwithstanding
the qualification of the Offered Shares for sale in any respective jurisdiction
(or the exemption therefrom), the Dealer Manager represents, warrants and
covenants that it will not offer Offered Shares and will not permit any of its
registered representatives to offer Offered Shares in any jurisdiction unless
both the Dealer Manager and such registered representative are duly licensed to
transact securities business in such jurisdiction. In offering Offered Shares,
Dealer Manager will comply, and in its agreements with Selected Dealers the
Dealer Manager will require that the Selected Dealers comply, with the
provisions of FINRA Rules, as well as all other applicable rules and regulations
relating to suitability of investors.
The Dealer Manager further represents,
warrants and covenants that neither the Dealer Manager, nor any person
associated with the Dealer Manager, shall offer or sell Offered Shares in any
jurisdiction except to investors who satisfy the investor suitability standards
and minimum investment requirements under the most restrictive of the following:
(1) applicable provisions described in the Prospectus, including minimum income
and net worth standards; (2) applicable laws of the jurisdiction of which such
investor is a resident; or (3) applicable FINRA Rules. The Dealer Manager agrees
to ensure that, in recommending the purchase, sale or exchange of Offered Shares
to an investor, the Dealer Manager, or a person associated with the Dealer
Manager, shall have reasonable grounds to believe, on the basis of information
obtained from the investor (and thereafter maintained in the manner and for the
period required by the Commission, any state securities commission, FINRA or the
Company) concerning his age, investment objectives, other investments, financial
situation and needs, and any other information known to the Dealer Manager, or
person associated with the Dealer Manager, that (A) the investor can reasonably
benefit from an investment in the Offered Shares based on the investor’s overall
investment objectives and portfolio structure, (B) the investor is able to bear
the economic risk of the investment based on the investor’s overall financial
situation, and (C) the investor has an apparent understanding of (i) the
fundamental risks of the investment, (ii) the risk that the investor may lose
his entire investment in the Offered Shares, (iii) the lack of liquidity of the
Offered Shares, (iv) the restrictions on transferability of the Offered Shares,
(v) the background and qualifications of the Company’s sponsor or the persons
responsible for directing and managing the Company, and (vi) the tax
consequences of an investment in the Offered Shares. The Dealer Manager further
represents, warrants and covenants that the Dealer Manager, or a person
associated with the Dealer Manager, will make every reasonable effort to
determine the suitability and appropriateness of an investment in Offered Shares
of each proposed investor by reviewing documents and records disclosing the
basis upon which the determination as to suitability was reached as to each
purchaser of Offered Shares pursuant to a subscription solicited by the Dealer
Manager, whether such documents and records relate to accounts which have been
closed, accounts which are currently maintained, or accounts hereafter
established. The Dealer Manager agrees to retain such documents and records in
the Dealer Manager’s records for a period of six years from the date of the
applicable sale of Offered Shares and to make such documents and records
available to (i) the Company upon request, and (ii) representatives of the
Commission, FINRA and applicable state securities administrators upon the Dealer
Manager’s receipt of an appropriate document subpoena or other appropriate
request for documents from any such agency. The Dealer Manager shall not
purchase any Offered Shares for a discretionary account without obtaining the
prior written approval of the Dealer Manager’s customer and his or her signature
on a Subscription Agreement.
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14.2 The Dealer Manager agrees, and in
its agreements with Selected Dealers the Dealer Manager will require that the
Selected Dealers to agree, (a) to abide by and comply with (i) the privacy
standards and requirements of the GrammLeach-Bliley Act of 1999 (“GLB Act”) and
Regulation S-P, (ii) the privacy standards and requirements of any other
applicable Federal or state law, and (iii) its own internal privacy policies and
procedures, each as may be amended from time to time; (b) to refrain from the
use or disclosure of nonpublic personal information (as defined under the GLB
Act) of all customers who have opted out of such disclosures except as necessary
to service the customers or as otherwise necessary or required by applicable
law; and (c) to determine which customers have opted out of the disclosure of
nonpublic personal information by periodically reviewing and, if necessary,
retrieving a list of such customers (the “List”) as provided by each to identify
customers that have exercised their opt-out rights.
In the event the Dealer Manager uses or
discloses nonpublic personal information of any customer for purposes other than
servicing the customer, or as otherwise required by applicable law, the Dealer
Manager will consult the List to determine whether the affected customer has
exercised his or her opt-out rights. The Dealer Manager understands that it is
prohibited from using or disclosing any nonpublic personal information of any
customer that is identified on the List as having opted out of such
disclosures.
15.
Notices.
Any notice, approval, request,
authorization, direction or other communication under this Agreement shall be
deemed given (a) when delivered personally, (b) on the first business day after
delivery to a national overnight courier service, (c) upon receipt of
confirmation if sent via facsimile, or (d) on the fifth business day after
deposited in the United States mail, properly addressed and stamped with the
required postage, registered or certified mail, return receipt requested, in
each case to the intended recipient at the address set forth below:
|
If
to the Company:
|
Xxxxxxx
Capital, Inc.
|
|
0000
XXX Xxxxxxx, Xxxxx 0000
|
|
|
Xxxxxxxxx
Xxxxxxx, XX 00000
|
|
|
If
to the Adviser
|
Xxxxxxx
Investments, LLC
|
|
0000
XXX Xxxxxxx, Xxxxx 0000
|
|
|
Xxxxxxxxx
Xxxxxxx, XX 00000
|
|
|
If
to the Dealer Manager:
|
Xxxxxxx
Securities, LLC
|
|
0000
XXX Xxxxxxx, Xxxxx 0000
|
|
|
Xxxxxxxxx
Xxxxxxx, XX 00000
|
17
Any party
may change its address specified above by giving the other party notice of such
change in accordance with this Section 15.
If the foregoing correctly sets forth
our understanding, please indicate your acceptance thereof in the space provided
below for that purpose, whereupon this letter and your acceptance shall
constitute a binding agreement between us as of the date first above
written.
| Very truly yours, | |
|
|
“COMPANY” |
|
|
XXXXXXX CAPITAL, INC. |
|
|
By:________________________________ |
|
|
Xxxxxxx X. Xxxxxxx |
|
|
President and Chief Executive Officer |
|
|
“ADVISER”
|
|
|
XXXXXXX
INVESTMENTS, LLC
|
|
|
By:________________________________
|
|
|
Xxxxxxx
X. Xxxxxxx
|
|
|
Managing
Member
|
Accepted
and agreed as of the date first above written:
|
“DEALER
MANAGER”
|
|
XXXXXXX
SECURITIES, LLC
|
|
By:_______________________________
|
|
Xxxx
X. Xxxxxxx
|
|
Principal
|
18
EXHIBIT
A
FORM
OF SELECTED DEALER AGREEMENT
XXXXXXX
CAPITAL, INC.
Up to
10,000,000 Shares of Common Stock, $0.001 par value per
share
Dated:________________,
2009
Ladies and
Gentlemen:
Subject to the terms described
hereinbelow, Xxxxxxx Securities, LLC, as the dealer manager (“Dealer Manager”)
for Xxxxxxx Capital, Inc., a Maryland corporation (the “Company”), invites you
(“Selected Dealer”) to participate in the distribution, on a best efforts basis,
of up to 10,000,000 shares of common stock of the Company, $0.001 par
value per share (the “Common Stock”), to be issued and sold to the public on a
“best efforts” basis (the “Offered Shares”) at an initial offering price of
$10.00 per share (subject in certain circumstances to discounts based upon the
volume of shares purchased) as set forth in the registration statement on Form
N-2 filed by the Company (File No.333-157217), which includes the Company’s
prospectus, as amended or supplemented (the “Prospectus”).
I.
Dealer Manager Agreement
Xxxxxxx Investments, LLC is the
investment adviser of the Company (the “Adviser”). The Dealer Manager has
entered into a dealer manager agreement with the Company and the Adviser dated
[___], 2009, in the form attached hereto as Exhibit A (the “Dealer Manager
Agreement”). Upon effectiveness of this Selected Dealer Agreement (this
“Agreement”) pursuant to Section XIV below, you will become one of the Selected
Dealers referred to in the Dealer Manager Agreement and will be entitled and
subject to the provisions contained in the Dealer Manager Agreement, including
the provisions of the Dealer Manager Agreement wherein each of the Selected
Dealers severally agrees to indemnify and hold harmless the Company, the
Adviser, the Dealer Manager and their respective officers, directors, employees,
members, partners, agents and representatives, and each person, if any, who
controls such entity within the meaning of the Securities Act of 1933, as
amended (the “Securities Act”) or the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). Except as otherwise set forth herein, capitalized
terms used and not otherwise defined herein shall have the meanings given them
in the Dealer Manager Agreement. The Offered Shares are offered solely through
broker-dealers who are members in good standing of the Financial Industry
Regulatory Authority (“FINRA”).
(a) Selected Dealer hereby agrees to
use its best efforts to sell the Offered Shares for cash on the terms and
conditions stated in the Company’s Prospectus. Nothing in this Agreement shall
be deemed or construed to make Selected Dealer an employee, agent,
representative, partner of the Dealer Manager, the Company or the Adviser, and
Selected Dealer is not authorized to act for the Dealer Manager, the Company or
the Adviser or to make any representations on their behalf except as set forth
in the Prospectus and any printed sales literature or other materials prepared
by the Company, the Adviser or the Dealer Manager, provided that the use of said
sales literature and other materials has been approved for use by the Company in
writing and all appropriate regulatory agencies (the “Authorized Sales
Materials”). In the event that the Company uses printed materials in connection
with the Offering prepared by the Company, the Adviser or the Dealer Manager
intended for “broker-dealer use only,” Selected Dealer shall use such
“broker-dealer use only” materials in accordance with Section VII
below.
19
II.
Submission of Orders
Each person desiring to purchase
Offered Shares in the Offering will be required to complete and execute a
Subscription Agreement in the form attached as an Appendix to the Prospectus and
to deliver to the Selected Dealer or Dealer Manager, as the case may be (the
“Processing Broker-Dealer”), such completed Subscription Agreement, together
with a check, draft, wire or money order (hereinafter referred to as a
“Subscription Payment”) for the purchase price of the Offered Shares, subject to
any discount that may apply based upon the volume of Offered Shares purchased
pursuant to the schedule of discounts and procedures specified in the
Prospectus. There shall be a minimum initial purchase by any one purchaser of
500 shares (except as otherwise indicated in the Prospectus, or in any
letter or memorandum from the Company to the Dealer Manager). Minimum subsequent
purchases of Offered Shares shall be 100 shares per transaction. Persons
who purchase Offered Shares shall make their checks payable to “ Xxxxxx Street
Bank & Trust, as escrow agent for Xxxxxxx Capital, Inc. ” Each
person desiring to purchase Offered Shares in the Offering must submit
subscriptions for a specific share amount
The Processing Broker-Dealer receiving
a Subscription Agreement and Subscription Payment not conforming to the
foregoing instructions shall return such Subscription Agreement and Subscription
Payment directly to such subscriber not later than the end of the second
business day following receipt by the Processing Broker-Dealer of such
materials. Subscription Agreements and Subscription Payments received by the
Processing Broker-Dealer which conform to the foregoing instructions shall be
transmitted for deposit pursuant to one of the methods described in this Section
II. If the Selected Dealer is a “$250,000 broker-dealer,” the Dealer Manager may
authorize the Selected Dealer to instruct its customers to make its check for
Offered Shares subscribed for payable directly to the Selected Dealer, in which
case the Selected Dealer will collect the proceeds of the subscriber’s check and
issue a check for the aggregate amount of the subscription proceeds made payable
to the order of “Xxxxxxx Capital Escrow Account.” Selected Dealer
hereby agrees to be bound by the terms of the Escrow Agreement,
dated ______, 2009 (the “Escrow Agreement”), by and among the
Escrow Agent and the Company.
(a) If the Processing Broker-Dealer
conducts its internal supervisory review at the same location at which
Subscription Agreements and Subscription Payments are received from subscribers,
then, by the end of the next business day following receipt by the Processing
Broker-Dealer, the Processing Broker-Dealer will transmit the Subscription
Agreements and Subscription Payment for deposit to the Escrow Agent, or after
the Minimum Offering has been achieved, to the Company or its designated
agent.
(b) If the Processing Broker-Dealer
conducts its internal supervisory review at a different location (the “Final
Review Office”), Subscription Agreements and Subscription Payments will be
transmitted by the Processing Broker-Dealer to the Final Review Office by the
end of the next business day following receipt by the Processing Broker-Dealer.
The Final Review Office will in turn by the end of the next business day
following receipt by the Final Review Office, transmit such Subscription
Agreements and Subscription Payment for deposit to the Escrow Agent, or after
the Minimum Offering has been achieved, to the Company or its designated
agent.
Selected Dealer understands that the
Company reserves the unconditional right to reject any subscription
for any or no reason.
Notwithstanding the foregoing, with
respect to any Offered Shares to be purchased by a custodial account, the
Processing Broker-Dealer shall cause the custodian of such account to deliver a
completed Subscription Agreement and Subscription Payment for such account
directly to the Transfer Agent. The Processing Broker-Dealer shall furnish with
each delivery of Subscription Payments a list of the subscribers showing the
name, address, tax identification number, state of residence, amount of Offered
Shares subscribed for, and the amount of money paid.
20
III.
Pricing
Except for volume discounts described
in or as otherwise provided in the “Plan of Distribution” section of the
Prospectus, the Offered Shares shall be offered to the public at an initial
offering price of $10.00 per Offered Share payable in cash. Except as otherwise
indicated in the Prospectus or in any letter or memorandum sent to Selected
Dealer by the Company or Dealer Manager, a minimum initial purchase of 500
Offered Shares is required. Minimum subsequent purchases of Offered Shares
shall be 100 Offered Shares per transaction. The Company will sell
the Offered Shares on a continuous basis at a price of $10.00 per Offered Share,
subject to any adjustment to ensure that Offered Shares are not sold at a price,
after deduction of selling commissions and the dealer manager fee, that is below
net asset value per Offered Share. Each person desiring to purchase Offered
Shares in the Offering must submit subscriptions for a specific
amount of Offered Shares.
The Offered Shares are nonassessable.
Selected Dealer hereby agrees to place any order for the full purchase price
except as otherwise provided in the Prospectus for volume discounts based upon
the number of Offered Shares purchased by a subscriber through Selected
Dealer.
IV.
Selected Dealer’s Compensation
Subject to volume discounts and other
special circumstances described in or as otherwise provided in the “The
Offering” section of the Prospectus, Selected Dealer’s selling commission
applicable to the total public offering price of Offered Shares sold by Selected
Dealer which it is authorized to sell hereunder is 7.0% of the gross proceeds of
Offered Shares sold by it and accepted and confirmed by the Company, which
commission will be paid by the Dealer Manager. For these purposes, a “sale of
Offered Shares” shall occur following the release from escrow the Offering
proceeds received in connection with the sale of the minimum number of Offered
Shares as set forth on the cover page of the Prospectus, and, if and only if, a
transaction has closed with a securities purchaser pursuant to all applicable
offering and subscription documents and the Company has thereafter distributed
the commission to the Dealer Manager in connection with such transaction.
Selected Dealer hereby waives any and all rights to receive payment of
commissions due until such time as the Dealer Manager is in receipt of the
commission from the Company. Selected Dealer affirms that the Dealer Manager’s
liability for commissions payable is limited solely to the proceeds of
commissions receivable associated therewith. In addition, as set forth in the
Prospectus, the Dealer Manager, in its sole discretion, may reallow a portion of
the Dealer Manager Fee to Selected Dealer as marketing fees or to defray other
distribution-related expenses, which reallowance, if any, shall be determined by
the Dealer Manager in its sole discretion based on factors including, but not
limited to, the number of shares sold by Selected Dealer, the assistance of
Selected Dealer in marketing the offering and due diligence expenses incurred,
and the extent to which similar fees are reallowed to selected broker-dealers in
similar offerings being conducted during the Offering. Such reallowance shall be
described in Schedule 1 to this Agreement.
Selected Dealer acknowledges and agrees
that no commissions, payments or amount whatsoever will be paid to Selected
Dealer in respect of the purchase of Offered Shares by a Selected Dealer (or its
registered representative), in its individual capacity, or by a retirement plan
of such Selected Dealer (or its registered representative), or by an officer,
director or employee of the Company, the Adviser or their respective
affiliates.
The parties hereby agree that the
foregoing commission is not in excess of the usual and customary distributors’
or sellers’ commission received in the sale of securities similar to the Offered
Shares, that Selected Dealer’s interest in the offering is limited to such
commission from the Dealer Manager and Selected Dealer’s indemnity referred to
in Section 5 of the Dealer Manager Agreement, and that the Company is not liable
or responsible for the direct payment of such commission to Selected
Dealer.
21
V.
Payment
Payments of selling commissions will be
made by the Dealer Manager (or by the Company as the agent of the Dealer
Manager, as provided in the Dealer Manager Agreement) to Selected Dealer within
30 days of the receipt by the Dealer Manager of the gross commission payments
from the Company.
Selected Dealer, in its sole
discretion, may authorize Dealer Manager (or the Company as the agent of the
Dealer Manager, as provided in the Dealer Manager Agreement) to deposit selling
commissions, reallowances and other payments due to it pursuant to this
Agreement directly to its bank account. If Selected Dealer so elects, Selected
Dealer shall provide such deposit authorization and instructions in Schedule 2
to this Agreement.
VI.
Right to Reject Orders or Cancel Sales
All orders, whether initial or
additional, are subject to acceptance by and shall only become effective upon
confirmation by the Company, which reserves the right to reject any order for
any or no reason. Orders not accompanied by a Subscription Agreement and
executed signature page thereto and the required Subscription Payment for the
Offered Shares may be rejected. Issuance and delivery of the Offered Shares will
be made only after actual receipt of payment therefor. If any Subscription
Payment is not paid upon presentment, or if the Company is not in actual receipt
of clearinghouse funds or cash, certified or cashier’s check or the equivalent
in payment for the Offered Shares within 15 days of sale, the Company reserves
the right to cancel the sale without notice. In the event an order is rejected,
canceled or rescinded for any reason, Selected Dealer agrees to return to the
Dealer Manager any commission or Dealer Manager Fee theretofore paid with
respect to such order, and, if Selected Dealer fails to so return any such
commission or Dealer Manager, the Dealer Manager shall have the right to offset
amounts owed against future commissions or Dealer Manager Fees due and otherwise
payable to Selected Dealer.
VII.
Prospectus and Authorized Sales Materials
Selected Dealer is not authorized or
permitted to give, and will not give, any information or make any representation
(written or oral) concerning the Offered Shares except as set forth in the
Prospectus and the Authorized Sales Materials. The Dealer Manager will supply
Selected Dealer with reasonable quantities of the Prospectus, any supplements
thereto and any amended Prospectus, as well as any Authorized Sales Materials,
for delivery to investors, and Selected Dealer will deliver a copy of the
Prospectus and all supplements thereto and any amended Prospectus to each
investor to whom an offer is made prior to or simultaneously with the first
solicitation of an offer to sell the Offered Shares to an investor. Selected
Dealer agrees that it will not send or give any supplements to the Prospectus,
any amended Prospectus or any Authorized Sales Materials to that investor unless
it has previously sent or given a Prospectus and all supplements thereto and any
amended Prospectus to that investor or has simultaneously sent or given a
Prospectus and all supplements thereto and any amended Prospectus with such
Prospectus supplement, amended Prospectus or Authorized Sales Materials.
Selected Dealer agrees that it will not show or give to any investor or
prospective investor or reproduce any material or writing which is supplied to
it by the Dealer Manager 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 Offered Shares to members of the public. Selected Dealer agrees that
it will not use in connection with the offer or sale of Offered Shares any
materials or writings which have not been previously approved by the Company
other than the Prospectus and the Authorized Sales Materials. Selected Dealer
agrees to furnish a copy of any revised preliminary Prospectus to each person to
whom it has furnished a copy of any previous preliminary Prospectus, and further
agrees that it will itself mail or otherwise deliver all preliminary and final
Prospectuses required for compliance with the provisions of Rule 15c2-8 under
the Exchange Act. Regardless of the termination of this Agreement, Selected
Dealer will deliver a Prospectus in transactions in the Offered Shares for a
period of 90 days from the Effective Date of the Registration Statement or such
longer period as may be required by the Exchange Act. Selected Dealer agrees to
comply with all the applicable requirements under the Securities Act and the
Exchange Act in offering and selling Offered Shares.
22
VIII.
License and Association Membership
Selected Dealer’s acceptance of this
Agreement constitutes a representation to the Company and the Dealer Manager
that Selected Dealer is a properly registered or licensed broker-dealer, duly
authorized to sell Offered Shares under Federal and state securities laws and
regulations in all states where it offers or sells Offered Shares, and that it
is a member in good standing of FINRA. Selected Dealer represents and warrants
that it is currently licensed as a broker-dealer in the jurisdictions identified
on Schedule 3 to this Agreement. This Agreement shall automatically terminate if
Selected Dealer ceases to be a member in good standing of FINRA or with the
securities commission of the state in which the Selected Dealer’s principal
office is located. Selected Dealer agrees to notify the Dealer Manager
immediately if Selected Dealer ceases to be a member in good standing of FINRA
or with the securities commission of any state in which the Selected Dealer is
currently registered or licensed, or in the case of a foreign dealer, so to
conform. Selected Dealer also hereby agrees to abide by the conduct rules set
forth in the FINRA rulebook (“FINRA Rules), including, without limitation, FINRA
Rules 2340, 2420, 2740 and 2750.
IX.
Anti-Money Laundering Compliance Programs
Selected Dealer’s acceptance of this
Dealer Agreement constitutes a representation to the Company and the Dealer
Manager that Selected Dealer has established and implemented an anti-money
laundering compliance program (“AML Program”) in accordance with applicable law,
including applicable FINRA Rules, Securities and Exchange Commission Rules (the
“Commission Rules”) and the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT
Act) of 2001, as amended by the USA Patriot Improvement and Reauthorization Act
of 2005 (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 sale of Offered
Shares. In addition, Selected Dealer represents that it has established and
implemented a program for compliance with Executive Order 13224 and all
regulations and programs administered by the Treasury Department’s Office of
foreign Assets Control regulations and programs administered by the Treasury
Department’s Office of Foreign Assets Control (“OFAC Program”) and will continue
to maintain its OFAC Program during the term of this Agreement. Upon request by
the Dealer Manager at any time, Selected Dealer hereby agrees to (i) furnish a
written copy of its AML Program and OFAC Program to the Dealer Manager for
review, and (ii) furnish a copy of the findings and any remedial actions taken
in connection with Selected Dealer’s most recent independent testing of its AML
Program and/or its OFAC Program.
23
The parties acknowledge that for the
purposes of FINRA Rules, the investors who purchase Offered Shares through
Selected Dealer are “customers” of Selected Dealer and not the Dealer Manager.
Nonetheless, to the extent that the Dealer Manager deems it prudent, Selected
Dealer shall cooperate with the Dealer Manager’s reasonable requests for
information, records and data related to the Company’s stockholders introduced
to, and serviced by, Selected Dealer (the “Customers”). Notwithstanding the
foregoing, Selected Dealer shall not be required to provide to the Dealer
Manager any documentation that, in Selected Dealer’s reasonable judgment, would
cause Selected Dealer 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. Selected Dealer 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.
Selected Dealer hereby agrees, upon request by the Dealer Manager to (A) provide
an annual certification to Dealer Manager that, as of the date of such
certification (i) its AML Program and its OFAC Program are consistent with the
AML Rules and OFAC requirements; (ii) it has continued to implement its AML
Program and its OFAC Program, and (iii) 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 (B) perform and carry out, on behalf of both the Dealer Manager
and the Company, the Customer Identification Program requirements in accordance
with Section 326 of the USA PATRIOT Act and applicable SEC and Treasury
Department Rules thereunder.
X.
Limitation of Offer; Suitability
Selected Dealer will offer Offered
Shares only to persons who meet the suitability standards set forth in the
Prospectus or in any suitability letter or memorandum sent to it by the Company
or the Dealer Manager and will only make offers to persons in the jurisdictions
in which it is advised in writing that the Offered Shares are qualified for sale
or that such qualification is not required. Notwithstanding the qualification of
the Offered Shares for sale in any respective jurisdiction (or the exemption
therefrom), Selected Dealer represents, warrants and covenants that it will not
offer Offered Shares and will not permit any of its registered representatives
to offer Offered Shares in any jurisdiction unless both the Selected Dealer and
such registered representative are duly licensed to transact securities business
in such jurisdiction. In offering Offered Shares, Selected Dealer will comply
with the provisions of FINRA Rules, as well as all other applicable rules and
regulations relating to suitability of investors.
Selected Dealer further represents,
warrants and covenants that neither Selected Dealer, nor any person associated
with Selected Dealer, shall offer or sell Offered Shares in any jurisdiction
except to investors who satisfy the investor suitability standards and minimum
investment requirements under the most restrictive of the following: (1)
applicable provisions described in the Prospectus, including minimum income and
net worth standards; (2) applicable laws of the jurisdiction of which such
investor is a resident; or (3) applicable FINRA Rules. Selected Dealer agrees to
ensure that, in recommending the purchase, sale or exchange of Offered Shares to
an investor, Selected Dealer, or a person associated with Selected Dealer, shall
have reasonable grounds to believe, on the basis of information obtained from
the investor (and thereafter maintained in the manner and for the period
required by the Commission, any state securities commission, FINRA or the
Company) concerning his age, investment objectives, other investments, financial
situation and needs, and any other information known to Selected Dealer, or
person associated with Selected Dealer, that (A) the investor can reasonably
benefit from an investment in the Offered Shares based on the investor’s overall
investment objectives and portfolio structure, (B) the investor is able to bear
the economic risk of the investment based on the investor’s overall financial
situation, and (C) the investor has an apparent understanding of (i) the
fundamental risks of the investment, (ii) the risk that the investor may lose
his entire investment in the Offered Shares, (iii) the lack of liquidity of the
Offered Shares, (iv) the restrictions on transferability of the Offered Shares,
(v) the background and qualifications of the Company’s sponsor or the persons
responsible for directing and managing the Company, and (vi) the tax
consequences of an investment in the Offered Shares. Selected Dealer further
represents, warrants and covenants that Selected Dealer, or a person associated
with Selected Dealer, will make every reasonable effort to determine the
suitability and appropriateness of an investment in Offered Shares of each
proposed investor by reviewing documents and records disclosing the basis upon
which the determination as to suitability was reached as to each purchaser of
Offered Shares pursuant to a subscription solicited by Selected Dealer, whether
such documents and records relate to accounts which have been closed, accounts
which are currently maintained, or accounts hereafter established. Selected
Dealer agrees to retain such documents and records in Selected Dealer’s records
for a period of six years from the date of the applicable sale of Offered
Shares, to otherwise comply with the record keeping requirements provided in
Section XII below and to make such documents and records available to (i) the
Dealer Manager and the Company upon request, and (ii) representatives of the
Commission, FINRA and applicable state securities administrators upon Selected
Dealer’s receipt of an appropriate document subpoena or other appropriate
request for documents from any such agency. Selected Dealer shall not purchase
any Offered Shares for a discretionary account without obtaining the prior
written approval of Selected Dealer’s customer and his or her signature on a
Subscription Agreement.
24
XI.
Due Diligence; Adequate Disclosure
Prior to offering the Offered Shares
for sale, Selected Dealer shall have conducted an inquiry such that Selected
Dealer has reasonable grounds to believe, based on information made available to
Selected Dealer by the Company or the Dealer Manager through the Prospectus or
other materials, that all material facts are adequately and accurately disclosed
and provide a basis for evaluating a purchase of Offered Shares. In determining
the adequacy of disclosed facts pursuant to the foregoing, Selected Dealer may
obtain, upon request, information on material facts relating at a minimum to the
following: (1) items of compensation; (2) tax aspects; (3) financial stability
and experience of the Company and its Adviser; (4) conflicts and risk factors;
and (5) other pertinent reports. Notwithstanding the foregoing, Selected Dealer
may rely upon the results of an inquiry conducted by an independent third party
retained for that purpose or another Selected Dealer, provided that: (1) such
Selected Dealer has reasonable grounds to believe that such inquiry was
conducted with due care by said independent third party or such other Selected
Dealer; (2) the results of the inquiry were provided to Selected Dealer with the
consent of the other Selected Dealer conducting or directing the inquiry; and
(3) no Selected Dealer that participated in the inquiry is an affiliate of the
Company or its Adviser. Prior to the sale of the Offered Shares, Selected Dealer
shall inform each prospective purchaser of Offered Shares of pertinent facts
relating to the Offered Shares including specifically the lack of liquidity and
lack of marketability of the Offered Shares during the term of the investment
but shall not, in any event, make any representation on behalf of the Company or
the Adviser except as set forth in the Prospectus and any Authorized Sales
Materials.
XII.
Compliance with Record Keeping Requirements
Selected Dealer agrees to comply with
the record keeping requirements of the Exchange Act, including but not limited
to, Rules 17a-3 and 17a-4 promulgated under the Exchange Act. Selected Dealer
further agrees to keep such records with respect to each customer who purchases
Offered Shares, his suitability and the amount of Offered Shares sold, and to
retain such records for such period of time as may be required by the
Commission, any state securities commission, FINRA or the Company.
XIII.
Customer Complaints
Each party hereby agrees to provide to
the other party copies of any written or otherwise documented customer
complaints received by such party relating in any way to the Offering
(including, but not limited to, the manner in which the Offered Shares are
offered by the Dealer Manager or the Selected Dealer), the Offered Shares or the
Company.
25
XIV.
Effective Date
This Agreement will become effective
upon the last date it is signed by either party hereto. Upon effectiveness of
this Agreement, all offers and sales of Offered Shares by the Selected Dealer
will be made pursuant to this Agreement exclusively and not through any prior
agreement between Selected Dealer and the Dealer Manager, if any.
XV.
Termination; Amendment
Selected Dealer will immediately
suspend or terminate its offer and sale of Offered Shares upon the request of
the Company or the Dealer Manager at any time and will resume its offer and sale
of Offered Shares hereunder upon subsequent request of the Company or the Dealer
Manager. Any party may terminate this Agreement by written notice. Such notice
shall be effective 48 hours after the mailing of such notice. This Agreement and
the exhibits and schedules hereto are the entire agreement of the parties and
supersedes all prior agreements, if any, between the parties
hereto.
This Agreement may be amended at any
time by the Dealer Manager by written notice to Selected Dealer, and any such
amendment shall be deemed accepted by Selected Dealer upon placing an order for
sale of Offered Shares after it has received such notice.
Notwithstanding the termination of this
Agreement or the payment of any amount to Selected Dealer, Selected Dealer
agrees to pay Selected Dealer’s proportionate share of any claim, demand or
liability asserted against Selected Dealer and the other Selected Dealers on the
basis that the Selected Dealers or any of them constitute an association,
unincorporated business or other separate entity, including in each case
Selected Dealer’s proportionate share of any expenses incurred in defending
against any such claim, demand or liability.
XVI.
Privacy Laws
The Dealer Manager and Selected Dealer
(each referred to individually in this section as a “party”) agree as
follows:
(a) Each party agrees to abide by and
comply with (i) the privacy standards and requirements of the Xxxxx-Xxxxx Xxxxxx
Act of 1999 (“GLB Act”) and Regulation S-P; (ii) the privacy standards and
requirements of any other applicable Federal or state law; and (iii) its own
internal privacy policies and procedures, each as may be amended from time to
time;
(b) Each party agrees to refrain from
the use or disclosure of nonpublic personal information (as defined under the
GLB Act) of all customers who have opted out of such disclosures except as
necessary to service the customers or as otherwise necessary or required by
applicable law; and
(c) Each party shall be responsible for
determining which customers have opted out of the disclosure of nonpublic
personal information by periodically reviewing and, if necessary, retrieving a
list of such customers (the “List”) as provided by each to identify customers
that have exercised their opt-out rights. In the event either party uses or
discloses nonpublic personal information of any customer for purposes other than
servicing the customer, or as otherwise required by applicable law, that party
will consult the List to determine whether the affected customer has exercised
his or her opt-out rights. Each party understands that each is prohibited from
using or disclosing any nonpublic personal information of any customer that is
identified on the List as having opted out of such disclosures.
26
XVII.
Notice
All notices will be in writing and will
be duly given to the Dealer Manager when mailed to Xxxxxxx Securities, LLC, 0000
XXX Xxxxxxx, Xxxxx 0000, Xxxxxxxxx Xxxxxxx, XX 00000, and to Selected Dealer
when mailed to the address specified by Selected Dealer below.
XVIII.
Attorneys’ Fees; Applicable Law and Venue
This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement, directly or indirectly, shall be governed by
the laws of the State of Colorado applicable to contracts formed and to be
formed entirely within the State of Colorado, without regard to the conflicts of
laws principles and rules thereof, to the extent such principles would require
or permit the application of the laws of another jurisdiction.
[Signatures
Appear on Following Pages]
27
IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be executed on its behalf by its duly authorized
agent.
|
|
“DEALER
MANAGER”
|
|
|
XXXXXXX
SECURITIES, LLC
|
|
|
By:_______________________________
|
|
|
Xxxx
X. Xxxxxxx
|
|
|
Managing
Member
|
We have read the foregoing Agreement
and we hereby accept and agree to the terms and conditions therein set forth. We
hereby represent that the jurisdictions identified below represent a true and
correct list of all jurisdictions in which we are registered or licensed as a
broker or dealer and are fully authorized to sell securities, and we agree to
advise you of any change in such list during the term of this
Agreement.
1. Identity of Selected
Dealer:
|
Full
Legal Name:
|
|
|
(to
be completed by Selected Dealer)
|
|
|
Type
of Entity:
|
|
|
(to
be completed by Selected Dealer)
|
|
|
Organization
in the State of:
|
|
|
(to
be completed by Selected Dealer)
|
|
|
Tax
Identification Number:
|
|
|
(to
be completed by Selected Dealer)
|
|
|
FINRA/CRD
Number:
|
|
|
(to
be completed by Selected
Dealer)
|
28
2. Any notice under this Agreement will
be deemed given pursuant to Section XVII hereof when delivered to Selected
Dealer as Follows:
|
Company
Name:
|
|
|
Attention
to:
|
|
|
(Name)
|
|
|
|
|
|
(Title)
|
|
|
Street
Address:
|
|
|
City,
State and Zip Code:
|
|
|
Telephone
Number:
|
( )
|
|
Facsimile
Number:
|
( )
|
|
Email
Address:
|
|
Accepted
and agreed as of the date below:
|
“SELECTED
DEALER”
|
|
_______________________________________
|
|
(Print
Name of Selected Dealer)
|
|
By:
|
_______________________________
|
|
Name:
|
_______________________________
|
|
Title:
|
_______________________________
|
|
Date:
|
_______________________________
|
29
SCHEDULE
1
TO
SELECTED
DEALER AGREEMENT WITH
XXXXXXX
SECURITIES, LLC (“DEALER MANAGER”)
NAME OF
ISSUER: XXXXXXX CAPITAL, INC.
|
NAME
OF SELECTED DEALER:
|
|
|
SCHEDULE
TO AGREEMENT DATED:
|
|
As
marketing fees and to defray other distribution-related expenses, the Dealer
Manager will pay [____] basis points of the gross cash proceeds on all
sales generated by Selected Dealer pursuant to Section IV of this Selected
Dealer Agreement. These amounts are in addition to the selling commissions
provided for in Section IV of this Selected Dealer Agreement and will be due and
payable at the same time as the selling commissions, as more fully described in
Section V hereof.
|
|
“DEALER
MANAGER”
|
|
|
XXXXXXX
SECURITIES, LLC
|
|
|
By:_______________________________
|
|
|
Xxxx
X. Xxxxxxx
|
|
|
Managing
Member
|
|
“SELECTED
DEALER”
|
|
_______________________________________
|
|
(Print
Name of Selected Dealer)
|
|
By:
|
_______________________________
|
|
Name:
|
_______________________________
|
|
Title:
|
_______________________________
|
30
SCHEDULE
2
TO
SELECTED
DEALER AGREEMENT WITH
XXXXXXX
SECURITIES, LLC (“DEALER MANAGER”)
NAME OF
ISSUER: XXXXXXX CAPITAL, INC.
|
NAME
OF SELECTED DEALER:
|
|
|
SCHEDULE
TO AGREEMENT DATED:
|
|
Selected
Dealer hereby authorizes the Dealer Manager or its agent to deposit selling
commissions, reallowances and other payments due to it pursuant to the Selected
Dealer Agreement to its bank account specified below. This authority will remain
in force until Selected Dealer notifies the Dealer Manager in writing to cancel
it. In the event that the Dealer Manager deposits funds erroneously into
Selected Dealer’s account, the Dealer Manager is authorized to debit the account
with no prior notice to Selected Dealer for an amount not to exceed the amount
of the erroneous deposit.
|
Bank
Name:
|
|
|
Bank
Address:
|
|
|
Bank
Routing Number:
|
|
|
Account
Number:
|
|
|
“SELECTED
DEALER”
|
|
_______________________________________
|
|
(Print
Name of Selected Dealer)
|
|
By:
|
_______________________________
|
|
Name:
|
_______________________________
|
|
Title:
|
_______________________________
|
|
Date:
|
_______________________________
|
31
SCHEDULE
3
TO
SELECTED
DEALER AGREEMENT WITH
XXXXXXX
SECURITIES, LLC
Selected
Dealer represents and warrants that it is currently licensed as a broker-dealer
in the following jurisdictions:
|
¨
|
Alabama
|
¨
|
Montana
|
|
¨
|
Alaska
|
¨
|
Nebraska
|
|
¨
|
Arizona
|
¨
|
Nevada
|
|
¨
|
Arkansas
|
¨
|
New
Hampshire
|
|
¨
|
California
|
¨
|
New
Jersey
|
|
¨
|
¨
|
New
Mexico
|
|
|
¨
|
Connecticut
|
¨
|
New
York
|
|
¨
|
Delaware
|
¨
|
North
Carolina
|
|
¨
|
District
of Columbia
|
¨
|
North
Dakota
|
|
¨
|
Florida
|
¨
|
Ohio
|
|
¨
|
Georgia
|
¨
|
Oklahoma
|
|
¨
|
Hawaii
|
¨
|
Oregon
|
|
¨
|
Idaho
|
¨
|
Pennsylvania
|
|
¨
|
Illinois
|
¨
|
Rhode
Island
|
|
¨
|
Indiana
|
¨
|
South
Carolina
|
|
¨
|
Iowa
|
¨
|
South
Dakota
|
|
¨
|
Kansas
|
¨
|
Tennessee
|
|
¨
|
Kentucky
|
¨
|
Texas
|
|
¨
|
Louisiana
|
¨
|
Utah
|
|
¨
|
Maine
|
¨
|
Vermont
|
|
¨
|
Maryland
|
¨
|
Virginia
|
|
¨
|
Massachusetts
|
¨
|
Washington
|
|
¨
|
Michigan
|
¨
|
West
Virginia
|
|
¨
|
Minnesota
|
¨
|
Wisconsin
|
|
¨
|
Mississippi
|
¨
|
Wyoming
|
|
¨
|
Missouri
|
32
EXHIBIT
B
QUALIFIED
JURISDICTIONS
AS
OF________________, 2009
|
¨
|
Alabama
|
¨
|
Montana
|
|
¨
|
Alaska
|
¨
|
Nebraska
|
|
¨
|
Arizona
|
¨
|
Nevada
|
|
¨
|
Arkansas
|
¨
|
New
Hampshire
|
|
¨
|
California
|
¨
|
New
Jersey
|
|
¨
|
¨
|
New
Mexico
|
|
|
¨
|
Connecticut
|
¨
|
New
York
|
|
¨
|
Delaware
|
¨
|
North
Carolina
|
|
¨
|
District
of Columbia
|
¨
|
North
Dakota
|
|
¨
|
Florida
|
¨
|
Ohio
|
|
¨
|
Georgia
|
¨
|
Oklahoma
|
|
¨
|
Hawaii
|
¨
|
Oregon
|
|
¨
|
Idaho
|
¨
|
Pennsylvania
|
|
¨
|
Illinois
|
¨
|
Rhode
Island
|
|
¨
|
Indiana
|
¨
|
South
Carolina
|
|
¨
|
Iowa
|
¨
|
South
Dakota
|
|
¨
|
Kansas
|
¨
|
Tennessee
|
|
¨
|
Kentucky
|
¨
|
Texas
|
|
¨
|
Louisiana
|
¨
|
Utah
|
|
¨
|
Maine
|
¨
|
Vermont
|
|
¨
|
Maryland
|
¨
|
Virginia
|
|
¨
|
Massachusetts
|
¨
|
Washington
|
|
¨
|
Michigan
|
¨
|
West
Virginia
|
|
¨
|
Minnesota
|
¨
|
Wisconsin
|
|
¨
|
Mississippi
|
¨
|
Wyoming
|
|
¨
|
Missouri
|
33
