LIGHTHOUSE LIFE CAPITAL, LLC managing broker-dealer AGREEMENT
Exhibit 1(a)
[ ],
2020
[________________]
Ladies
and Gentlemen:
Lighthouse Life
Capital, LLC , a Delaware limited liability company (the
“Company”), is
qualifying for the public sale of a maximum of its 8.5% senior
beacon bonds or Class A Bonds, and its 6.5% senior beacon bonds, or
Class B Bonds (the “Bonds”), pursuant to an exemption
from registration under Regulation A (“Regulation A”) promulgated by the
Securities and Exchange Commission (“SEC”) pursuant to the Securities
Act of 1933 (the “Securities
Act”), at the purchase price per Bond set forth in the
Offering Statement (as defined below) (the “Offering”). The Company desires to
appoint International Assets Advisory LLC (“IAA”), a
Florida limited liability company, as managing broker-dealer for
the Offering (the “Managing
Broker-Dealer”) on the terms and conditions described
herein. The Managing Broker-Dealer shall have the right to enter
into (i) Participating Dealer Agreements substantially in the form
attached to this Managing Broker-Dealer Agreement (this
“Agreement”) as
“Exhibit B” with
broker-dealers participating in the Offering (each broker-dealer
entering into a Participating Dealer Agreement being referred to
herein as a “Dealer” and said broker-dealers
being collectively referred to herein as the “Dealers”); and (ii) additional
agreements with broker-dealers (each broker-dealer entering into
such an agreement being referred to herein as a “Procurement Dealer” and said
broker-dealers being collectively referred to herein as the
“Procurement
Dealers”), all of whom must be members of the
Financial Industry Regulatory Authority (“FINRA”), for the purposes of
wholesaling the Bonds or procuring other broker-dealers to
participate in the Offering as a Dealer (each such agreement being
referred to herein as a “Procurement Agreement”). The
Company shall have the right to approve any material modifications
or addendums to the form of the Participating Dealer Agreement. The
indemnities, representations and warranties to the Company in
Section 4 herein shall be required of each Procurement Dealer
entering into a Procurement Agreement and becoming a Dealer. The
Company shall have the right to approve any material modification
Terms not defined herein shall have the same meaning as in the
Offering Circular prepared by the Company for use in connection
with the Offering, as it may be amended from time to time in the
future by the Company. In connection with the Offering, the Company
hereby agrees with the Managing Broker-Dealer, as
follows:
1.
Representations and Warranties of the Company
The
Company represents and warrants to the Managing Broker-Dealer, each
Procurement Dealer with whom the Managing Broker-Dealer enters into
a Procurement Agreement, and each Dealer with whom the Managing
Broker-Dealer enters into a Participating Dealer Agreement
that:
1.1 An Offering
Statement on Form 1-A (the “Offering Statement”), including a
preliminary offering circular (the “Preliminary Offering Circular”),
with respect to the Bonds has been prepared by the Company in
accordance with the requirements of the Securities Act, Regulation
A promulgated thereunder and any other rules and regulations (as
applicable) of the SEC (the “Rules and Regulations”) applicable
to the Offering and sale of the Bonds. Upon qualification of the
Offering Statement, the Company shall file a final offering
circular with the SEC pursuant to Rule 253 of Regulation A (the
“Offering
Circular”).
1.2 The Company has
been duly organized and is validly existing as a limited liability
company under the laws of the State of Delaware, and has, and at
all times during the Offering will have, the power and authority to
conduct its business as described in the Offering Circular and the
limited liability company agreement of the Company (the
“Operating
Agreement”). The Company is qualified, or, on or prior
to the date of qualification of the Offering Statement with the
SEC, will qualify to do business in each jurisdiction in which the
ownership or leasing of its properties or the nature or conduct of
its business, as described in the Offering Circular and the
Operating Agreement, 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 (a “Material Adverse
Effect”).
1.3 Upon qualification
of the Offering Statement, the Offering Circular will comply with
the Securities Act and the Rules and Regulations, and the Offering
Circular and any and all authorized printed sales literature or
other sales materials prepared and authorized by the Company for
use with potential investors in connection with the Offering
(“Authorized Sales
Materials”), including without limitation, all testing
the waters material under Rule 255 (“TTW Materials”), when used in
conjunction with the Offering Circular, do not contain any untrue
statements of material facts 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 foregoing
provisions of this Section 1.3 will not extend to such
statements contained in or omitted from the Offering Circular or
Authorized Sales Materials as are primarily within the knowledge of
the Managing Broker-Dealer, any Procurement Dealer or any of the
Dealers and are based upon information either (a) furnished by
a Dealer in writing to the Managing Broker-Dealer, any Procurement
Dealer or the Company, or (b) furnished by the Managing
Broker-Dealer in writing to the Company specifically for inclusion
therein.
1.4 The Company intends
to use the funds received from the sale of the Bonds as set forth
in the Offering Circular and the Operating Agreement.
1.5 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 Bonds, except such as have been or are to be
obtained under the Securities Act, or where the failure to obtain
such consent, approval, authorization or other order of any
governmental authority would not have a Material Adverse
Effect.
1.6 Unless otherwise
described in the Offering Circular, there are no actions, suits or
proceedings pending or, to the knowledge of the Company, threatened
against the Company 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 be
reasonably expected to have a Material Adverse Effect.
1.7 There are no
contracts or other documents required by the Securities Act or the
Rules and Regulations to be described in or incorporated by
reference into the Offering Circular which have not been accurately
described in all material respects in the Offering Circular or
incorporated or filed as required.
1.8 The execution and
delivery of this Agreement, the consummation of the transactions
herein contemplated and compliance with the terms of this Agreement
by the Company will not conflict with or constitute a default under
the Operating Agreement or any indenture, mortgage, deed of trust,
lease, or, to the Company’s knowledge, under any rule,
regulation, writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Company, except (i) to the extent that
the enforceability of the indemnity and/or contribution provisions
contained in Section 4 of this Agreement may be limited under
applicable securities laws, and (ii) for such conflicts or
defaults that would not reasonably be expected to have a Material
Adverse Effect.
1.9 The Company has
full legal right, power and authority to enter into this Agreement
and to perform the transactions contemplated hereby, except to the
extent that the enforceability of the indemnity and/or contribution
provisions contained in Section 4 of this Agreement may be
limited under applicable securities laws.
1.10 Since
the respective dates as of which information is given in the
Offering Circular and solely through the closing of the Offering,
there has not been any Material Adverse Effect, except as set forth
in or contemplated in the Offering Circular, (a) there has not been
any change in the capitalization of the Company, or in the
business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Company, arising for any
reason whatsoever other than in the ordinary course of business and
(b) the Company has not incurred and will not incur any material
liabilities or obligations, direct or contingent.
2.
Covenants of the Company
The
Company covenants and agrees with the Managing Broker-Dealer
that:
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2.1 It will prepare and
file with the SEC the Offering Statement (or the equivalent, if a
state securities commission requires a different format), including
all amendments thereto. In addition, it will furnish the Managing
Broker-Dealer, at no expense to the Managing Broker-Dealer, with
such number of printed copies of the Offering Circular, including
all amendments thereto, as the Managing Broker-Dealer may
reasonably request. It will similarly furnish to the Managing
Broker-Dealer and others designated by the Managing Broker-Dealer
as many copies as the Managing Broker-Dealer may reasonably request
in connection with the Offering of: (a) the offering circular,
in preliminary and final form, and every form of supplemental or
amended offering circular; and (b) this
Agreement.
2.2 It will prepare, at
no expense to the Managing Broker-Dealer, the Authorized Sales
Materials. In addition, it will furnish the Managing Broker-Dealer,
at no expense to the Managing Broker-Dealer, with such number of
printed copies of Authorized Sales Materials as the Managing
Broker-Dealer may reasonably request.
2.3 It will use its
reasonable best efforts to cause the Offering Statement to become
qualified with the SEC. If at any time the SEC shall issue any stop
order suspending the qualification of the Circular, and to the
extent the Company determines that such action is in the best
interest of its members, it will use its reasonable best efforts to
obtain the lifting of such order at the earliest possible
time.
2.4 It will not use any
Offering Circular or sales materials for the Offering which have
not been approved by the Managing Broker-Dealer prior to use, and
shall make such modifications, amendments or supplements to the
Offering Circular and Authorized Sales Materials as reasonably
requested by the Managing Broker-Dealer to eliminate any materially
inaccurate or misleading statement contained therein, but no
failure to make any objection or to request any modification,
amendment or supplement shall constitute any representation by the
Managing Broker-Dealer regarding the accuracy or completeness of
the Offering Circular or sales materials prepared by the Company.
If at any time when an Offering Circular is required to be
delivered under the Securities Act any event occurs as a result of
which, in the opinion of either the Company or the Managing
Broker-Dealer, the Offering Circular or Authorized Sales Materials
would include an untrue statement of a material fact or, in view of
the circumstances under which they were made, omit to state any
material fact necessary to make the statements therein not
misleading, the Company will promptly notify the Managing
Broker-Dealer thereof (unless the information shall have been
received from the Managing Broker-Dealer) and will affect the
preparation of an amended or supplemental Offering Circular and
Authorized Sales Materials which will correct such statement or
omission and file such amended or supplemental Offering Circular
and Authorized Sales Materials as required under federal
law.
2.5 Neither the Company
nor any of its affiliates shall make any written or oral
representations or statements to investors that contradict or are
inconsistent with the statements made in the Offering Circular or
the Authorized Sales Material, as then amended or
supplemented.
2.6 The Company will,
as long as any Bonds placed by the Managing Broker-Dealer or any
Dealer remain held by investors purchasing them in the Offering,
furnish directly to the Managing Broker-Dealer one (1) copy of each
report furnished to investors and/or the trustee in the Bonds at
the time such report is furnished to the investors and/or the
trustee.
2.7 Neither the
Company, nor any predecessor of the Company; nor any other issuer
affiliated with the Company; nor any director or executive officer
of the Company or other officer of the Company participating in the
Offering, nor any beneficial owner of 20% or more of the Company's
outstanding voting equity securities, nor any promoter connected
with the Company, is subject to the disqualification provisions of
Rule 262 of the Rules and Regulations.
2.8 Each of the
representations and warranties contained in this Agreement are true
and correct and the Company will comply with each covenant and
agreement contained in this Agreement.
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3.
Agreements and Compensation of Managing Broker-Dealer
3.1 The
Company hereby appoints the Managing Broker-Dealer as its agent and
principal distributor for the purpose of selling for cash, on a
“best efforts”
basis, up to a maximum of 50,000 Bonds through the Dealers, all of
whom shall be members of the FINRA. The Managing Broker-Dealer may
also sell Bonds for cash directly to its own clients and customers
at the public offering price and subject to the terms and
conditions stated in the Offering Circular. The Managing
Broker-Dealer hereby accepts such agency and distributorship and
agrees to use its best efforts to sell the Bonds on said terms and
conditions. The Managing Broker-Dealer represents to the Company
that it is a member of FINRA, that it and its employees and
representatives have all required licenses and registrations to act
under this Agreement, and that each shall remain a member or duly
licensed, as the case may be, during the Offering.
3.2 Promptly after the
qualification of the Bonds as exempt from registration pursuant to
Regulation A by the SEC, the Managing Broker-Dealer and the
Dealers shall commence the offering of the Bonds for cash to the
public in jurisdictions in which the Bonds are registered or
qualified for sale or in which such offering is otherwise
permitted. The Managing Broker-Dealer and the Dealers will suspend
or terminate offering of the Bonds upon request of the Company at
any time and will resume offering the Bonds upon subsequent request
of the Company. Subject to the Company’s compliance with its
obligations hereunder, the Managing Broker-Dealer will comply with
all applicable federal securities laws, including the Securities
Act, Exchange Act, and the applicable rules and regulations of
FINRA (the “FINRA
Rules”).
3.3 Except as otherwise
provided in the “Plan of
Distribution” section of the Offering Circular, as
compensation for the services rendered by the Managing
Broker-Dealer, the Company agrees that it will pay to the Managing
Broker-Dealer sales commissions, Managing Broker-Dealer Fee,
allowances and reimbursements set forth on Exhibit A attached hereto. It is
understood that no sale shall be regarded as effective unless and
until accepted by the Company. The Company reserves the right in
its sole discretion to accept or reject any subscription for Bonds
(each a “Subscription”) in whole or in part
for a period of thirty (30) days from the receipt of the
Subscription. Any Subscription not accepted within thirty (30) days
of receipt shall be deemed rejected. The Bonds will be offered
during a period commencing at such time as set forth in the
Offering Circular, and continuing until the earlier of the second
anniversary of qualification of the Offering Statement, subject to
extension in the sole discretion of the Company for an additional
twelve (12) months, or the date upon which all $50,000,000 in
offering proceeds have been received (the “Offering
Termination Date”). The Company may accept purchases of the
Bonds as soon as the Offering Statement has been qualified by the
SEC. Following qualification, the Company will conduct closings in
the Offering at its discretion. The Managing Broker-Dealer further
understands and agrees that the fees, commission or compensation to
the Managing Broker-Dealer for the sale of Bonds described herein
is conditioned upon acceptance of sales by the Company as set forth
in this Section 3.3, and that the failure to do so shall relieve
the Company or any other party of any obligation to pay Managing
Broker-Dealer for any services rendered by Managing Broker-Dealer
in connection with the sale of Bonds under this Agreement, other
than as specified herein. The Company will not be liable or
responsible to any Dealer for direct payment of commissions to any
Dealer, it being the sole and exclusive responsibility of the
Managing Broker-Dealer for payment of commissions to Dealers. The
Company will not be liable or responsible to any Procurement Dealer
for direct payment of fees to any Procurement Dealer, it being the
sole and exclusive responsibility of the Managing Broker-Dealer for
payment of fees to Procurement Dealers. Notwithstanding the above,
at the direction of the Managing Broker-Dealer, the Company may act
as agent of the Managing Broker-Dealer by making direct payment of
commissions to Dealers or fees to Procurement Dealers on behalf of
the Managing Broker-Dealer without incurring any liability;
provided, that the Managing Broker-Dealer may direct the Company in
writing to discontinue payments of commissions to any Dealer or
fees to Procurement Dealers at any time, and the Company shall
comply with the Managing Broker-Dealer’s written instructions
regarding such payments.
Notwithstanding the
foregoing, no fee, compensation or expense reimbursement may be
paid to the Managing Broker-Dealer, any Procurement Dealer or any
Dealer following the termination of this Agreement in violation of
FINRA Conduct Rule 5110(f)(2)(D). No compensation in
connection with the Offering will be paid to underwriters,
broker-dealers, or affiliates thereof out of the proceeds of the
Offering. Any such payments from sources other than proceeds of the
Offering shall be made only on the basis of bona fide
transactions.
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3.4 The Managing
Broker-Dealer represents and warrants to the Company that the
information under the caption “Plan of Distribution” in the
Offering Circular and all other information furnished to the
Company by the Managing Broker-Dealer in writing expressly for use
in the Offering Circular, 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.
3.5 The Managing
Broker-Dealer represents and warrants to the Company that it will
not use any sales literature not authorized and approved by the
Company, use any “broker-dealer use only” materials
with members of the public, or make any unauthorized verbal
representations or verbal representations which contradict or are
inconsistent with the statements made in the Offering Circular or
the Authorized Sales Material in connection with offers or sales or
the Bonds.
3.6 The Managing
Broker-Dealer is a duly organized and validly existing limited
liability company under the laws of Texas.
3.7 No consent,
approval, authorization or other order of any governmental
authority is required in connection with the execution or delivery
by the Managing Broker-Dealer of this Agreement, except such as may
be required under the Securities Act.
3.8 There are no
actions, suits or proceedings pending or to the knowledge of the
Managing Broker-Dealer, threatened against the Managing
Broker-Dealer 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 could be reasonably
expected to have a material adverse effect on the Managing
Broker-Dealer or the ability of the Managing Broker-Dealer to
perform its obligations under this Agreement or to participate in
the Offering as contemplated by the Offering Circular.
3.9 The execution and
delivery of this Agreement, the consummation of the transactions
herein contemplated and compliance with the terms of this Agreement
by the Managing Broker-Dealer will not conflict with or constitute
a default under any operating agreement or other similar agreement,
indenture, mortgage, deed of trust, lease, or, to the Managing
Broker-Dealer’s knowledge, under any rule, regulation, writ,
injunction or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction
over the Managing Broker-Dealer, except to the extent that the
enforceability of the indemnity and/or contribution provisions
contained in Section 4 of this Agreement may be limited under
applicable securities laws.
3.10 The
Managing Broker-Dealer has full legal right, power and authority to
enter into this Agreement and to perform the transactions
contemplated hereby, except to the extent that the enforceability
of the indemnity and/or contribution provisions contained in
Section 4 of this Agreement may be limited under applicable
securities laws.
3.11 Except
for Participating Dealer Agreements and Procurement Agreements, no
agreement will be made by the Managing Broker-Dealer with any
person permitting the resale, repurchase or distribution of any
Bonds purchased by such person.
3.12 The
Managing Broker-Dealer represents that the commissions and fees
payable to the Managing Broker-Dealer as set forth in this
Agreement are fair, reasonable and not in excess or violation of
applicable rules, regulations and other requirements of the SEC,
FINRA, Act, the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”).
3.13 Neither
the Managing Broker-Dealer, any Procurement Dealer nor any Dealer,
nor any managing member of the Managing Broker-Dealer, any
Procurement Dealer or any Dealer, nor any director or executive
officer of the Managing Broker-Dealer, any Procurement Dealer or
any Dealer or other officer of the Managing Broker-Dealer, any
Procurement Dealer or any Dealer participating in the Offering is
subject to the disqualification provisions of Rule 262 of the Rules
and Regulations. No registered representative of the Managing
Broker-Dealer, any Procurement Dealer or any Dealer, or any other
person being compensated by or through the Managing Broker-Dealer,
any Procurement Dealer or any Dealer for the solicitation of
investors, is subject to the disqualification provisions of Rule
262 of the Rules and Regulations.
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3.14 If
and to the extent that the Managing Broker-Dealer directly places
any of the Bonds sold to investors in the Offering, the Managing
Broker-Dealer shall be deemed to have made the representations,
warranties and covenants of a Dealer as contained in the
Participating-Dealer Agreement as if it had entered into a
Participating Dealer Agreement, as a Dealer, with the
Company.
4.
Indemnification
4.1 For
the purposes of this Section 4, an entity’s
“Indemnified
Parties” shall include such entity’s officers,
directors, employees, members, partners, affiliates, 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.
4.2 The Company will
indemnify, defend (subject to Section 4.6) and hold harmless the
Managing Broker-Dealer, the Procurement Dealers and the Dealers, as
applicable, 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 Dealers, Procurement Dealers or the Managing Broker-Dealer, as
applicable, 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 the Company, any material breach of a
covenant contained herein by the Company or any material failure by
the Company 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 any Offering Statement or any post-qualification
amendment thereto or in the Offering Circular or any amendment or
supplement to the Offering Circular or (ii) in any Authorized Sales
Materials, or (c) the omission or alleged omission to state a
material fact required to be stated in the Offering Statement or
any post-qualification amendment thereof necessary to make the
statements therein not misleading, and the Company will reimburse
each Dealer, Procurement Dealer or the Managing Broker-Dealer, as
applicable, and their respective Indemnified Parties, for any legal
or other expenses reasonably incurred by such Dealer, Procurement
Dealer or the Managing Broker-Dealer, as applicable, and their
respective Indemnified Parties, in connection with investigating or
defending such loss, claim, damage, liability or action;
provided, however, that the
Company 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 by the
Managing Broker-Dealer or (y) to the Company or the Managing
Broker-Dealer by or on behalf of any Dealer, in each case expressly
for use in the Offering Statement or any post-qualification
amendment thereof, or the Offering Circular or any such amendment
thereof or supplement thereto. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
Notwithstanding the foregoing the indemnification and agreement to
hold harmless provided in this Section 4.2 is further limited to
the extent that no such indemnification by the Company of a Dealer
or the Managing Broker-Dealer, 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 Bonds were offered or sold as to
indemnification for violations of securities laws. The Manager will
indemnify and hold harmless the Dealer Manager and Dealers, their
officers and directors and each person, if any, who controls the
Dealer Manager and Dealers within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against
any losses, claims, damages or liabilities, joint or several, to
which the Dealer Manager, its officers and directors, or such
controlling person 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 the termination of the Offering, and underwriting
compensation has exceeded 10% of gross proceeds of this Offering at
the time of such termination.
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4.3 The Managing
Broker-Dealer will indemnify, defend and hold harmless the Company,
its Indemnified Parties and each person who has signed the Offering
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 Managing Broker-Dealer, any material breach
of a covenant contained herein by the Managing Broker-Dealer, or
any material failure by the Managing Broker-Dealer to perform its
obligations hereunder or (b) any untrue statement or any alleged
untrue statement of a material fact contained (i) in any Offering
Statement or any post-qualification amendment thereto or (ii) in
any Authorized Sales Materials, or (c) the omission or alleged
omission to state a material fact required to be stated in the
Offering Statement or any post-qualification amendment thereof
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 by the Managing Broker-Dealer specifically for use
with reference to the Managing Broker-Dealer in the preparation of
the Offering Statement or any such post-qualification amendments
thereof or the Offering Circular or any such amendment thereof or
supplement thereto, or (d) any use of sales literature by the
Managing Broker-Dealer not authorized or approved by the Company or
any use of “broker-dealer use only” materials with
members of the public concerning the Bonds by the Managing
Broker-Dealer, or (e) any untrue statement made by the Managing
Broker-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 Bonds, or (f) any
material violation by the Managing Broker-Dealer of this Agreement,
or (g) any failure by the Managing Broker-Dealer to comply with
applicable laws governing money laundry abatement and
anti-terrorist financing efforts in connection with the Offering,
including applicable FINRA Rules, regulations pursuant to the
Exchange Act (“Exchange Act
Regulations”) and the USA PATRIOT Act, or (h) any
other failure by the Managing Broker-Dealer to comply with
applicable FINRA Rules or Exchange Act Regulations. The Managing
Broker-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 Managing Broker-Dealer may otherwise
have.
4.4 Promptly after
receipt by any indemnified party under this Section 4 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 4, promptly notify the indemnifying party
of the commencement thereof; provided, however, the failure to give
such notice shall not relieve the indemnifying party of its
obligations hereunder except to the extent it shall have been
prejudiced by such failure. In case any such action is brought
against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be
entitled, to the extent it may wish, jointly with any other
indemnifying party similarly notified, to participate in the
defense thereof, with separate counsel. Such participation shall
not relieve such indemnifying party of the obligation to reimburse
the indemnified party for reasonable legal and other expenses
(subject to Section 4.6) 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.
4.5 An indemnifying
party under Section 4 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 indemnifying the Managing Broker-Dealer,
the advancement of Company funds to the Managing Broker-Dealer 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
stockholder of the Company or the legal action is initiated by a
stockholder of the Company acting in his or her capacity as such
and a court of competent jurisdiction specifically approves such
advancement; and (iii) the Managing Broker-Dealer undertakes to
repay the advanced funds to the Company, together with the
applicable legal rate of interest thereon, in cases in which the
Managing Broker-Dealer is found not to be entitled to
indemnification.
6
(b) In
any case of indemnification other than that described in Section
4.6(a) above, the indemnifying party shall pay all legal fees and
expenses reasonably incurred by the indemnified party in the
defense of such claims or actions; provided, however, that the
indemnifying party shall not be obligated to pay legal expenses and
fees to more than one law firm in connection with the defense of
similar claims arising out of the same alleged acts or omissions
giving rise to such claims notwithstanding that such actions or
claims are alleged or brought by one or more parties against more
than one indemnified party. If such claims or actions are alleged
or brought against more than one indemnified party, then the
indemnifying party shall only be obliged to reimburse the expenses
and fees of the one law firm that has been participating by a
majority of the indemnified parties against which such action is
finally brought; and in the event a majority of such indemnified
parties is unable to agree on which law firm for which expenses or
fees will be reimbursable by the indemnifying party, then payment
shall be made to the first law firm of record representing an
indemnified party against the action or claim. Such law firm shall
be paid only to the extent of services performed by such law firm
and no reimbursement shall be payable to such law firm on account
of legal services performed by another law firm.
4.6 To provide for just
and equitable contribution in circumstances in which the
indemnification provided pursuant to this Section 4 is for any
reason held to be unavailable from the Company, the Managing
Broker-Dealer or the Dealers, as the case may be, the Company, the
Managing Broker-Dealer and the Dealers shall contribute to the
aggregate losses, claims, damages or liabilities (including any
amount paid in settlement of any action, suit, or proceeding or any
claims asserted) in such amounts as a court of competent
jurisdiction may determine (or in the case of settlement, in such
amounts as may be agreed upon by the parties) in such proportion to
reflect the relative fault of the Company, on the one hand, and the
Managing Broker-Dealer and Dealers, on the other hand, in
connection with the events which resulted in such losses, claims,
damages or liabilities. The relative fault of the parties
shall be determined by reference to, among other things, whether
any untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or Managing
Broker-Dealer or Dealer, on the other, and the parties’
relative intent, knowledge, access to information and opportunity
to correct or prevent such omission or statement.
4.7 The indemnity
agreements contained in this Section 4 shall remain operative
and in full force and effect regardless of (a) any
investigation made by or on behalf of the Company, the Managing
Broker-Dealer, any Dealer, (b) delivery of any Bonds and payment
therefor, and (c) any termination or completion of this
Agreement or any Participating Dealer Agreement. A successor of any
Dealer, any Procurement 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 4.
5.
Applicable Law and Venue
This
Agreement was executed and delivered in, and its validity,
interpretation and construction shall be governed by, the laws of
the State of Delaware; provided however, that causes of action for
violations of federal or state securities laws shall not be
governed by this Section. The Company, the Managing Broker-Dealer
and each Dealer hereby agree that venue for any action brought in
connection with this Managing Broker-Dealer Agreement shall lie
exclusively in ▇▇▇▇ County, Illinois.
6.
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.
7.
Successors and Amendment
7.1 This
Agreement shall inure to the benefit of and be binding upon the
Managing Broker-Dealer and the Company and their respective
successors, and to the benefit of the Dealers to the extent set
forth in Sections 1 and 4 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.
7
7.2 This Agreement may
be amended by the written agreement of the Managing Broker-Dealer
and the Company.
8.
Term
This
Agreement may be terminated by either party (a) immediately upon
notice to the other party in the event that the other party shall
have materially failed to comply with any of the material
provisions of this Agreement on its part to be performed during the
term of this Agreement or if any of the representations,
warranties, covenants or agreements of such party contained herein
shall not have been materially complied with or satisfied within
the times specified or (b) by either party on 60 days’
prior written notice.
In any
case, this Agreement shall expire at the close of business on the
Offering Termination Date. The provisions of Sections 4, 5 and
13-17 hereof shall survive such termination. In addition, the
Managing Broker-Dealer, upon the expiration or termination of this
Agreement, shall (1) promptly deposit any and all funds in its
possession which were received from investors for the sale of Bonds
into such account as the Company may designate; and
(2) promptly deliver to the Company all records and documents
in its possession which relate to the Offering which are not
designated as dealer copies. The Managing Broker-Dealer, at its
sole expense, may make and retain copies of all such records and
documents, but shall keep all such information confidential. The
Managing Broker-Dealer shall use its best efforts to cooperate with
the Company to accomplish any orderly transfer of management of the
Offering to a party designated by the Company. Upon expiration or
termination of this Agreement, the Company shall pay to the
Managing Broker-Dealer all commissions to which the Managing
Broker-Dealer is or becomes entitled under Section 3 at such
time as such commissions become payable.
9.
Confirmations
The
Company hereby agrees to prepare and send confirmations to all
purchasers of Bonds whose Subscriptions are accepted by the
Company.
10.1 Prior
to closing on each Subscription, each person subscribing for Bonds
(the “Subscribers”), will execute and
deliver a Subscription Agreement (a “Subscription Agreement”) to the
Company and the Company will make available to the Managing
Broker-Dealer copies of such Subscription Agreement. Each
Subscriber will transfer funds to the Company in an amount equal to
the price per Bond as shown on the cover page of the Offering
Circular multiplied by the number of Bonds subscribed by such
Subscriber (the “Subscription
Amount”). The Subscription Agreement shall contain
relevant information with regard to the transfer of funds for the
respective Subscriber.
10.2 If
on any date the Trustee shall have received the Subscription Amount
and the Company accepts such Subscription (each such date, a
“Closing Date”),
the Trustee will release the Subscription Amount from for
collection by the Company and the Managing Broker-Dealer and the
Company shall deliver the Bonds purchased on such Closing Date to
the Subscriber, which delivery may be made through the facilities
of the Depository Trust Company (“DTC”) or via book
entry with the Company’s securities registrar and transfer
agent, UMB Bank (the “Transfer Agent”). All closings
(each, a “Closing”) shall take place at the
office of the Managing Broker-Dealer or such other location as the
Managing Broker-Dealer and the Company shall mutually agree. All
actions taken at the Closing shall be deemed to have occurred
simultaneously on such Closing Date.
11.
Notice
Any
notice in this Agreement permitted to be given, made or accepted by
either party to the other, must be in writing and may be given or
served by (1) overnight courier, (2) depositing the same
in the United States mail, postpaid, certified, return receipt
requested, or (3) facsimile transmission. Notice deposited in
the United States mail shall be deemed given three (3) business
days after mailing. Notice given in any other manner shall be
effective when received at the address of the addressee. For
purposes hereof the addresses of the parties, until changed as
hereafter provided, shall be as follows:
8
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To
Company:
|
Lighthouse
Life Capital, LLC1100 ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇: [ ]
|
|
|
|
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To
Managing Broker-Dealer:
|
International
Assets Advisory ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇: [ ]
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12.
Severability
In the
event that any court of competent jurisdiction declares any
provision of this Agreement invalid, such invalidity shall have no
effect on the other provisions hereof, which shall remain valid and
binding and in full force and effect, and to that end the
provisions of this Agreement shall be considered
severable.
13.
No Waiver
Failure
by either party to promptly insist upon strict compliance with any
of the obligations of the other party under this Agreement shall
not be deemed to constitute a waiver of the right to enforce strict
compliance with respect to any obligation hereunder.
14.
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.
15.
Assignment
This
Agreement may not be assigned by either party, except with the
prior written consent of the other party. This Agreement shall be
binding upon the parties hereto, their heirs, legal
representatives, successors and permitted assigns.
16.
Privacy Act
To
protect Customer Information (as defined below) and to comply as
may be necessary with the requirements of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Act, the relevant state and federal regulations pursuant thereto
and state privacy laws, the Managing Broker-Dealer hereby agrees to
the confidentiality and non-disclosure obligations set forth
herein.
16.1 “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).
9
16.2 The
Managing Broker-Dealer understands and acknowledges that it may be
financial institutions subject to applicable federal and state
customer and consumer privacy laws and regulations, including Title
V of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act (15 U.S.C. 6801, et seq.) and
regulations promulgated thereunder (collectively, the
“Privacy Laws”),
and any Customer Information received by the Managing Broker-Dealer
is received with limitations on its use and disclosure. The
Managing Broker-Dealer agrees that it is prohibited from using the
Customer Information received 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.
16.3 The
Managing Broker-Dealer shall establish and maintain safeguards
against the unauthorized access, destruction, loss, or alteration
of Customer Information in its control which are no less rigorous
than those maintained by the Managing Broker-Dealer for its own
information of a similar nature. In the event of any improper
disclosure of any Customer Information, the Managing Broker-Dealer
will immediately notify the Company.
17.
Third Party Beneficiary
Each
Procurement Dealer is expressly made a third party beneficiary of
this Agreement, including, without limitation, regarding the
representations and warranties contained in Section 1 and the
indemnification obligations contained in Section 4.
[Signatures
appear on next page]
10
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,
By: LHL
Strategies, Inc.
Its:
Sole Member
By:
_______________________________________
Name:
[▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇]
Its:
[Chief Executive Officer]
|
Accepted
and agreed as of the
date
first above written.
MANAGING BROKER-DEALER
International
Assets Advisory LLC
By:
Name: [
]
Its: [
]
11
Exhibit A
Managing Broker-Dealer Compensation:
The Managing Broker-Dealer will receive selling
commissions equal to 5.0% and
4.5% of aggregate gross offering proceeds on the sale of Class A
Bonds and Class B Bonds, respectively, which it may re-allow, in
whole or in part to the Procurement Dealers and Dealers. The
Managing Broker-Dealer will also receive a Managing Broker-Dealer
Fee of up to 2.00% of aggregate gross offering proceeds, which it
may re-allow, in whole or in part to selling group members.
Additionally, the Company has agreed to pay to the Managing
Broker-Dealer a re-allowance in an amount up to 1.00% of aggregate
gross offering proceeds. The
Company will also pay a 0.50% wholesaling fee on the sale of Class
B Bonds only. The aggregate of the selling commissions, the
Managing Broker-Dealer Fee, the reallowance and wholesaling fee
will equate to a maximum amount of 8.0% of gross proceeds from the
Offering.
Organizational
and offering expenses (“O&O Expenses”) will total
2.00% of offering proceeds which equals $1,000,000 at the maximum
offering amount. In no event will O&O Expenses exceed 2.00% of
the offering proceeds.
The
Managing Broker-Dealer will monitor the aggregate amount of
underwriting compensation that the Company and its Manager pay in
connection with this Offering in order to ensure compliance with
the underwriting compensation limits of applicable FINRA rules,
including FINRA Rule 2310, which prohibits underwriting
compensation in excess of 10% of the gross offering
proceeds.
Exhibit B
PARTICIPATING DEALER AGREEMENT
1
PARTICIPATING DEALER AGREEMENT
Ladies
and Gentlemen:
International
Assets Advisory, LLC, a Florida limited liability company, as the
managing broker-dealer (“Managing Broker-Dealer”) for
Lighthouse Life Capital, LLC, a Delaware limited liability company
(the “Company”),
invites you (the “Dealer”) to participate in the
distribution, on a “best efforts basis,” to the public
(the “Offering”)
of up to $50,000,000 of its 8.5% senior beacon bonds
(“Class A
Bonds”, and its 6.5% senior beacon bonds
(“Class B
Bonds” and
together with the Class A Bonds, the “Bonds”) subject to the following
terms:
The
Managing Broker-Dealer and the Company have entered into that
certain Managing Broker-Dealer Agreement dated [ ], 2020 (the
“Managing Broker-Dealer
Agreement”). By your acceptance of this Participating
Dealer Agreement, you will become one of the Dealers referred to in
such agreement between the Company and the Managing Broker-Dealer
and will be entitled and subject to the indemnification provisions
contained in the Managing Broker-Dealer Agreement, including
specifically the provisions of Section 4 of the Managing
Broker-Dealer Agreement. Such indemnification obligations shall
survive the termination of this Participating Dealer Agreement.
Except as otherwise specifically stated herein, all terms used in
this Participating Dealer Agreement have the meanings provided in
the Managing Broker-Dealer Agreement. The Bonds are offered solely
through broker-dealers who are members of the Financial Industry
Regulatory Authority (“FINRA”).
Dealer
hereby agrees to use its best efforts to sell the Bond for cash on
the terms and conditions stated in the Offering Circular. Nothing
in this Participating Dealer Agreement shall be deemed or construed
to make Dealer an employee, agent, representative or partner of the
Managing Broker-Dealer or of the Company, and Dealer is not
authorized to act for the Managing Broker-Dealer or the Company or
to make any representations except as set forth in the Offering
Circular and Authorized Sales Materials.
II.
Submission of Orders
Those
persons who purchase Bonds will be instructed by the Dealer to
transfer the Subscription Amount to the entity listed in the
Subscription Agreement. Any Dealer receiving a Subscription Amount
not conforming to the foregoing instructions shall return such
Subscription Amount directly to such Subscriber not later than noon
of the next business day following its receipt. Subscription
Amounts received by the Dealer which conform to the foregoing
instructions shall be transmitted for deposit pursuant to one of
the methods in this Article II. Transmittal of received
investor funds will be made in accordance with the following
procedures:
Where,
pursuant to the Dealer’s internal supervisory procedures,
internal supervisory review is conducted at the same location at
which the Subscription Agreements and Subscription Amounts are
received from Subscribers, the Subscription Amounts will be
transmitted by noon of the next business day following receipt by
the Dealer to the Trustee for deposit directly with the
Trustee.
Where,
pursuant to the Dealer’s internal supervisory procedures,
final and internal supervisory review is conducted at a different
location, Subscription Amounts will be transmitted by noon of the
next business day following receipt by the Dealer to the office of
the Dealer conducting such final internal supervisory review (the
“Final Review
Office”). The Final Review Office will in turn
transmit by 5:00 pm of the next business day following receipt at a
different location by the Final Review Office such Subscription
Amounts to the Trustee for deposit directly with the
Trustee.
2
III.
Pricing
Except
as may be otherwise provided for in the “Plan of Distribution” section of
the Offering Circular, Bonds shall be offered to the public at the
offering price of $1,000 per Bond. Except as otherwise indicated in
the Offering Circular or in any letter or memorandum sent to the
Dealer by the Company or Managing Broker-Dealer, a minimum initial
purchase of ten (10) Bonds is required.
IV.
Representations and Warranties of Dealer
Dealer
represents and warrants to the Company and the Managing
Broker-Dealer and agrees that:
A. Dealer will
undertake all reasonable investigation, review, and inquiry to
ensure, to the best of its reasonable knowledge and belief, that
the investment is suitable for such prospective investor upon the
basis of the information known to Dealer or disclosed by such
prospective investor as to his other security holdings and as to
his financial situation and needs. Dealer shall keep written
records supporting this representation and warranty and such
records shall be made available to the Company or the Managing
Broker-Dealer promptly upon request.
B. Dealer shall
deliver to each prospective investor, prior to any submission by
such prospective investor, a written offer to buy any Bonds, a copy
of the Offering Circular.
C. Dealer will not
deliver to any prospective investor any written documents
pertaining to the Company or the Bonds, other than the Offering
Circular, and any Authorized Sales Materials that are supplied to
Dealer by the Company, the Managing Broker-Dealer or their
respective affiliates. Without intending to limit the generality of
the foregoing, Dealer shall not deliver to any prospective investor
any material pertaining to the Company or any of its affiliates
that has been furnished as “broker/dealer information
only.”
D. Dealer will make
reasonable inquiry to determine whether a prospective investor is
acquiring Bonds for his own account or on behalf of other persons
and not for the purpose of resale or other distribution
thereof.
E. Dealer will not
give any information or make any representation or warranty in
connection with the Offering, the Company or the Bonds other than
those contained in the Offering Circular and any Authorized Sales
Materials.
F. Dealer will abide
by, and will take reasonable precautions to ensure compliance by
prospective investors from whom Dealer has solicited an offer to
purchase, all provisions contained in the Offering Circular
regulating the terms and manner of the Offering.
G. In its solicitation
of offers for the Bonds, Dealer will comply with all applicable
requirements of the Securities Act, the Exchange Act, and the
applicable Rules and Regulations.
H. Dealer is (and will
continue to be) a member in good standing with FINRA, will abide by
the FINRA Rules, is in full compliance with all applicable
requirements under the Exchange Act, and is registered as a
broker-dealer in all of the jurisdictions in which Dealer solicits
offers to purchase the Bonds.
I. Dealer, nor any
managing member of Dealer, nor any director or executive officer of
Dealer or other officer of Dealer participating in the Offering is
subject to the disqualification provisions of Rule 262 of the Rules
and Regulations. No registered representative of Dealer, or any
other person being compensated by or through Dealer for the
solicitation of investors, is subject to the disqualification
provisions of Rule 262 of the Rules and Regulations.
J. Dealer will not
take any action in conflict with, or omit to take any action the
omission of which would cause Dealer to be in violation of the
requirements of the Securities Act or the Exchange
Act.
3
K. Dealer will use
reasonable efforts to ensure that all investors who are acquiring
Bonds have and will satisfy all conditions described in the
Offering Circular and the Subscription Agreement.
L. Each of the
representations and warranties made by each prospective investor to
the Company in the Subscription Agreement, is, to the
Dealer’s best knowledge, information, and belief, after due
inquiry, true and correct as of the date thereof and as of the date
of purchase of the Bonds by such prospective investor.
V.
Dealers’ Compensation
The
Managing Broker-Dealer shall pay the Dealer a selling commission of
up to 5.0% and 4.5% of the gross offering proceeds of the Class A
Bonds and Class B Bonds, respectively, sold by it and accepted and
confirmed by the Company.
As
provided in the “Plan of Distribution” section of the
Offering Circular, and in Section 3.3 and Exhibit A of the Managing
Broker-Dealer Agreement, in addition to the selling commissions equal to 5.0% and 4.5% of
aggregate gross offering proceeds on the sale of Class A Bonds and
Class B Bonds, respectively, the Managing Broker-Dealer will
receive a Managing Broker-Dealer Fee of up to 2.0% of aggregate
gross offering proceeds, which it may re-allow, in whole or in part
to the Dealers. Additionally, the Company has agreed to pay
to Managing Broker-Dealer a re-allowance of up to 1.0% of aggregate
gross offering proceeds. The Company
will also pay a 0.50% wholesaling fee on the sale of Class B Bonds
only. The aforementioned selling commissions, Managing
Broker-Dealer Fees, re-allowance and wholesaling fee shall only be
paid to the Dealer with regard to the Bonds sold by it and accepted
and confirmed by the Company.
For
purposes of this Participating Dealer Agreement, Bonds shall be
deemed to be “sold” if and only if a transaction has
closed with a subscriber for Bonds pursuant to all applicable
offering and subscription documents, the Company has accepted the
Subscription Agreement of such subscriber and such Bonds have been
fully paid for. The Dealer affirms that the Managing
Broker-Dealer’s liability for commissions and other amounts
payable to the Dealer is limited solely to the proceeds of
commissions and other payments received from the Company. The
Dealer shall have the responsibility to disclose to investors the
terms of any such selling commissions, fees, reimbursements,
payments or any preferential treatments, if any, provided to the
Managing Broker-Dealer or Dealer in connection therewith, if
applicable and to the extent required.
The
Dealer shall have no right to receive, and the Managing
Broker-Dealer shall have no obligation to make, payments of any
selling commissions, fees, or reimbursements until such time as the
Managing Broker-Dealer is in receipt from the Company of such
selling commissions, fees or reimbursements from which such fees or
reimbursements are to be paid.
The
parties hereby agree that the foregoing selling commissions, fees,
reimbursements and other payments are not in excess of the usual
and customary distributors’ or sellers’ commissions,
fees, reimbursements and payments received in the sale of
securities similar to the Bonds, that the Dealer’s interest
in the Offering is limited to such selling commissions, fees,
reimbursements and payments from the Managing Broker-Dealer and the
Dealer’s indemnity referred to in Section 4 of the Managing
Broker-Dealer Agreement, and that the Company is not liable or
responsible for such payments to the Dealer.
VI.
Applicability of Indemnification
Each of
the Dealer and Managing Broker-Dealer hereby acknowledges and
agrees that it will be subject to the obligations set forth in, and
entitled to the benefits of all the provisions of, the Managing
Broker-Dealer Agreement, including but not limited to, the
representations and warranties and the indemnification obligations
contained in the Managing Broker-Dealer Agreement, including
specifically the indemnification provisions of Section 4 of the Managing
Broker-Dealer Agreement. Such indemnification obligations shall
survive the termination of this Participating Dealer Agreement and
the Managing Broker-Dealer Agreement.
4
VII.
Payment
Payments of sales
commissions will be made by the Managing Broker-Dealer (or by the
Company as provided in the Managing Broker-Dealer Agreement) to
Dealer within 30 days of the receipt by the Managing Broker-Dealer
of the gross commission payments from the Company.
VIII.
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. Orders not
accompanied by a Subscription Agreement signature page and the
required Subscription Amount may be rejected. Issuance of the Bonds
will be made only after actual receipt of payment. If any check 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 Bonds
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, Dealer agrees to return to
the Managing Broker-Dealer any commission theretofore paid with
respect to such order within 30 days thereafter and, failing
to do so, the Managing Broker-Dealer shall have the right to offset
amounts owed against future commissions due and otherwise payable
to Dealer.
IX.
Circular and Authorized Sales Materials
Dealer
is not authorized or permitted to give, and will not give, any
information or make any representation (written or oral) concerning
the Bonds, except as set forth in the Offering Circular and any
Authorized Sales Materials. The Managing Broker-Dealer will supply
Dealer with reasonable quantities of the Offering Circular, any
supplements thereto and any amended Offering Circular, as well as
any Authorized Sales Materials, for delivery to investors, and
Dealer will deliver a copy of the Offering Circular and all
supplements thereto and any amended Offering Circular to each
investor to whom an offer is made prior to or simultaneously with
the first solicitation of an offer to sell the Bonds to an
investor. Dealer agrees that it will not send or give any
Authorized Sales Materials to an investor unless it has previously
sent or given an Offering Circular to that investor or has
simultaneously sent or given an Offering Circular with such
Authorized Sales Materials. 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 Managing
Broker-Dealer and marked “broker-dealer use only” or
otherwise bearing a legend denoting that it is not to be used in
connection with the sale of Bonds to members of the public. Dealer
agrees that it will not use in connection with the offer or sale of
Bonds any material or writing supplied to it by the Company or the
Managing Broker-Dealer bearing a legend which states that such
material may not be used in connection with the offer or sale of
the Bonds or any other securities. Dealer further agrees that it
will not use in connection with the offer or sale of Bonds any
materials or writings which have not been previously authorized or
approved by the Managing Broker-Dealer.
Dealer
agrees to furnish a copy of any revised Preliminary Offering
Circular to each person to whom it has furnished a copy of any
previous Preliminary Offering Circular and further agrees that it
will itself mail or otherwise deliver all Preliminary Offering
Circulars and the Offering Circular required for compliance with
the provisions of Regulation A under the Securities Act. Regardless
of the termination of this Participating Dealer Agreement, Dealer
will deliver an Offering Circular in transactions in the Bonds for
a period of 90 days from the qualification date of the Offering
Statement. On becoming a Dealer, and in offering and selling Bonds,
Dealer agrees to comply with all the applicable requirements under
the Securities Act and Regulation A promulgated
thereunder.
X.
License and Association Membership
Dealer’s
acceptance of this Participating Dealer Agreement constitutes a
representation to the Company and the Managing Broker-Dealer that
Dealer is a properly registered broker-dealer under the Exchange
Act, is duly licensed as a broker-dealer and authorized to sell
Bonds under Federal laws and regulations, and that it is a member
in good standing of FINRA. Dealer agrees to notify the Managing
Broker-Dealer immediately in writing and this Participating Dealer
Agreement shall automatically terminate if Dealer ceases to be a
member in good standing of FINRA, is subject to a FINRA suspension,
or its registration as a broker-dealer under the Exchange Act is
terminated or suspended. Dealer hereby agrees to abide by all
applicable FINRA Rules, including, but not limited to, FINRA
Rule 2111.
5
Managing
Broker-Dealer represents and warrants that it is currently, and at
all times while performing its functions under this Participating
Dealer Agreement will be, a properly registered broker-dealer under
the Exchange Act, and that it is a member in good standing of
FINRA. The Managing Broker-Dealer agrees to notify Dealer
immediately in writing if it ceases to be a member in good standing
with FINRA, is subject to a FINRA suspension, or its registration
as a broker-dealer under the Exchange Act is terminated or
suspended. The Managing Broker-Dealer hereby agrees to abide by all
applicable FINRA Rules, specifically including, but not limited to,
FINRA Rule 2111.
XI.
Anti-Money Laundering Compliance Programs
Dealer’s
acceptance of this Participating Dealer Agreement constitutes a
representation to the Company and the Managing Broker-Dealer that
Dealer has established and implemented an anti-money laundering
compliance program (“AML
Program”) in accordance with applicable law, including
applicable FINRA Rules, SEC Rules and Section 352 of the Money
Laundering Abatement Act, reasonably expected to detect and cause
the reporting of suspicious transactions in connection with the
sale of the Bonds. Dealer hereby agrees to furnish, upon request, a
copy of its AML Program to the Managing Broker-Dealer for review
and to promptly notify the Managing Broker-Dealer of any material
changes to its AML Program.
XII.
Limitations of Offer and Suitability
Dealer
will offer Bonds only to persons who meet the suitability standards
set forth in the Offering Circular or in any suitability letter or
memorandum sent to it by the Company or the Managing
Broker-Dealer.
In
offering Bonds, Dealer will comply with the provisions of the
applicable FINRA Rules, as well as all other applicable rules and
regulations relating to suitability of investors. Nothing contained
in this Participating Dealer Agreement shall be construed to impose
upon the Company or the Managing Broker-Dealer the responsibility
of assuring that prospective investors meet the suitability
standards set forth in the Offering Circular, or to relieve Dealer
from the responsibility of assuring that prospective investors meet
the suitability standards in accordance with the terms and
provisions of the Offering Circular.
Dealer
further represents, warrants and covenants that no Dealer, or
person associated with Dealer, shall offer or sell Bonds 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
of the Offering Circular; or (2) applicable FINRA Rules
including FINRA Rule 2111. Dealer agrees to ensure that, in
recommending the purchase, sale or exchange of Bonds to an
investor, each Dealer, or person associated with Dealer, shall have
reasonable grounds (as required by FINRA Rule 2111) to
believe, on the basis of information obtained from the investor
(and thereafter maintained in the manner and for the period
provided in such FINRA Rules) concerning his financial status, tax
status, investment objectives and any other information known to
Dealer, or person associated with Dealer, that: (A) the
investor is or will be in a financial position appropriate to
enable him to realize to a significant extent the benefits
described in the Offering Circular, including the tax benefits to
the extent they are a significant aspect of the Company;
(B) the investor has a fair market net worth sufficient to
sustain the risks inherent in an investment in Bonds in the amount
proposed, including loss, and lack of liquidity of such investment;
(C) that the investor has an apparent understanding of the
fundamental risks of an investment in Bonds, the lack of liquidity
of the Bonds, the background and qualifications of the sponsor, the
advisor to the Company and their affiliates, and the tax
consequences of an investment in the Bonds; and (D) an
investment in Bonds is otherwise suitable for such investor. Dealer
further represents, warrants and covenants that Dealer, or a person
associated with Dealer, will make every reasonable effort to
determine the suitability and appropriateness of an investment in
Bonds 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 Bonds pursuant to a
subscription solicited by Dealer, whether such documents and
records relate to accounts which have been closed, accounts which
are currently maintained, or accounts hereafter established. Dealer
agrees to retain such documents and records in Dealer’s
records for a period of six years from the date of the applicable
sale of Bonds and to make such documents and records available to
(i) the Managing Broker-Dealer and the Company upon request,
and (ii) to representatives of the SEC, and FINRA upon your
firm’s receipt of an appropriate document subpoena or other
appropriate request for documents from any such agency. Dealer
shall not purchase any Bonds for a discretionary account without
obtaining the prior written approval of Dealer’s customer and
his or her signature on a Subscription Agreement.
6
XIII.
Due Diligence and Adequate Disclosure
Prior
to offering the Bonds for sale, Dealer shall have conducted an
inquiry such that Dealer has reasonable grounds to believe, based
on information made available to Dealer by the Company or the
Managing Broker-Dealer through the Offering Circular or other
materials, that all material facts are adequately and accurately
disclosed and provide a basis for evaluating a purchase of Bonds.
In determining the adequacy of disclosed facts pursuant to the
foregoing, each Dealer may obtain, upon request, information on
material facts relating at a minimum to the following:
(1) items of compensation; (2) physical properties;
(3) tax aspects; (4) financial stability and experience
of the Company and its advisor; (5) conflicts and risk
factors; and (6) appraisals and other pertinent
reports.
Notwithstanding the
foregoing, each Dealer may rely upon the results of an inquiry
conducted by an independent third party retained for that purpose
or another Dealer, provided that: (1) such Dealer has
reasonable grounds to believe that such inquiry was conducted with
due care by said independent third party or such other Dealer;
(2) the results of the inquiry were provided to Dealer with
the consent of the other Dealer conducting or directing the
inquiry; and (3) no Dealer that participated in the inquiry is
an affiliate of the Company.
Prior
to the sale of the Bonds, each Dealer shall inform each prospective
purchaser of Bonds of pertinent facts relating to the Bonds
including specifically the lack of liquidity and lack of
marketability of the Bonds during the term of the investment, but
shall not, in any event, make any representation on behalf of the
Company except as set forth in the Offering Circular and any
Authorized Sales Materials.
XIV.
Compliance with Record Keeping Requirements
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. Dealer further agrees to keep
such records with respect to each customer who purchases Bonds, his
suitability and the amount of Bonds sold and to retain such records
for such period of time as may be required by the SEC, FINRA or the
Company.
XV.
Customer Complaints
Each
party hereby agrees to promptly provide to the other party copies
of any written or otherwise documented complaints from customers of
Dealer received by such party relating in any way to the Offering
(including, but not limited to, the manner in which the Bonds are
offered by the Managing Broker-Dealer or Dealer), the Bonds or the
Company.
XVI.
Effectiveness, Termination and Amendments
This
Participating Dealer Agreement shall become effective upon the
execution hereof by Dealer and receipt of such executed
Participating Dealer Agreement by the Managing Broker-Dealer;
provided, however, that in the event of the execution of this
Participating Dealer Agreement prior to the time that the Offering
Statement becomes qualified with the SEC, this Participating Dealer
Agreement shall not become effective prior to the Offering
Statement being qualified with the SEC and shall instead become
effective simultaneously with the qualification of the Offering
Statement.
Dealer
will immediately suspend or terminate its offer and sale of Bonds
upon the request of the Company or the Managing Broker-Dealer at
any time and will resume its offer and sale of Bonds hereunder upon
subsequent request of the Company or the Managing Broker-Dealer.
Any party may terminate this Participating Dealer Agreement by
written notice. Such termination shall be effective 48 hours after
the mailing of such notice. This Participating Dealer Agreement and
the exhibits hereto are the entire agreement of the parties and
supersede all prior agreements, if any, between the parties hereto.
In any event, this Participating Dealer Agreement shall terminate
at the close of business on the Offering Termination
Date.
This
Participating Dealer Agreement may be amended at any time by the
Managing Broker-Dealer by written notice to the Dealer, and any
such amendment shall be deemed accepted and agreed to by Dealer
upon placing an order for sale of Bonds after receipt of such
notice.
7
XVII.
Privacy Laws
The
Managing Broker-Dealer and Dealer (each referred to individually in
this section as “Party”) agree as
follows:
A. Each Party agrees
to abide by and comply with (1) the privacy standards and
requirements of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of 1999
(“GLB Act”),
(2) the privacy standards and requirements of any other
applicable Federal or state law, and (3) its own internal
privacy policies and procedures, each as may be amended from time
to time.
B. Dealer agrees to
provide privacy policy notices required under the GLB Act resulting
from purchases of Bonds made by its customers pursuant to this
Participating Dealer Agreement.
C. 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
D. 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”) 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.
XVIII.
Notice
Any
notice in this Participating Dealer Agreement permitted to be
given, made or accepted by either party to the other, must be in
writing and may be given or served by (1) overnight courier or
(2) depositing the same in the United States mail, postpaid,
certified, return receipt requested. Notice deposited in the United
States mail shall be deemed given three (3) business days after
mailing. Notice given in any other manner shall be effective when
received at the address of the addressee. For purposes hereof the
addresses of the parties, until changed as hereafter provided,
shall be as follows:
|
To
Managing Broker-Dealer:
|
International
Assets Advisory, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇: [ ]
|
|
To
Dealer:
|
Address
Specified By Dealer on signature page.
|
XIX.
Attorney’s Fees, Applicable Law and Venue;
Arbitration
In any
action to enforce the provisions of this Participating Dealer
Agreement or to secure damages for its breach, the prevailing party
shall recover its costs and reasonable attorney’s fees. This
Participating Dealer Agreement shall be construed under the laws of
the State of California and shall take effect when signed by Dealer
and countersigned by the Managing Broker-Dealer. Dealer and the
Managing Broker-Dealer hereby acknowledge and agree that venue for
any action brought hereunder shall lie exclusively in Orange
County, California.
XX.
Severability
In the
event that any court of competent jurisdiction declares any
provision of this Participating Dealer Agreement invalid, such
invalidity shall have no effect on the other provisions hereof,
which shall remain valid and binding and in full force and effect,
and to that end the provisions of this Participating Dealer
Agreement shall be considered severable.
8
XXI.
No Waiver
Failure
by either party to promptly insist upon strict compliance with any
of the obligations of the other party under this Participating
Dealer Agreement shall not be deemed to constitute a waiver of the
right to enforce strict compliance with respect to any obligation
hereunder.
XXII.
Assignment
This
Participating Dealer Agreement may not be assigned by Dealer,
except with the prior written consent of the Managing
Broker-Dealer. This Participating Dealer Agreement may be assigned
by the Managing Broker-Dealer with 10 days prior written notice to
Dealer, but such assignment shall not release the Managing
Broker-Dealer from any liability under this Participating Dealer
Agreement subsequent to any such assignment. This Participating
Dealer Agreement shall be binding upon the parties hereto, their
heirs, legal representatives, successors and permitted
assigns.
XXIII.
Authorization
Each
party represents to the other that all requisite corporate
proceedings have been undertaken to authorize it to enter into and
perform under this Participating Dealer Agreement as contemplated
herein, and that the individual who has signed this Participating
Dealer Agreement below on its behalf is a duly elected officer that
has been empowered to act for and on behalf of such party with
respect to the execution of this Participating Dealer
Agreement.
XXIV. Counterparts
This
Participating Dealer 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.
|
|
THE
MANAGING BROKER-DEALER
International
Assets Advisory, LLC
By:
Name:
Title:
|
9
We have
read the foregoing Participating Dealer Agreement and we hereby
accept and agree to the terms and conditions therein set forth. We
agree to advise you of any changes to the information listed on
this signature page during the term of this Participating Dealer
Agreement.
1.
Identity of
Dealer:
Name:
Type of
entity:
(to
be completed by Dealer) (corporation, partnership or
proprietorship)
Organized
in the State of:
(to
be completed by Dealer) (State)
Licensed
as broker-dealer in the following States:
(to
be completed by Dealer)
Tax I.D.
#:
2.
Person to receive
notice pursuant to Section XVIII.
Name:
Company:
Address:
City,
State and Zip Code:
Telephone
No.:(
)
Fax
No.:(
)
AGREED
TO AND ACCEPTED BY THE
DEALER:
(Dealer’s
Firm Name)
By:
Signature
Title:
Date:
10
INTERNATIONAL ASSET ADVISOR, LLC
SCHEDULE I TO PARTICIPATING DEALER AGREEMENT
This Schedule I to Participating Dealer Agreement
is intended to reflect the terms of the marketing fees paid to
__________________________ (“Dealer”) and shall
constitute a part of the Participating Dealer Agreement between
International Assets Advisory, LLC (“Managing
Broker-Dealer”) and Dealer dated the _____ day of
________________, 20____ (the “Participating Dealer
Agreement”) relating to the sale of the 8.5% senior beacon
bonds (“Class A Bonds”) and the 6.5% senior beacon
bonds (“Class B Bonds” and together with the Class A Bonds,
the “Bonds”) of Lighthouse Life Capital, LLC. (the
“Company”). Capitalized terms used herein, which are
not specifically defined herein, shall have the same meanings as
set forth in the Participating Dealer
Agreement.
The
payment of marketing fees to Dealer is intended to support actual
marketing and sales distribution efforts provided by Dealer the
distribution of the Bonds. The Managing Broker-Dealer’s
obligation to pay marketing fees to Dealer hereunder shall be
conditioned upon Dealer’s providing the marketing and sales
distribution support summarized below:
1.
Dealer
has internal marketing support personnel who will provide
substantial support and assistance to the Managing
Broker-Dealer’s marketing personnel, and Dealer shall provide
marketing and sales distribution support in connection with the
distribution and sale of Bonds of the Company equivalent to the
highest level of marketing and sales distribution support provided
to other product sponsors.
2.
Dealer
will use its internal marketing communications systems to promote
the product, which may include, without limitation, internal or
external newsletters, internal intranet sites, internal mail,
sponsor pages, approved product lists, conference calls. Managing
Broker-Dealer shall have the opportunity to provide newsletter
submissions and other materials, content for written and e-mail
communications to Dealer’s registered
representatives.
3.
Managing
Broker-Dealer shall be provided (i) updated lists of Dealer’s
registered representatives, including names, addresses, and
telephone numbers; (ii) lists of newly hired registered
representatives; (iii) copies of Dealer’s sales and market
share reports; and (iv) copies of Dealer’s conference
calendars.
4.
Managing
Broker-Dealer will have reasonable access to Dealer’s
registered representatives and shall have the opportunity to invite
registered representatives associated with Dealer to educational,
training and due diligence conferences and meetings sponsored by
the Managing Broker-Dealer, subject to Dealer’s applicable
broker-dealer compliance approval procedures.
5.
Managing
Broker-Dealer will be invited to attend and participate in all
Dealer sponsored conferences and shall have the right to
participate in such conferences. The payments to Dealer
contemplated by this Agreement shall cover and include the amount
of the conference fees for the Managing Broker-Dealer’s
attendance at and participation in all conferences sponsored by
Dealer available product sponsors.
6.
Dealer
will assist its customers with account transfers, change of address
requests, dividend reinvestments and share
redemptions.
7.
Dealer
will provide such other services as may be reasonably requested by
its customers or the Managing Broker-Dealer from time to time and
will maintain the technical support necessary to adequately service
its customers and promote the distribution and sale of the
Bonds.
11
The
parties to the Participating Dealer Agreement of which this
Schedule I is a part hereby acknowledge and agree as
follows:
1.
The
marketing fees paid to Dealer shall be based upon the total volume
of sales of Bonds sold to customers of Dealer during the applicable
calendar quarter and shall be subject to Managing
Broker-Dealer’s verification of said sales
volume.
2.
The
payment of marketing fees to Dealer contemplated hereby for sales
made during the preceding calendar quarter shall be payable on or
before the last day of the following month.
3.
The
agreement between Dealer and the Managing Broker-Dealer regarding
the payment of marketing fees set forth in the Offering Statement,
this Schedule I and the Managing Broker-Dealer Agreement shall
comply with all applicable FINRA Rules. In the event of any change
in FINRA Rules that limits the payment of marketing fees to Dealer,
the agreement between Dealer and the Managing Broker-Dealer
regarding the payment of marketing fees set forth in the Offering
Statement, this Schedule I and the Managing Broker-Dealer Agreement
shall be modified to be in compliance with such FINRA Rules. In the
event of any change in applicable FINRA Rules that paying the
aforementioned marketing fees becomes prohibited, such agreement to
pay marketing fees shall be considered
terminated immediately.
4.
Either
party to the Participating Dealer Agreement of which this Schedule
I is a part may terminate the Select Dealer Agreement at any time
by providing to the other party a written notice of termination at
least 15 days prior to the termination date.
In
consideration for providing the foregoing services, Managing
Broker-Dealer shall pay marketing fees to Dealer in an amount equal
to __% of the aggregate proceeds received by the Company from the
sale of Bonds to customers of Dealer in transactions in which
Dealer acted as the broker-dealer of record, in accordance with the
terms and conditions set forth in this Schedule I.
Any
amendments or exceptions to this Schedule I or its provisions set
forth above shall be in writing or otherwise supported by written
documentation.
AGREED AND ACKNOWLEDGED:
DEALER:
_________________________________________________
(Print Name of Dealer)
By:_______________________________________________
Name:____________________________________________
Title:_____________________________________________
12