FIRST AMENDMENT TO MANAGING BROKER-DEALER/UNDERWRITER AGREEMENT
Exhibit
1(b)
FIRST AMENDMENT TO
MANAGING BROKER-DEALER/UNDERWRITER AGREEMENT
THIS FIRST AMENDMENT TO MANAGING
BROKER-DEALER/UNDERWRITER AGREEMENT (this
“First
Amendment”) dated as of December 30, 2021, is made by
and between Red Oak Capital
Intermediate Income Fund, LLC, a Delaware limited liability
company (the “Company”), and Crescent Securities Group, Inc., a Texas
corporation (“Crescent”).
RECITALS
WHEREAS, the Company and Crescent
entered into that certain Managing Broker-Dealer/Underwriter
Agreement (the “Original MBD
Agreement”), regarding the offering and sale by the
Company of Bonds to be issued by the Company.
WHEREAS, the parties hereto wish to amend
the Original MBD Agreement as herein provided.
AGREEMENT
NOW,
THEREFORE, FOR and in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1.
Any defined terms
used herein shall have the meaning ascribed to such terms in the
Original MBD Agreement.
2.
The Offering shall
now include the offer and sale of up to $75,000,000 of Bonds by the
Company.
3.
Any reference to
the Offering Circular and/or Offering Documents shall also include
all amendments and supplements thereto.
4.
Exhibit A to the
Original MBD Agreement shall be replaced with Exhibit A to this First
Amendment.
5.
This First
Amendment may be executed in one or more counterparts, each of
which is an original, but all of which shall constitute but one and
the same instrument.
6.
This First
Amendment contains or expressly incorporates by reference the
entire agreement of the parties with respect to the matters
contemplated herein and supersedes all prior negotiations or
agreements, written or oral, and shall not be modified except by
written instrument executed by all parties.
7.
The Original MBD
Agreement, as amended herein, is ratified, approved and
confirmed.
[Signature Page Follows]
IN
WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed as of the day and in the month and
year first above written.
Company
Name: Red Oak Capital Intermediate Income Fund, LLC
By:
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/s/ Xxxx
Xxxxxxx
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Name:
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Xxxx
Xxxxxxx
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Title:
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Authorized
Signatory
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AGREED
AND ACCEPTED:
Crescent Securities
Group, Inc., a Texas Corporation
By:
/s/ Xxxx
Xxxxx
Name:
Xxxx
Xxxxx
Title:
President
Commission checks
to be sent to: Crescent Securities Group, Inc.
0000 X.
Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx,
Xxxxx 00000
Soliciting Dealer Agreement
Ladies
and Gentlemen:
The
undersigned, Crescent Securities Group, Inc., a Texas corporation
(the “Managing Broker-Dealer”), has entered into an
agreement (the “MBD Agreement”) with Red Oak Capital
Intermediate Income Fund, LLC, a Delaware Limited Liability Company
(the “Company”), for the sale of up to 75,000 of bonds
(the “Bonds”) to be issued by the Company, pursuant to
which the Managing Broker-Dealer has agreed to use its best efforts
to form and manage, as the Managing Broker-Dealer, a group of
securities dealers (the “Selling Group Members”) for
the purpose of soliciting offers for the purchase of the Bonds. The
MBD Agreement is attached as Exhibit A. The terms of the Offering
and the Bonds are set forth in the Company’s Offering Statement on Form 1-A POS
filed with the Securities and Exchange Commission
(“SEC”) on December 28, 2021, as amended (together with
all exhibits thereto, the “Offering Statement”) and the
Final Offering Circular dated , as may be supplemented (the
“Offering Circular”). The Bonds will be offered during
a period commencing on the date of the Offering Circular and
continuing until the Offering Termination Date and all extensions
thereof (as defined in the Offering Circular). Terms used but not
otherwise defined in this Soliciting Dealer Agreement (this
“Agreement”) have the same meanings as in the MBD
Agreement.
You are
invited to become a Selling Group Member and by your confirmation
hereof you agree to act in such capacity and to use your best
efforts, in accordance with the following terms and conditions, to
find qualified Investors (the “Investors”) for the
Bonds. By your acceptance of this Agreement, you will become one of
the Selling Group Members and will be entitled to and subject to
the indemnification and contribution provisions contained in the
MBD Agreement, including the provisions of the MBD Agreement
wherein the Selling Group Members severally agree to indemnify and
hold harmless the Company and the Managing Broker-Dealer for
certain actions.
1.
Selling Group Member Representations.
1.1
You hereby confirm
that you (i) are a member in good standing of the Financial
Industry Regulatory Authority, Inc. (“FINRA”), (ii) are
qualified and duly registered to act as a broker-dealer within all
states in which you will sell the Bonds, (iii) are a broker-dealer
duly registered with the SEC pursuant to the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) and (iv)
will maintain all such registrations and qualifications in good
standing for the duration of your involvement in the Offering. You
agree to immediately notify the Managing Broker-Dealer if you cease
to be a member of FINRA in good standing.
1.2
You hereby agree to
solicit, as an independent contractor and not as the Managing
Broker-Dealer's agent, or as an agent of the Company or its
affiliates, persons acceptable to the Company to purchase the Bonds
pursuant to the Subscription Agreement (the "Subscription
Agreement") in the form attached to the Offering Statement on Form
1-A, as amended (the "Offering Statement") of which the Offering
Circular is a part and in accordance with the terms of the Offering
Circular, and to diligently make inquiries as required by this
Agreement, the Offering Circular or applicable law with respect to
prospective Investors in order to ascertain whether a purchase of
the securities is suitable for the Investor. You shall solicit the
purchase of Bonds in a manner that complies with Regulation A
promulgated under the Securities Act of 1933, as amended (the
"Securities Act") and the rules of FINRA applicable to public
offerings. In accordance with the instructions set forth in the
Subscription Agreement, all the Subscription Agreements and all
funds received by you with respect to any Subscription Agreement
shall be transmitted to the Managing Broker-Dealer by noon of the
next business day following receipt thereof. No Subscription
Agreement shall be effective unless and until accepted by the
Company, it being understood that the Company may accept or reject
any Investor in its sole discretion and that the Company may
terminate the Offering at any time for any reason.
1.3
You understand and
agree that your compensation under this Agreement for the sale of
Bonds is conditioned upon the Company's acceptance of sales by you,
and that the failure to accept a purchase for Bonds shall relieve
the Company, the Managing Broker-Dealer or any other party of any
obligation to pay you for any services rendered by you in
connection with the sale of Bonds under this Agreement or
otherwise.
1.4
You agree that
before participating in the Offering, you will have reasonable
grounds to believe based on information made available to you by
the Managing Broker-Dealer and/or the Company through the Offering
Circular, that all material facts are adequately and accurately
disclosed in the Offering Circular and provide a basis for
evaluating the Company and the Bonds.
1.5
You agree not to
execute any transaction in which an Investor invests in the Bonds
in a discretionary account without prior written approval of the
transaction by the Investor and the Managing
Broker-Dealer.
1.6
You agree to comply
in all respects with the purchase procedures and plan of
distribution set forth in the Offering Circular. Further, you agree
that although you may receive due diligence and other information
regarding the Offering from the Company in electronic form, you
will not distribute to any prospective Investor or any other person
any such material. All material distributions to prospective
Investors shall only be in hard copy form.
1.7
All Subscriptions
solicited by you will be strictly subject to confirmation by the
Managing Broker-Dealer and acceptance thereof by the Company. The
Managing Broker-Dealer and the Company reserve the right in their
absolute discretion to reject any such Subscriptions and to accept
or reject Subscriptions in the order of their receipt by the
Company, as appropriate or otherwise. Neither you nor any other
person is authorized to and neither you nor any of your employees,
agents or representatives shall give any information or make any
representation other than those contained in the Offering Circular
or in any supplemental sales literature furnished by the Managing
Broker-Dealer or the Company for use in making solicitations in
connection with the offer and sale of the Bonds.
1.8
Upon authorization
by the Managing Broker-Dealer, you may offer the Bonds at the
Offering price set forth in the Offering Circular, subject to the
terms and conditions thereof.
1.9
The Company or the
Managing Broker-Dealer will provide you with such number of copies
of the Offering Circular and such number of copies of amendments
and supplements thereto as you may reasonably request. You will be
responsible for correctly placing orders of such materials and will
reimburse the Company or the Managing Broker-Dealer for any costs
incurred in connection with unreasonable or mistaken orders. The
Managing Broker-Dealer also understands that the Company may
provide you with certain supplemental sales material to be used by
you in connection with the solicitation of purchases of the Bonds.
If you elect to use such supplemental sales material, you agree
that such material shall not be used in connection with the
solicitation or purchase of the Bonds unless accompanied or
preceded by the Offering Circular, as then currently in effect, and
as it may be amended or supplemented in the future.
1.10
The Managing
Broker-Dealer shall have full authority to take such action as it
may deem advisable with respect to all matters pertaining to the
Offering. The Managing Broker-Dealer shall be under no liability to
you except for lack of good faith and for obligations expressly
assumed by it in this Agreement. Nothing contained in this section
is intended to operate as, and the provisions of this section shall
not constitute a waiver by you of, compliance with any provision of
the Securities Act, the Exchange Act, other applicable federal law,
applicable state law or of the rules and regulations
thereunder.
1.11
You agree that you
will not sell the Bonds to any Investor who has not confirmed to
you, in writing, that such Investor meets the suitability
requirements set forth in the section captioned “PLAN OF DISTRIBUTION – Determination of
Suitability” in the Offering Circular. Nothing
contained in this Section 1.11 shall be construed to relieve you of
your suitability obligations under FINRA Rule 2111.
1.12
You will instruct
all Investors to make their checks payable to Red Oak Capital Intermediate Income Fund,
LLC or by wire or electronic funds transfer (via ACH) in
accordance to the wiring instructions attached. If you receive a
check that does not conform with the foregoing instructions, you
shall return such check directly to such subscriber not later than
noon of the business day following its receipt.
1.13
You will limit the
offering of the Bonds to persons whom you have reasonable grounds
to believe, and in fact believe, meet the financial suitability and
other Investor requirements set forth in the Offering
Circular.
1.14
After the Offering
Statement has been filed with the SEC but prior to date the SEC
qualifies the Bonds for sale under Regulation A (the "Qualification
Date"), you are required to provide each prospective Investor with
a copy of the most recent preliminary offering circular contained
within the Offering Statement (the "Preliminary Offering
Circular"). After the Qualification Date, you are required to
provide each prospective Investor with a copy of the final Offering
Circular. If a prospective Investor received the Preliminary
Offering Circular, then you will be required to deliver to the
Investor the final Offering Circular at least 48 hours before such
Investor will be permitted to acquire Bonds. If an Investor
purchases Bonds within 90 calendar days of the Qualification Date,
you will deliver to the Investor, no later than two business days
following the completion of such sale, a copy of the final Offering
Circular and all exhibits and appendices thereto either by (i)
electronic delivery of the final Offering Circular or the uniform
resource locator (the "URL") to where the final Offering Circular
may be accessed on the SEC's Electronic Data Gathering, Analysis
and Retrieval System ("XXXXX"), or (ii) mailing the final Offering
Circular and all exhibits and appendices thereto to the Investor at
the address indicated in the Subscription Agreement.
1.15
During the course
of the Offering, you will advise each prospective Investor at the
time of the initial offering to him or her that the Company and/or
its agents and consultants will, during the course of the Offering
and prior to any sale, accord said Investor and his or her
purchaser representative, if any, the opportunity to ask questions
of and to receive answers from the Company and/or its agents and
consultants concerning the terms and conditions of the Offering and
to obtain any additional information, which information is
possessed by the Company or may be obtained by it without
unreasonable effort or expense and which is necessary to verify the
accuracy of the information contained in the Offering
Circular.
1.16
You will
immediately bring to the attention of the Company and the Managing
Broker-Dealer any circumstance or fact which causes you to believe
the Offering Circular, or any other literature distributed pursuant
to the Offering, or any information supplied to prospective
Investors in their purchase materials, may be inaccurate or
misleading.
1.17
You agree that in
recommending to an Investor the purchase or sale of the Bonds, you
shall have reasonable grounds to believe, on the basis of
information obtained from the prospective Investor concerning his
or her investment objectives, other investments, financial
situation and needs, and any other information known by you,
that:
1.17.1
The prospective
Investor meets the suitability requirements set forth in the
Offering Circular and the acquisition of Bonds is otherwise a
suitable investment for such Investor as may be required by all
applicable laws, rules and regulations;
1.17.2
The prospective
Investor is or will be in a financial position appropriate to
enable him or her to realize to a significant extent the benefits
described in the Offering Circular;
1.17.3
The prospective
Investor has a fair market net worth sufficient to sustain the
risks inherent in an investment in the Bonds, including, but not
limited to, the total loss of the investment, lack of liquidity and
other risks described in the Offering Circular; and
1.17.4
An investment in
the Bonds is otherwise suitable for the prospective
Investor.
1.18
You agree to retain
in your records and make available to the Managing Broker-Dealer
and to the Company, for a period of at least 6 years following the
Offering Termination Date, information establishing that (i) each
person who purchases the Bonds pursuant to a Subscription Agreement
solicited by you is within the permitted class of Investors under
the requirements of the jurisdiction in which such Investor is a
resident, (ii) each person met the suitability requirements set
forth in the Offering Circular and the Subscription Agreement and
(iii) each person is suitable for such investment and the basis on
which such suitability determination was made.
1.19
You agree that upon
request by the Managing Broker-Dealer, you will furnish a complete
list of all persons who have been offered the Bonds (including the
corresponding number of the Offering Circular delivered to such
persons) and such persons’ place of residence.
1.20
You agree that
before executing a purchase transaction in the Bonds, you will
inform the prospective Investor and his or her investor
representative, if any, of all pertinent facts relating to the
liquidity and marketability of the Bonds, as appropriate, during
the term of the investment.
1.21
You hereby
undertake and agree to comply with all obligations applicable to
you as set forth in FINRA rules, including, but not limited to, any
new suitability and filing requirements.
1.22
You agree not to
rely upon the efforts of the Managing Broker-Dealer in (i)
performing due diligence related to the Company (including its
members, managers, trustees, officers, directors, employees and
Affiliates), the Bonds, or the suitability thereof for any
Investors and (ii) determining whether the Company has adequately
and accurately disclosed all material facts upon which to provide a
basis for evaluating the Company to the extent required by federal
law, state law and/or FINRA. You further agree that you are solely
responsible for performing adequate due diligence, and you agree to
perform adequate due diligence as required by federal law, state
law and/or FINRA.
1.23
You will refrain
from making any representations to any prospective Investor other
than those contained in the Offering Circular, and will not allow
any other written materials to be used to describe the potential
investment to prospective Investors other than the Offering
Circular or factual summaries and sales brochures of the Offering
prepared by the Company and distributed by the Managing
Broker-Dealer.
1.24
You will refrain
from distributing any material to prospective Investors that is
marked “Financial Advisor Use Only” or
“Broker-Dealer Use Only,” or any other due diligence
material related to the Offering received by you.
1.25
The Selling Group
Member hereby represents and warrants as of the date of this
Agreement to the Managing Broker-Dealer and to the Company that
neither the Selling Group Member nor any of its executive officers,
directors, general partners, managing members, or officers involved
in the offering or persons who own 20% or more of the Selling Group
Member or any person receiving a commission from the Selling Group
Member with respect to the Offering:
1.25.1
Has been convicted,
within 5 years of the Qualification Date of any felony or
misdemeanor that was:
(a)
In connection with
the purchase or sale of any security;
(b)
Involving or making
of any false filing with the SEC; or
(c)
Arising out of the
conduct of the business of an underwriter, broker, dealer,
municipal securities dealer, investment adviser or paid solicitor
of investors of securities.
1.25.2
Is subject to any
order, judgment or decree of any court of competent jurisdiction,
entered within 5 years before the Qualification Date that restrains
or enjoins such person from engaging or continuing in any conduct
or practice:
(a) In
connection with the purchase or sale of any security;
(b) Involving
the making of any false filing with the SEC; or
(d)
Arising out of the
conduct of the business of an underwriter, broker, dealer,
municipal securities dealer, investment adviser or paid solicitor
of investors of securities.
1.25.3
Is subject to a
final order of a state securities commission (or an agency or
officer of a state performing like functions), a state authority
that supervises or examines banks, savings associations or credit
unions, a state insurance commission (or an agency or officer of a
state performing like functions), an appropriate federal banking
agency, the U.S. Commodity Futures Trading Commission or the
National Credit Union Administration that:
(a)
As of the
Qualification Date, bars the person from: (i) Association with an
entity regulated by such commission, authority, agency or officer;
(ii) Engaging in the business of securities, insurance or banking;
or (iii) Engaging in savings association or credit union
activities.
(b)
Constitutes a final
order based on a violation of any law or regulation that prohibits
fraudulent, manipulative or deceptive conduct entered within ten
years before the Qualification Date.
1.25.4
Is subject to an
order of the SEC pursuant to sections 15(b) or 15B(c) of the
Exchange Act or section 203(e) or (f) of the Investment Advisers
Act of 1940 (the “Investment Advisers Act”) that, at
the time of such sale:
(a)
Suspends or revokes
such person’s registration as a broker, dealer, municipal
securities dealer or investment advisor;
(b)
Places limitations
on the activities, functions or operations of such person;
or
(c)
Bars such person
from being associated with any entity or from participating in the
offering of any xxxxx stock.
1.25.5
Is subject to any
order of the SEC entered within 5 years before the Effective Date,
as of the date hereof, that orders the person to cease and desist
from committing or causing a violation or future violation
of:
(a)
Any scienter-based
anti-fraud provisions of the federal securities laws including,
without limitation, section 17(a)(1) of the Securities Act, section
10(b) of the Exchange Act and 17 CFR 240.10b-5, section 15(c)(1) of
the Exchange Act and section 206(1) of the Investment Advisers Act,
or any other rule or regulation thereunder; or
(b) Section
5 of the Securities Act.
1.25.6
Is suspended or
expelled from membership in, or suspended or barred from
association with, a member of a registered national securities
exchange or a registered national or affiliated securities
association for any act or omission to act constituting conduct
inconsistent with just and equitable principles of
trade;
1.25.7
Has filed (as a
registrant or issuer), or was or was named as an underwriter in,
any registration statement or Regulation A offering statement filed
with the SEC that, within 5 years of the Qualification Date, was
the subject of a refusal order, stop order or order suspending the
Regulation A exemption or, is, at the time of such sale, the
subject of an investigation or proceeding to determine whether a
stop order or suspension order should be issued.
1.25.8
Is subject to a
United States Postal Service false representation order entered
within 5 years before the Qualification Date, or is, at the
Qualification Date, subject to a temporary restraining order or
preliminary injunction with respect to conduct alleged by the
United States Postal Service to constitute a scheme or device for
obtaining money or property through the mail by means of false
representations. The representations and warranties made in this
Section 1.24 are and shall be continuing representations and
warranties throughout the term of the Offering. In the event that
any of these representations or warranties becomes untrue, the
Selling Group Member will immediately notify the Managing
Broker-Dealer in writing of the fact which makes the representation
or warranty untrue.
1.26
You acknowledge
that this Offering is being made in reliance on Regulation A
promulgated under the Securities Act and that the Company is
relying on a certification from you that a potential Investor meets
with the suitability requirements set forth in the Offering
Circular.
1.27
You will provide
the Managing Broker-Dealer with such information relating to the
offer and sale of the Bonds by you as the Managing Broker-Dealer
may from time to time reasonably request.
1.28
You agree not to
rely upon the efforts of the Managing Broker-Dealer in determining
whether the Company has adequately and accurately disclosed all
material facts upon which to provide a basis for evaluating the
Company to the extent required by federal or state law, or FINRA.
You further agree to conduct your own investigation to make that
determination independent of the efforts of the Managing
Broker-Dealer.
1.29
You agree to
promptly provide to the Managing Broker-Dealer copies of any
written or otherwise documented complaints from customers received
by you relating in any way to the Offering (including, but not
limited to, the manner in which the Bonds are offered by
you.
2.
Compensation. Subject
to certain conditions, and in consideration of your services
hereunder, the Managing Broker-Dealer will pay you sales
commissions and marketing allowances as follows:
2.1
You will be
reallowed certain fees by the Managing Broker-Dealer in an amount
equal to -[__]% of the
purchase price of the Bonds sold by you
("Compensation").
2.2
[Intentionally
Omitted].
2.3
Payment of the
Commissions and the Allowances shall be subject to the following
conditions:
(a)
No Commissions or
Allowances will be payable with respect to any Subscription
Agreements that are rejected by the Company or the Managing
Broker-Dealer, or if the Company terminates the Offering for any
reason whatsoever.
(b)
No Commissions or
Allowances will be payable to you with respect to any sale of the
Bonds by you unless and until such time as the Company has received
the total proceeds of any such sale and the Managing Broker-Dealer
has received the aggregate amount of sales commission to which it
is entitled.
(c)
All other expenses
incurred by you in the performance of your obligations hereunder,
including, but not limited to, expenses related to the Offering and
any attorneys’ fees, shall be at your sole cost and expense,
and the foregoing shall apply notwithstanding the fact that the
Offering is not consummated for any reason.
2.4
Once Commissions or
Allowances become payable, they will be paid within 7 days of
receipt by the Managing Broker-Dealer of such Commissions or
Allowances from the Company. You agree that, in the event the
Company has paid any Commissions or Allowances to the Managing
Broker-Dealer, you will look solely to the Managing Broker-Dealer
for payment of any Commissions or Allowances.
2.5
In the event that a
purchase is revoked or rescinded, the Selling Group Member will be
obligated to return to the Managing Broker-Dealer any Commissions
or Allowances previously paid to the Selling Group Member in
connection with such purchase.
3.
Solicitation.
3.1
In soliciting
persons to acquire the Bonds, you agree to comply with any
applicable requirements of the Securities Act, the Exchange Act,
applicable state securities laws, the published rules and
regulations thereunder and FINRA rules and, in particular, you
agree that you will not give any information or make any
representations other than those contained in the Offering Circular
and in any supplemental sales literature furnished to you by the
Managing Broker-Dealer or the Company for use in making such
solicitations.
3.2
You will conduct
all solicitation and sales efforts in conformity with Regulation A
promulgated under the Securities Act, and exemptions available
under applicable state law and conduct reasonable investigation to
ensure that all prospective Investors are not (i) listed on the
Specially Designated Nationals and Blocked Persons List maintained
by the Office of Foreign Asset Control, Department of the Treasury
(“OFAC”) pursuant to Executive Order No. 133224, 66
Fed. Reg. 49079 (September 25, 2001) and/or on any other list of
terrorists or terrorist organizations maintained pursuant to any of
the rules and regulations of OFAC or pursuant to any other
applicable enabling legislation or other Executive Orders in
respect thereof (such lists are collectively referred to as
“Lists”) or (ii) owned or controlled by, nor act for or
on behalf of, any person or entity on the Lists.
4.
Offer and Sale Activities. It
is understood that under no circumstances will you engage in any
activities hereunder in any state other than those for which
permission has been granted by the Managing Broker-Dealer to you,
as evidenced by written acknowledgement by the Managing
Broker-Dealer that such state has been cleared for offer and sale
activity. It is further understood that you shall notify the
Company of Subscription Agreements you receive within 2 business
days of receipt so that the Company may make any required federal
or state law filings.
5.
Relationship of Parties.
Nothing contained herein shall constitute the Selling Group Members
as an association, partnership, unincorporated business, or other
separate entity. The Managing Broker-Dealer shall be under no
liability to make any payment to you except out of the funds
received pursuant to the terms of the Managing broker-Dealer
Agreement as hereinabove provided, and the Managing Broker-Dealer
shall not be under any liability for, or in respect of the value or
validity of the Subscription Agreements, the Bonds or the
performance by anyone of any agreement on its part, or for, or in
respect of any matter connected with this Agreement, except for
lack of good faith by the Managing Broker-Dealer, and for
obligations expressly assumed by the Managing Broker-Dealer in this
Agreement.
6.
Indemnification and
Contribution. You hereby agree and acknowledge that you
shall be entitled to the rights, and be subject to the obligations
and liabilities, of the indemnification and contribution provisions
contained in the MBD Agreement, including without limitation, the
provisions by which the Selling Group Members shall severally agree
to indemnify and hold harmless the Company and the Managing
Broker-Dealer and their respective owners, managers, members,
trustees, partners, directors, officers, employees, agents,
attorneys and accountants.
7.
Privacy Act. To protect
Customer Information (as defined below) and to comply as may be
necessary with the requirements of the Xxxxx-Xxxxx-Xxxxxx Act, the
relevant state and federal regulations pursuant thereto and state
privacy laws, the parties wish to include the confidentiality and
non-disclosure obligations set forth herein.
7.1
Customer
Information. “Customer Information” means any
information contained on a customer’s application or other
form and all nonpublic personal information about a customer that a
party receives from the other party. Customer Information shall
include, but not be limited to, name, address, telephone number,
social security number, health information and personal financial
information (which may include consumer account
number).
7.2
Usage and
Nondisclosure. The parties understand and acknowledge that they may
be financial institutions subject to applicable federal and state
customer and consumer privacy laws and regulations, including Title
V of the Xxxxx-Xxxxx-Xxxxxx Act (15 U.S.C. 6801, et seq.) and
regulations promulgated thereunder (collectively, the
“Privacy Laws”), and any Customer Information that one
party receives from the other party is received with limitations on
its use and disclosure. The parties agree that they are prohibited
from using the Customer Information received from the other party
other than (i) as required by law, regulation or rule or (ii) to
carry out the purposes for which one party discloses Customer
Information to the other party pursuant to this Agreement, as
permitted under the use in the ordinary course of business
exception to the Privacy Laws.
7.3
Safeguarding
Customer Information. The parties shall establish and maintain
safeguards against the unauthorized access, destruction, loss, or
alteration of Customer Information in their control which are no
less rigorous than those maintained by a party for its own
information of a similar nature. In the event of any improper
disclosure of any Customer Information, the party responsible for
the disclosure will immediately notify the other
party.
7.4
Survivability. The
provisions of Section 6 and this Section 7 shall survive the
termination of this Agreement.
8.
Survival of Representations and
Warranties. Except as the context otherwise requires, all
representations, warranties and agreements contained in this
Agreement and in the applicable provisions of the MBD Agreement
shall be deemed to be representations, warranties and agreements at
and through the Offering Termination Date, and such
representations, warranties and agreements by the Managing
Broker-Dealer or the Selling Group Members, including the indemnity
agreements contained in Sections 10, 11 and 12, the contribution
agreements contained in Section 13 and the representations and
warranties contained in Section 2.6 of the MBD Agreement shall
remain operative and in full force and effect regardless of any
investigation made by the Managing Broker-Dealer, the Selling Group
Members and/or any controlling person, and shall survive the sale
of, and payment for, the Bonds and the termination of this
Agreement.
9.
Termination. The Selling Group
Member will suspend or terminate the Offering upon request of the
Company or the Managing Broker-Dealer at any time and will resume
the Offering upon the subsequent request of the Company or the
Managing Broker-Dealer. This Agreement may be terminated by the
Managing Broker-Dealer or a Selling Group Member at any time upon 5
days written notice to the other party. If this Agreement is
terminated the Selling Group Member is still obligated to fulfill
its delivery requirements pursuant to Section 1.14.
10.
Managing Broker-Dealer
Obligations.
10.1
Notifications. The
Managing Broker-Dealer shall provide prompt written notice to the
Selling Group Members of any material changes to the Offering
Circular that in its judgment could materially and adversely affect
a Selling Group Member with respect to this Offering.
10.2
Records. The
Managing Broker-Dealer shall retain in its records and make
available to the Selling Group Members, for a period of at least 6
years following the Offering Termination Date, any communications
and information with respect to a prospective Investor that has
otherwise not been provided to a Selling Group Member.
10.3
[Reserved]
10.4
Confirmation. The Managing
Broker-Dealer hereby acknowledges that it has assumed the duty to
confirm on behalf of the Selling Group Members all orders for
purchases of Bonds accepted by the Company. Such confirmations will
comply with the rules of the SEC and FINRA and will comply with the
applicable laws of such other jurisdictions to the extent that the
Managing Broker-Dealer is advised of such laws in writing by the
Selling Group Member.
11.
Governing Law. This Agreement
shall be governed by, subject to and construed in accordance with
the laws of the State of Texas without regard to conflict of law
provisions.
12.
Venue. Any action relating to
or arising out of this Agreement shall be brought only in a court
of competent jurisdiction located in Dallas County,
Texas.
13.
Severability. If any portion of
this Agreement shall be held invalid or inoperative, then so far as
is reasonable and possible (i) the remainder of this Agreement
shall be considered valid and operative and (ii) effect shall be
given to the intent manifested by the portion held invalid or
inoperative.
14.
Counterparts. This Agreement
may be executed in 2 or more counterparts, each of which shall be
deemed to be an original, and together which shall constitute one
and the same instrument.
15.
Modification or Amendment. This
Agreement may not be modified or amended except by written
agreement executed by the parties hereto.
16.
Notices. All communications
hereunder, except as herein otherwise specifically provided, shall
be in writing and, (i) if sent to the Managing Broker-Dealer, shall
be mailed or delivered to Crescent Securities Group, Inc., 0000 X.
Xxxxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, Attn: Xxxx
Xxxxx, (ii) if sent to the Company, Red Oak Capital Intermediate Income
Fund, 000 Xxxxxxx Xxx. Xxxxx 000, Xxxxx Xxxxxx, XX 00000,
Attention: CFO (iii) if sent to you, shall be mailed or
delivered to you at your address set forth below. The notice shall
be deemed to be received on the date of its actual receipt by the
party entitled thereto.
17.
Parties. This Agreement shall
be binding upon and inure solely to the benefit of the parties
hereto, the persons referred to in Sections 10, 11, 12 and 13 of
the MBD Agreement, their respective successors, legal
representatives, heirs and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or
claim under, in respect of, or by virtue of, this Agreement or any
provision herein contained.
18.
Delay. Neither the failure nor
any delay on the part of any party to this Agreement to exercise
any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall a waiver of any right,
remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege
with respect to any subsequent occurrence.
19.
Recovery of Costs. If any legal
action or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party shall be entitled to
recover reasonable attorneys’ fees and other costs incurred
in that action or proceeding (and any additional proceeding for the
enforcement of a judgment) in addition to any other relief to which
it or they may be entitled.
20.
Entire Agreement. This
Agreement, along with the applicable provisions of the MBD
Agreement, constitute the entire understanding between the parties
hereto and supersede any prior understandings or written or oral
agreements between them respecting the subject matter
hereof.
21.
Anti-Money Laundering Compliance
Programs. Each Selling Group Member’s acceptance of
this Agreement constitutes a representation to the Managing
Broker-Dealer that the Selling Group Member has established and
implemented an anti-money laundering (“AML”) compliance
program (“AML Program”), in accordance with FINRA Rule
3310 and Section 352 of the Money Laundering Abatement Act and
Section 326 of the Patriot Act of 2001, which are reasonably
expected to detect and cause reporting of suspicious transactions
in connection with the sale of Bonds. In addition, the Selling
Group Member represents that it has established and implemented a
program (“OFAC Program”) for compliance with OFAC and
will continue to maintain its OFAC Program during the term of this
Agreement. Upon request by the Managing Broker-Dealer at any time,
the Selling Group Member hereby agrees to (i) furnish a copy of its
AML Program and OFAC Program to the Managing Broker-Dealer for
review and (ii) furnish a copy of the findings and any remedial
actions taken in connection with the Selling Group Member’s
most recent independent testing of its AML Program and/or its OFAC
Program.
The
parties acknowledge that for the purposes of the FINRA rules the
Investors who purchase Bonds through the Selling Group Member are
“Customers” of the Selling Group Member and not the
Managing Broker-Dealer. Nonetheless, to the extent that the
Managing Broker-Dealer deems it prudent, the Selling Group Member
shall cooperate with the Managing Broker-Dealer’s auditing
and monitoring of the Selling Group Member’s AML Program and
its OFAC Program by providing, upon request, information, records,
data and exception reports, related to the Company’s
Investors introduced to, and serviced by, the Selling Group Member
(the “Customers”). Such documentation could include,
among other things: (i) copies of Selling Group Member’s AML
Program and its OFAC Program, (ii) documents maintained pursuant to
the Selling Group Member’s AML Program and its OFAC Program
related to the Customers, (iii) any suspicious activity reports
filed related to the Customers, (iv) audits and any exception
reports related to the Selling Group Member’s AML activities
and (v) any other files maintained related to the Customers. In the
event that such documents reflect, in the opinion of the Managing
Broker-Dealer, a potential violation of the Managing
Broker-Dealer’s obligations in respect of its AML or OFAC
requirements, the Selling Group Member will permit the Managing
Broker-Dealer to further inspect relevant books and records related
to the Customers (with respect to the Offering) and/or the Selling
Group Member’s compliance with AML or OFAC requirements.
Notwithstanding the foregoing, the Selling Group Member shall not
be required to provide to the Managing Broker-Dealer any
documentation that, in the Selling Group Member’s reasonable
judgment, would cause the Selling Group Member to lose the benefit
of attorney-client privilege or other privilege which it may be
entitled to assert relating to the discoverability of documents in
any civil or criminal proceedings. The Selling Group Member hereby
represents that it is currently in compliance with all AML rules
and all OFAC requirements, specifically including, but not limited
to, the Customer Identification Program requirements under Section
326 of the USA PATRIOT Act. The Selling Group Member hereby agrees,
upon request by the Managing Broker-Dealer to (i) provide an annual
certification to the Managing Broker-Dealer that, as of the date of
such certification (A) its AML Program and its OFAC Program are
consistent with the AML Rules and OFAC requirements, (B) it has
continued to implement its AML Program and its OFAC Program and (C)
it is currently in compliance with all AML Rules and OFAC
requirements, specifically including, but not limited to, the
Customer Identification Program requirements under Section 326 of
the USA PATRIOT Act and (ii) perform and carry out, on behalf of
both the Managing Broker-Dealer and the Company, the Customer
Identification Program requirements in accordance with Section 326
of the USA PATRIOT Act and applicable SEC and Treasury Department
Rules thereunder.
22.
Due Diligence. Pursuant to the
MBD Agreement, the Company will authorize a collection of
information regarding the Offering (the "Due Diligence
Information"), which collection the Company may amend and
supplement from time to time, to be delivered by the Managing
Broker-Dealer to the Selling Group Member (or their agents
performing due diligence) in connection with its due diligence
review of the Offering. In the event the Selling Group Member (or
its agent performing due diligence) requests access to additional
information or otherwise wishes to conduct additional due diligence
regarding the Offering, the Company, the Company's sponsor or the
sponsor's affiliates, the Company and the Managing Broker-Dealer
will reasonably cooperate with the Selling Group Member to
accommodate such request. All Due Diligence Information received by
the Selling Group Member in connection with its due diligence
review of the Offering is confidential and shall be maintained as
confidential and not disclosed by the Selling Group Member, except
to the extent such information is disclosed in the Offering
Circular.
23.
Managing Broker-Dealer
Representations. The Managing Broker-Dealer hereby
represents and warrants as of the Qualification Date to the Selling
Group Member that neither the Managing Broker-Dealer nor any of its
executive officers, directors, general partners, managing members,
or officers involved in the offering or persons who own 20% or more
of the Managing Broker-Dealer:
23.1
Has been convicted,
within 10 years of the Qualification Date of any felony or
misdemeanor that was:
23.1.1
In connection with
the purchase or sale of any security;
23.1.2
Involving or making
of any false filing with the SEC; or
23.1.3
Arising out of the
conduct of the business of an underwriter, broker, dealer,
municipal securities dealer, investment adviser or paid solicitor
of investors of securities.
23.2
Is subject to any
order, judgment or decree of any court of competent jurisdiction,
entered within 5 years before the Qualification Date, which
restrains or enjoins such person from engaging or continuing in any
conduct or practice:
23.2.1 In
connection with the purchase or sale of any security;
23.2.2 Involving
the making of any false filing with the SEC; or
23.2.3
Arising out of the
conduct of the business of an underwriter, broker, dealer,
municipal securities dealer, investment adviser or paid solicitor
of investors of securities.
23.3
Is subject to a
final order of a state securities commission (or an agency or
officer of a state performing like functions), a state authority
that supervises or examines banks, savings associations or credit
unions, a state insurance commission (or an agency or officer of a
state performing like functions), an appropriate federal banking
agency, the U.S. Commodity Futures Trading Commission or the
National Credit Union Administration that:
23.3.1
As of the
Qualification Date, bars the person from:
(a)
Association with an
entity regulated by such commission, authority, agency or
officer;
(b) Engaging
in the business of securities, insurance or banking;
or
(c) Engaging
in savings association or credit union activities.
23.3.2 Constitutes
a final order based on a violation of any law or regulation that
prohibits fraudulent, manipulative or deceptive conduct entered
within 10 years before the Qualification Date.
23.4
Is subject to an
order of the SEC pursuant to sections 15(b) or 15B(c) of the
Exchange Act or section 203(e) or (f) of the Investment Advisers
Act that, as of the Qualification Date:
23.4.1
Suspends or revokes
such person’s registration as a broker, dealer, municipal
securities dealer or investment advisor;
23.4.2
Places limitations
on the activities, functions or operations of such person;
or
23.4.3
Bars such person
from being associated with any entity or from participating in the
offering of any xxxxx stock.
23.5
Is subject to any
order of the SEC entered within 5 years before the Qualification
Date that, as of the date hereof, orders the person to cease and
desist from committing or causing a violation or future violation
of:
23.5.1
Any scienter-based
anti-fraud provisions of the federal securities laws including,
without limitation, section 17(a)(1) of the Securities Act, section
10(b) of the Exchange Act and 17 CFR 240.10b-5, section 15(c)(1) of
the Exchange Act and section 206(1) of the Investment Advisers Act,
or any other rule or regulation thereunder; or
23.5.2
Section 5 of the
Securities Act.
23.6
Is suspended or
expelled from membership in, or suspended or barred from
association with, a member of a registered national securities
exchange or a registered national or affiliated securities
association for any act or omission to act constituting conduct
inconsistent with just and equitable principles of
trade.
23.7
Has filed (as a
registrant or issuer), or was or was named as an underwriter in,
any registration statement or offering statement filed with the SEC
that, within 5 years of the Qualification Date, was the subject of
a refusal order, stop order or order suspending the Regulation A
exemption or, is, as of the Qualification Date, the subject of an
investigation or proceeding to determine whether a stop order or
suspension order should be issued.
23.8
Is subject to a
United States Postal Service false representation order entered
within 5 years before the Qualification Date, or is, at the
Qualification Date, subject to a temporary restraining order or
preliminary injunction with respect to conduct alleged by the
United States Postal Service to constitute a scheme or device for
obtaining money or property through the mail by means of false
representations.
The
representations and warranties made in this Section 23 are and
shall be continuing representations and warranties throughout the
term of the Offering. In the event that any of these
representations or warranties becomes untrue, the Managing
Broker-Dealer will immediately notify the Selling Group Member in
writing of the fact which makes the representation or warranty
untrue.
24.
Electronic Delivery of Information;
Electronic Processing of Subscriptions. Pursuant to the MBD
Agreement, the Company has agreed to confirm all orders for the
purchase of Bonds accepted by the Company. In addition, the
Company, the Managing Broker-Dealer and/or third parties engaged by
the Company or the Managing Broker-Dealer may, from time to time,
provide to the Selling Group Member copies of Company Investor
letters, annual reports and other communications provided to the
Company Investors. The Selling Group Member agrees that, to the
extent practicable and permitted by law, all confirmations,
statements, communications and other information provided to or
from the Company, the Managing Broker-Dealer, the Selling Group
Member and/or their agents or customers may be provided
electronically, as a preference but not as a
requirement.
With
respect to Bonds held through custodial accounts, the Selling Group
Member agrees and acknowledges that to the extent practicable and
permitted by law, all confirmations, statements, communications and
other information provided from the Company, the Managing
Broker-Dealer and/or their agents to Company interest holders may
be provided solely to the custodian that is the registered owner of
the Bonds, rather than to the beneficial owners of the Bonds. In
such case it shall be the responsibility of the custodian to
distribute the information to the beneficial owners of
Bonds.
The
Selling Group Member agrees and acknowledges that the Managing
Broker-Dealer may, as a preference but not as a requirement, use an
electronic platform to process purchases, including but not limited
to the Depository Trust Company (DTC) model. If an electronic
platform is used, the Selling Group Member agrees to cooperate with
the processing of purchases through such an electronic platform if
reasonably practical.
25.
Third Party
Beneficiaries. The Company and its affiliates, successors and
assigns shall be express third party beneficiaries of Section 1 of
this Agreement.
26.
Successors and Assigns. No
party shall assign this Agreement or any right, interest or benefit
under this Agreement without the prior written consent of the other
party. This Agreement shall be binding upon the Managing
Broker-Dealer and Selling Group Member and their respective
successors and permitted assigns.
Please
confirm this Agreement to solicit persons to acquire the Bonds on
the foregoing terms and conditions by signing and returning the
form enclosed herewith.
Very
truly yours,
CRESCENT
SECURITIES GROUP, INC., a
Texas
Corporation
By:
Name:
Xxxx
Xxxxx
Title:
President
CRESCENT
SECURITIES GROUP, INC.
0000 X.
Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx,
Xxxxx 00000
Re: Offering of
Bonds in ___________________________________
Ladies
and Gentlemen:
The
undersigned confirms its agreement to act as a Selling Group Member
as referred to in the foregoing Soliciting Dealer Agreement,
subject to the terms and conditions of such Agreement. The
undersigned confirms that it is a member in good standing of the
Financial Industry Regulatory Authority, Inc., and is qualified
under federal law and the laws of the states in which sales are to
be made by the undersigned to act as a Selling Group
Member.
Dated:
_____________________, 20__
(Print
Name of Firm)
By: ___________________________________
(Authorized
Representative)
Address:
___________________________________
___________________________________
___________________________________
___________________________________
Taxpayer
Identification Number:
___________________________________
Firm
CRD Number:
Firm is registered in the following states:
☐ Alabama
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Montana
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Nebraska
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Nevada
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New Hampshire
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New Jersey
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Colorado
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New Mexico
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☐ Connecticut
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New York
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Delaware
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North Carolina
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Florida
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North Dakota
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Ohio
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Hawaii
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Oklahoma
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Idaho
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Oregon
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Illinois
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Pennsylvania
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Indiana
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Rhode Island
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Iowa
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South Dakota
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South Carolina
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Tennessee
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Kansas
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Texas
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Kentucky
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Utah
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Louisiana
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Vermont
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Maine
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Virginia
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Maryland
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Washington
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Massachusetts
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West Virginia
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Michigan
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Wisconsin
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Minnesota
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Wyoming
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Mississippi
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Missouri
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EXHIBIT A
MBD AGREEMENT