187,500,000 Units of Limited Liability Company Interests ($1 per Unit) REDWOOD MORTGAGE INVESTORS IX, LLC PARTICIPATING BROKER DEALER AGREEMENT
Exhibit
1.1
187,500,000
Units of Limited Liability Company Interests
($1
per Unit)
______________________________
______________________________
______________________________
______________________________
Redwood
Mortgage Corp., a California corporation, and Gymno Corporation, a California
corporation, are the Managers of Redwood Mortgage Investors IX, LLC, a Delaware
limited liability company (the “Company”) engaged in business as a mortgage
lender. The Company will loan Redwood Mortgage Corp., a California
corporation, funds (the “Formation Loan”) out of which Redwood Mortgage Corp.
will pay sales commissions under this Agreement. The Managers, on
behalf of the Company, propose to offer and sell to qualified investors, upon
the terms and subject to the conditions set forth in the Prospectus dated
___________, 2008 (the “Prospectus”), units of limited liability company
interests (“Units”) of the Company at an offering price of $1 per Unit, with a
minimum investment of two thousand (2,000) Units per purchaser for initial
investments and one thousand (1,000) Units for additional investments by
existing members. The offering is for a maximum of 187,500,000 Units
($187,500,000), including 37,500,000 Units ($37,500,000) issuable pursuant to
the Company’s Distribution Reinvestment Plan.
1. Sale of Units. The
Managers hereby appoint you to effect sales of Units, on a best efforts basis,
for the account of the Company. This appointment shall commence on
the date hereof. Subject to the terms and conditions of this
Participating Broker Dealer Agreement (this “Agreement”) and upon the basis of
the representations and warranties herein set forth, you accept such appointment
and agree to use your best efforts to find purchasers of
Units. Offers and sales of Units may only be made in accordance with
the terms of the offering thereof as set forth in the Prospectus.
2. Eligible Purchasers of
Units. You agree not to offer or sell Units to any person who
does not meet the suitability standards set forth in the
Prospectus. Each prospective purchaser must complete and execute a
Subscription Agreement, and return it to the undersigned together with such
other documents, instruments or information as the Managers may request together
with a check in the full amount of the purchase price for the number of Units
subscribed for.
3. Submission of
Orders. Until such time as the Company has received and
accepted subscriptions for at least $1,000,000 of Units (the “Minimum Offering”)
and released the proceeds from such subscriptions from escrow (or such greater
amount as may be applicable in respect of any greater escrow in respect of
subscribers from any state), each prospective investor shall deliver a completed
and signed copy of the Subscription Agreement together with a check payable to
the order of “California
Bank & Trust – Escrow Holder for Redwood Mortgage Investors IX,
LLC.” Following
the receipt and acceptance by the Company of the Minimum Offering, a purchaser’s
check shall be made payable to “Redwood Mortgage Investors IX,
LLC” and remitted directly to Redwood Mortgage Investors IX, LLC, ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Manager,
together with the Subscription Agreement and other above referenced documents by
noon of the next business day after your receipt. You shall ascertain
that each Subscription Agreement and check submitted by a prospective purchaser
of Units has been fully completed and properly executed by such prospective
purchaser.
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The
Managers, no later than thirty (30) days after such receipt of such Subscription
Agreement, shall determine whether they wish to accept the proposed purchaser as
a member in the Company. It is understood that the Managers reserve
the right to reject the tender of any Subscription Agreement for any reason
whatsoever. Should the Managers determine to accept the tender of a
Subscription Agreement, the Managers will promptly advise you of such
action. Should the Managers determine to reject such tender, they
will notify you of such determination within this thirty (30) day period and
will return to you the tendered Subscription Agreement. The escrow
agent or the Managers will return to you a check made payable to the proposed
purchaser in the same amount as the proposed purchaser’s initial
check. You agree to return this Subscription Agreement and check to
the prospective purchaser by noon of the next business day. You shall
not be entitled to any commissions with respect to subscription offers which are
rejected.
3. Compensation. In
consideration of your services in soliciting and obtaining purchasers of Units,
Redwood Mortgage Corp. agrees to pay to you, out of the Formation Loan, a sales
commission equal to seven percent (7%) of the gross proceeds from Units sold by
you pursuant to the terms of this Agreement; provided, however, you will not be
entitled to receive any sales commissions with respect to sales of Units under
the Company’s Distribution Reinvestment Plan.
You may
also be paid, in the discretion of the Managers, a marketing reallowance in an
amount up to one percent (1%) of the gross proceeds of the Units sold by you
pursuant to the terms of this Agreement, except that no marketing reallowances
shall be paid with respect to sales of Units under the Company’s Distribution
Reinvestment Plan.
In
addition, you may be reimbursed, in the discretion of the Managers, in an amount
up to _____ percent (___%) of the gross proceeds of the Units sold by you
pursuant to the terms of this Agreement, for certain bona fide out-of-pocket,
itemized and detailed due diligence expenses incurred by you, in connection with
the performance of your due diligence services under this Agreement, including
by way of illustration (i) the cost of independent auditors, accountants and
legal counsel; and (ii) the costs to supervise, review and exercise due
diligence activities with respect to the Company, including, without limitation,
telephone calls and travel.
You may
also receive, in the discretion of the Managers, certain expense reimbursements,
including reimbursements for sales seminar expenses.
Commissions
(and due diligence expenses if specified above) shall be paid within 30 days
after the Company’s acceptance of a prospective investor’s proper tender of a
completed Subscription Agreement. Until the Minimum Offering is
accepted by the Company, subscription proceeds will be held in escrow and, if
the Minimum Offering is not sold by ___________, 2009, which is one year from
the date of the Prospectus, all subscription proceeds held in escrow will be
returned to the investors in accordance with the Prospectus. Any
payment to you will be payable only with respect to transactions lawful in the
jurisdictions where such transactions occur.
The
offering of Units shall be made in compliance with Rule 2810 of the NASD Conduct
Rules, which governs the amount of compensation that direct participation
programs may pay for the services provided by FINRA
members. Accordingly, total underwriting compensation, including
sales commissions, marketing reallowances and expense reimbursements (including
reimbursements for sales seminars expenses), to be paid by Redwood Mortgage
Corp. and the Company for the sale of Units shall not exceed a maximum of ten
percent (10%) of the gross proceeds of the offering received. If you
are a member of FINRA, you shall not re-allow all or any part of the
compensation provided for in this Section 3 to any person who is not also a
member of FINRA.
4. Further Agreements of
Broker-Dealer. Your execution and acceptance of this Agreement
constitutes a representation to the Managers and the Company that:
(a) You are a
corporation, limited liability company or limited partnership (as the case may
be) duly organized, validly existing and in good standing under the laws of the
jurisdiction in which you are incorporated, with all requisite power and
authority to enter into this Agreement and to carry out your obligations
hereunder.
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(b) This
Agreement has been duly and validly authorized, executed and delivered by you,
and constitutes the valid agreement of you enforceable in accordance with its
terms, subject to applicable bankruptcy and similar laws and principals of
equity. Your execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and the compliance with the
terms hereof do not and will not conflict with or constitute a default under
your organizational documents, or any indenture, mortgage, deed of trust, lease
or other agreement or instrument to which you are a party as of this date, or
any law, order, rule or regulation, writ, injunction or decree of any
government, governmental instrumentality or court, domestic or foreign, having
jurisdiction over you, or any of your property; and no consent, approval,
authorization or order of any court or other governmental agency or body has
been or is required for your performance of this Agreement, or for the
consummation of the transactions contemplated hereby.
(c) You
are a properly registered or licensed broker-dealer, duly authorized to sell
Units under federal and state securities laws and regulations and in all states
where you offer or sell Units, and you are a member in good standing of the
Financial Industry Regulatory Authority, Inc. (“FINRA”), and shall maintain such
registration, license and good standing throughout the term of this
Agreement.
(d) In
connection with offering and selling Units, you covenant and agree to comply
with all of the applicable requirements under the Securities Act of 1933, as
amended (the “Securities Act”), the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), including without limitation, the provisions of Rule
10b-6, Rule 10b-9, Rule 15c2-4 and Rule l5c2-8 under the Exchange Act, the
applicable rules and regulations of the Securities and Exchange Commission (the
“Regulations”), the rules of FINRA and state blue sky or securities
laws.
(e) You
will not give any information or make any representations or warranties in
connection with the offering of Units other than, or inconsistent with, those
contained in the Prospectus and any sales material approved in writing by the
Managers of the Company. You will deliver a copy of the Prospectus
and all supplements thereto and any amended Prospectus to each investor to whom
an offer is made (i) prior to or simultaneously with the first solicitation of
any offer to sell the Units to an investor, and (ii) at least five (5) days
prior to the sale of Units to an investor. You agree to deliver or
send any supplements and any amended Prospectus to any investor you have
previously sent to or given a Prospectus prior to or simultaneously with the
first solicitation of an offer to sell the Units to an investor. You
will not deliver the approved sales material to any person unless such sales
material is accompanied or preceded by a copy of the Prospectus. You
expressly agree not to prepare or use any sales literature, advertisements or
other materials in connection with the offering or sale of the Units without our
prior written consent. You agree that to the extent information is
provided to you marked “For Broker-Dealer Use Only”, you will not provide such
information to prospective investors.
(f) You
will solicit only eligible purchasers of Units as described in the Prospectus
under “INVESTOR SUITABILITY STANDARDS” and will offer the Units to persons only
in the jurisdictions in which you are legally qualified to so act and in which
you have been advised by the Company in writing that the Units are qualified for
sale or that such qualification is not required.
(g) You
agree to make diligent inquiries and maintain a record thereof for a period of
at least six years of all investors in the Units, in order to ascertain whether
the purchase of Units represents a suitable investment for such investor, and
whether the investor is otherwise eligible to purchase Units in accordance with
the terms of the offering. Such inquiry shall also be made with
respect to any resales or transfers of Units. Accordingly, you shall
satisfy the following requirements:
(i) In
recommending to an investor the purchase of Units, you shall have reasonable
grounds to believe, on the basis of information obtained from the investor
concerning his investment objectives, other investments, financial situation and
needs, and any other information known by you or your representatives, that the
investor (or, if the investor is acting as trustee or custodian of a trust or
other entity, that such other trust or entity) is or will be in a financial
position to realize to a significant extent the benefits described in the
Prospectus, that such investor has a fair market net worth sufficient to sustain
the risks inherent in the purchase of Units, including loss of investment and
lack of liquidity, and that Units are otherwise suitable as an
investment.
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(ii) You
shall also maintain in your files documents disclosing the basis upon which your
determination of suitability was reached as to each investor.
(iii) Notwithstanding
the foregoing, you shall not execute any transaction for the purchase or sale of
Units in a discretionary account, without prior written approval of the
transaction by your customer.
(iv) Prior
to executing any transaction for the purchase or sale of Units, and any resale
or transfer of Units as permitted, you (or one of your associated persons) shall
fully inform the investor of all pertinent facts relating to the liquidity and
marketability of Units during the term of the Company.
(h) You
agree that you will not rely exclusively on the Company and the Managers to
satisfy your duty of due diligence and, in particular, you agree to obtain from
the Company and from other sources such information as you deem necessary to
comply with Rule 2810 of the NASD Conduct Rules. You further agree to
supply the Company with such written reports of your activities relating to the
offer and sale of Units as the Company may request from time to
time.
(i) You
agree to diligently make inquiries as required by law of all prospective
purchasers of Units in order to ascertain whether a purchase of Units is
suitable for each such purchaser, and not rely solely on information supplied by
each purchaser. You also agree to promptly transmit to the Company
all fully completed and duly executed Subscription Agreements. You
shall retain all records relating to investor suitability as to each purchaser
for a period of six years from the date of sale of the Units to each
purchaser. Upon reasonable notice to you, the Managers, or their
designated agents, shall have the right to inspect such records.
(j) You
have reasonable grounds to believe (based on information made available to you
by the Managers through the Prospectus and other materials, or otherwise
obtained as a result of inquiries conducted by you or other FINRA member firms)
that all material facts concerning the Company are adequately and accurately
disclosed and provide a basis for evaluating the Company, including facts
relating to items of compensation, physical properties, tax aspects, financial
stability and experience of the sponsor, conflicts of interest and risk factors,
and appraisals or other reports.
(k) For
purposes of 4(j) above, you may rely upon the results of an inquiry conducted by
another member broker dealer, provided that:
(i) You
have reasonable grounds to believe that such inquiry was conducted with due
care;
(ii) The
results of the inquiry were provided to you with the consent of the member
broker dealer conducting or directing the inquiry; and
(iii) No
broker dealer that participated in the inquiry is a Manager or affiliate of a
Manager.
5. Representations and Warranties of the
Managers and Company.
(a) The
Company is duly organized and validly existing and in good standing under the
laws of the State of Delaware with full power and authority to conduct the
business in which it is engaged as described in the Prospectus.
(b) The
Units, when issued, will be duly and validly issued and will conform to the
description thereof contained in the Prospectus; such Units are not subject to
the preemptive rights of any Unit holder of the Company; and all action required
to be taken for the authorization, issue and sale of such Units has been validly
and sufficiently taken.
(c) The
Company does not intend to conduct its business so as to be an “investment
company” as that term is defined in the Investment Company Act of 1940, as
amended, and the rules and regulation thereunder, and it will exercise
reasonable diligence to ensure that it does not become an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended.
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(d) This
Agreement has been duly and validly authorized, executed and delivered by a
Manager, and constitutes the valid agreement of the Managers enforceable in
accordance with its terms, subject to applicable bankruptcy and similar laws and
principals of equity. The execution and delivery of this Agreement,
the consummation of the transactions herein contemplated and the compliance with
the terms hereof by the Managers and the Company do not and will not conflict
with or constitute a default under the organizational documents of such
entities, or any indenture, mortgage, deed of trust, lease or other agreement or
instrument to which the Company or Managers are a party as of this date, or any
law, order, rule or regulation, writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign, having jurisdiction
over the Managers or the Company, or any of their respective property; and no
consent, approval, authorization or order of any court or other governmental
agency or body has been or is required for the performance of this Agreement by
any of the Managers or the Company, or for the consummation of the transactions
contemplated hereby.
(e) To
the best of our knowledge, all materials provided by the Managers or the Company
to you, including materials provided to you in connection with your due
diligence investigation relating to the offering of Units, were materially
accurate as of the date provided.
(f) Any
and all supplemental sales materials prepared by the Managers or the Company,
for use with potential investors in connection with the offering of Units, when
used in conjunction with the Prospectus, will not at the time provided for use,
include any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. If at any time any event occurs as a result of which such
supplemental sales materials when used in conjunction with the Prospectus 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 Managers or the Company will promptly
notify you thereof, and you agree to terminate the use of any such supplemental
sales materials after being informed.
(g) To
the best of our knowledge, the Company is not in any material violation of its
Limited Liability Company Operating Agreement, as amended, or in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument to which it is a party or by which it or
any of its properties is bound which could reasonably be expected to have a
material adverse effect upon the Company.
(h) The
Registration Statement has been prepared and filed by the Company in conformity
with the Securities Act and the applicable instructions and Regulations. The
Securities and Exchange Commission has not issued any order preventing or
suspending the use of any prospectus or preliminary prospectus filed with the
Registration Statement or any amendments thereto. At the time the
Registration Statement became effective (the “Effective Date”) and at the time
that any post-effective amendment thereto becomes effective and at all times
subsequent thereto up to the final termination of the offering, the Registration
Statement and Prospectus (as amended or as supplemented) will contain all
statements which are required to be stated therein in accordance with the
Securities Act and the Regulations and will in all respects conform to the
requirements of the Securities Act and the Regulations, and will not include 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, in the light
of the circumstances under which they were made, not misleading, and each
preliminary prospectus filed as part of the Registration Statement as originally
filed or as part of any amendment thereto, or filed pursuant to Rule 424 under
the Securities Act, complied when so filed in all material respects with the
Securities Act and Regulations and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(i) The
Blue Sky Memorandum provided to you, as supplemented or amended to the extent
such supplement or amendment is provided to you in writing, accurately indicates
the states in which the Units are exempt from, or have been registered or
qualified under, applicable state securities or “blue sky” laws, and sets forth
the restrictions, if any, on the rights of broker dealers to solicit sales
thereof.
(j) To
the best of our knowledge, there is no material action, suit or proceeding
pending or threatened before or by any court or governmental agency or body, to
which the Company or the Managers are a party, except for such actions, suits or
proceedings that have been publicly disclosed in the Company’s filings with the
Securities and Exchange Commission.
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(k) To
the best of our knowledge, since the respective dates as of which information is
given in the Registration Statement and the Prospectus, as amended or
supplemented from time to time, except as may otherwise be stated in or
contemplated by the Registration Statement, the Prospectus or other subsequent
filings of the Company with the Securities and Exchange Commission, (i) there
has not been any material adverse change in the financial condition or in the
earnings, affairs or business prospects of the Company whether or not arising in
the ordinary course of business, and (ii) there have not been any material
transactions entered into by the Company except in the ordinary course of
business.
(l) The
financial statements of the Company filed as part of the Registration Statement
and those included in the Prospectus present fairly in all material respects the
financial position of the Company as of the date indicated and the results of
its operations for the periods specified; said financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis; and Armanino & ▇▇▇▇▇▇▇ LLP whose report is filed with
the Securities and Exchange Commission as a part of the Registration Statement,
are independent accountants as required by the Securities Act and the
Regulations.
6. Anti-Money Laundering Compliance
Program. Your acceptance of this Agreement constitutes a
representation to the Managers and the Company that you have established and
implemented anti-money laundering compliance programs, in accordance with
applicable law, including applicable FINRA rules, SEC rules and the USA PATRIOT
Act of 2001 (the Patriot Act”), which are reasonably expected to detect and
cause reporting of suspicious transactions in connection with the sale of Units
of the Company. The Managers’ acceptance of this Agreement
constitutes a representation by the Managers and the Company that the Managers
and the Company have established and implemented anti-money laundering
compliance programs, in accordance with applicable law, including applicable SEC
rules and the Patriot Act, which are reasonably expected to detect and cause
reporting of suspicious transactions in connection with your sale of the Units
of the Company.
7. Confidentiality and
Privacy. 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 Managers, the Company and you wish to
include the confidentiality and non-disclosure obligations set forth
herein.
(a) 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
numbers).
(b) Usage and
Nondisclosure. The Managers, the Company and you understand
and acknowledge that all of you 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 that one party receives from another party is received with
limitations on its use and disclosure. The Managers, the Company and
you agree that you are each prohibited from using the Customer Information
received from another 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.
(c) Safeguarding Customer
Information. The Managers, the Company and you shall establish
and maintain safeguards against the unauthorized access, destruction, loss, or
alteration of Customer Information in your respective 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.
(d) Survivability. The
provisions of this Section 7 shall survive the termination of this
Agreement.
8. Termination. Either
party may terminate this Agreement at any time, effective immediately, by giving
written notice to other party. In the event of termination, you shall
not be entitled to any commissions or any restitution for the value of your
services rendered prior to or subsequent to the effective date of such
termination, excepting only such commissions as may have been earned with
respect to Units already sold by you and accepted by the Company prior to the
termination date.
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9. Expenses. You shall
bear all your own expenses incurred in connection with the offer and sale of
Units, and you shall not be entitled to any reimbursement for such expenses by
the Company except to the extent of any expenses specified in Section 3 of this
Agreement.
10. Indemnification and
Contribution.
(a) The
Company and the Managers agree to indemnify you and your officers, directors,
representatives and controlling persons against losses, claims, damages or
liabilities (including reasonable attorneys’ fees) to which you or such other
persons may become subject, under federal or state securities laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement of material fact
contained in the Prospectus, or any breach of this Agreement (or any addendum
thereto), or is inconsistent with or in violation of any provision of federal or
state securities laws, the rules and regulations of the Securities and Exchange
Commission, or the omission to state therein, material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading. The
foregoing indemnity shall include reimbursement of any legal or other expenses
reasonably incurred in connection with investigation or defending any such loss,
claim, damage, liability or action, and shall be paid by you as such expenses
are incurred. You agree to repay the Company and/or the Managers any
funds advanced by the Company and/or Managers in cases in which you are later
found not to be entitled to such indemnification.
(b) You
agree to indemnify and hold harmless the Company, its Managers and all other
dealers participating in the offering of Units, and each officer, director and
controlling person of such persons, against any losses, claims, damages or
liabilities (including reasonable attorneys’ fees) to which any of such persons
may become subject, under federal or state securities laws or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any statements, actions or omissions by you or
any person controlled by you or acting on your behalf, which statement, action
or omission is untrue, or any breach of this Agreement (or any addendum
thereto), or is inconsistent with or in violation of any provision of federal or
state securities laws, the rules and regulations of the Securities and Exchange
Commission or FINRA (including the NASD Conduct Rules). The foregoing
indemnity shall include reimbursement of any legal or other expenses reasonably
incurred in connection with investigation or defending any such loss, claim,
damage, liability or action, and shall be paid by you as such expenses are
incurred. The Company and/or Managers agree to repay you any
funds advanced by you in cases in which the Company and/or Managers are later
found not to be entitled to such indemnification.
(c) Promptly
after receipt by an indemnified party of notice of the commencement of any
action for which indemnification is provided under subsection (a) or (b) above,
such indemnified party shall, if a claim in respect thereof is to be made
hereunder against the indemnifying party, notify the indemnifying party in
writing of the commencement thereof; but the omission to notify the indemnifying
party shall not relieve the indemnifying party from any liability which it may
have to any indemnified party otherwise under such subsection. In
each case any such action is brought against any indemnified party, it shall
notify the indemnifying party of the commencement thereof and the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other indemnifying party similarly notified, assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party.
(d) The
indemnified party additionally may elect to employ its own legal counsel, but if
it elects to do so the indemnifying party shall not be liable to such
indemnified party for any legal expenses of such other counsel or any other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of
investigation. If, however, the indemnified party reasonably
concludes that there may be defenses available to it that are different from or
additional to those available to the indemnifying party, then the indemnifying
party shall not have the right to direct the defense of any such action or
proceeding on behalf of the indemnified party and the reasonable legal and other
expenses incurred by the indemnified party in its own defense shall be borne by
the indemnifying party.
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(e) In
order to provide for just and equitable contribution in any case in which (i) a
claim is made for indemnification pursuant to this Section 10 but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that express provisions of this Section 10 provide for
indemnification in such case or (ii) contribution may be required on the part of
a party thereto, then the Managers, the Company, and participating dealers shall
contribute to the aggregate losses, claims, damages, or liabilities to which
they may be subject (which shall, for all purposes of this Agreement include,
without limitation, all costs of defense and investigation and all attorneys
fees) in either such case (after contribution from others) in such proportions
that the participating dealers are responsible in the aggregate for that portion
of such losses, claims, damages or liabilities represented by the percentage
that the aggregate amounts received by the participating dealers pursuant to
Section 3 of this agreement bear to the aggregate of the offering price of the
Units, and the Managers and the Company shall be responsible for the balance;
provided, however, that the contribution of each such participating dealer shall
not be in excess of their proportionate share (based upon the ratio of the
aggregate purchase price of the Units sold by such participating dealer to the
aggregate purchase price of the Units sold) of the portion of such losses,
claims, damages or liabilities for which the participating dealer is
responsible. No person guilty of a fraudulent misrepresentation shall
be entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. If the full amount of the contribution specified
in this subsection (e) of Section 10 is not permitted by law, then each
participating dealer and each person who controls each participating dealer
shall be entitled to contribution from the Managers and the Company and
controlling persons to the full extent permitted by law.
11. Arbitration.
(a) As
between the parties hereto, all questions as to rights and obligations arising
under the terms of this Agreement are subject to arbitration, including any
question concerning any right or duty under the Securities Act, the Exchange
Act, and the securities laws of any state in which Units are offered, and rules
of FINRA and such arbitration shall be governed by the rules of the American
Arbitration Association.
(b) If
a dispute should arise under this Agreement, any Party may within 60 days make a
demand for arbitration by filing a demand in writing for the other.
(c) The
parties may agree upon one arbitrator, but in the event that they cannot agree,
there shall be three, one named in writing by each of the parties within five
(5) days after demand for arbitration is given and a third chosen by the two
appointed. Should either party refuse or neglect to join in the
appointment of the arbitrator(s) or to furnish the arbitrator(s) with any papers
or information demanded, the arbitrator(s) are empowered by both parties to
proceed ex parte.
(d) Arbitration
shall take place in the County of San Mateo, California, and the hearing before
the arbitrator(s) of the matter to be arbitrated shall be at the time and place
within said city as is selected by the arbitrator(s). The
arbitrator(s) shall select such time and place promptly after his (or their)
appointment and shall give written notice thereof to each party at least sixty
(60) days prior to the date so fixed. At the hearing any relevant
evidence may be presented by either party, and the formal rules of evidence
applicable to judicial proceedings shall not govern. Evidence may be
admitted or excluded in the sole discretion of the
arbitrator(s). Said arbitrator(s) shall hear and determine the matter
and shall execute and acknowledge their award in writing and cause a copy
thereof to be delivered to each of the parties.
(e) If
there is only one arbitrator, his decision shall be binding and conclusive on
the parties, and if there are three arbitrators the decision of any two shall be
binding and conclusive. The submission of a dispute to the
arbitrator(s) and the rendering of his (or their) decision shall be a condition
precedent to any right of legal action on the dispute. A judgment
confirming the award of the arbitrator(s) may be rendered by any Court having
jurisdiction; or such Court may vacate, modify, or correct the award in
accordance with the prevailing sections of California state law.
(f) If
three arbitrators are selected under the foregoing procedure but two of the
three fail to reach an agreement in the determination of the matter in question,
the matter shall be decided by three new arbitrators who shall be appointed and
shall proceed in the same manner, and the process shall be repeated until a
decision is finally reached by two of the three arbitrators
selected.
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(g) The
costs of such arbitration shall be borne by the losing party or in such
proportions as the arbitrator(s) shall determine.
12. Authority. It is
understood that your relationship with the Company is as an independent
contractor and that nothing herein shall be construed and creating a
relationship of partnership, joint venturers, employer and employee or any other
agency relationship between you and the Company.
13. Survival of Indemnities, Warranties
and Representations. The indemnity agreements and the
representations and warranties of the parties as set forth herein shall remain
operative and in full force and effect, regardless of any termination or
cancellation of this Agreement, and shall survive the delivery of any payment
for Units.
14. Notices. All
communications hereunder shall be in writing and shall be mailed, hand delivered
or telegraphed, all charges prepaid, to the respective parties at the addresses
set forth herein. The address of the Company and its Managers is ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (telephone: (▇▇▇)
▇▇▇-▇▇▇▇), until changed by written notice.
15. Successors and
Assigns. This Agreement and the terms and provisions hereof
shall inure to the benefit of and shall be binding upon the successors and
assigns of the parties hereto; provided, however, that in no in event shall the
term “successors and assigns” as used herein include any purchaser, as such, of
any Units. In addition, and without limiting the generality of the
foregoing, the indemnity agreements contained herein shall inure to the benefit
of the successors and assigns of the parties hereto, and shall be valid
irrespective of any investigation made or not made by or on behalf of any party
hereto.
16. Applicable
Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware and the appropriate courts in
the County of San Mateo, California should be the forum for any litigation
arising hereunder.
Please confirm your Agreement with the
Managers and Redwood Mortgage Corp. to the terms contained herein and your
acceptance of this appointment by dating and signing below and return a fully
executed copy of this Participating Dealer Agreement to us.
9
REDWOOD
MORTGAGE CORP.
By:
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President
BROKER-DEALER
ACCEPTANCE
ACCEPTED
this ____ day of ___________, 20___
By:
______________________________
(Print Name)
__________________________________
(Signature)
__________________________________
Title
__________________________________
Taxpayer
I. D. No.
__________________________________
(Telephone
Number)
__________________________________
Type of
Entity:
(corporation,
partnership or proprietorship)
10