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| Commonwealth Income & Growth Fund VI |
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PARTICIPATING BROKER AGREEMENT
COMMONWEALTH INCOME & GROWTH FUND VI
LIMITED PARTNERSHIP
THIS PARTICIPATING BROKER AGREEMENT (the "Agreement") is made and entered into as of the day indicated on Exhibit A attached hereto and by this reference incorporated herein, between Commonwealth Capital Securities Corp., a Pennsylvania corporation (the "Dealer Manager"), and the Participating Broker (the "Participating Broker") identified in Exhibit A hereto.
WHEREAS COMMONWEALTH INCOME & GROWTH FUND VI, is a limited partnership (the "Partnership") duly organized under the Revised Uniform Limited Partnership Act (1986), as amended, as enacted in the Commonwealth of Pennsylvania; and
WHEREAS, COMMONWEALTH INCOME & GROWTH FUND, INC., a Pennsylvania corporation is serving as the general partner (the "General Partner") of the Partnership; and
WHEREAS, the Partnership proposes to offer and sell up to 2,500,000 Units of limited partnership interest in the Partnership ("Units") to the general public, pursuant to a public offering (the "Offering") of the Units which shall be registered with the Securities and Exchange Commission ("SEC"); and
WHEREAS, the Dealer Manager, which has heretofore entered into an agency agreement with the Partnership pursuant to which it has been designated the Dealer Manager to sell and manage the sale by others of the Units pursuant to the terms of such agreement and the Offering (the "Dealer Manager Agreement"), is a corporation incorporated in and presently in good standing in the Commonwealth of Pennsylvania, and is presently registered with the National Association of Securities Dealers, Inc. ("NASD") as a securities broker-dealer qualified to offer and sell to members of the public securities of the type represented by the Units; and
WHEREAS, the Participating Broker is an entity, as designated in Exhibit A hereto, organized and presently in good standing in the state or states designated in Exhibit A hereto, presently registered as a broker-dealer with the NASD, and presently licensed by the appropriate regulatory agency of each state in which it will offer and sell the Units as a securities broker-dealer qualified to offer and sell to members of the public securities of the type represented by the Units; and
WHEREAS, the Partnership has filed with the SEC a registration statement on Form S-1, including a preliminary or final prospectus, for the registration of the Units under the Securities Act of 1933, as amended (the "Securities Act") (such registration statement, as it may be amended, and the prospectus and exhibits on file with the SEC at the time the registration statement becomes effective, including any post-effective amendments or supplements to such registration statement or prospectus after the effective date of registration, being herein respectively referred to as the "Registration Statement" and the "Prospectus"); and
WHEREAS, the offer and sale of the Units shall be made pursuant to the terms and conditions of the Registration Statement and the Prospectus and, further, pursuant to the terms and conditions of all applicable securities laws of all states in which the Units are offered and sold; and
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WHEREAS, the Dealer Manager desires to retain the Participating Broker to use its best efforts to sell the Units, and the Participating Broker is willing and desires to serve as a broker for the Dealer Manager for the sale of the Units upon the following terms and conditions;
NOW THEREFORE, in consideration of the premises and terms and conditions thereof, it is agreed between the Dealer Manager and the Participating Broker as follows.
1. Engagement.
(a) Subject to the terms and conditions herein set forth, the Dealer Manager hereby engages the Participating Broker and the Participating Broker hereby agrees and covenants to use its best efforts to sell for the account of the Partnership a portion of the Units described in the Registration Statement, as specified on Exhibit A hereto. The Participating Broker hereby accepts such engagement and covenants, warrants and agrees to sell the Units according to all of the terms and conditions of the Registration Statement, all applicable state and federal laws, including the Securities Act and any and all regulations and rules pertaining thereto, heretofore or hereafter issued by the SEC and the NASD, including but not limited to NASD'S Conduct Rules.
(b) The Participating Broker shall use its best efforts, promptly following receipt of written notice from the Dealer Manager of the effective date of the Registration Statement, to sell the Units in such quantities and for the account of such Partnership as shall be agreed between the Participating Broker and Dealer Manager and specified on Exhibit A hereto, and to such persons and according to all such terms as are contained in the Registration Statement and the Prospectus. The Participating Broker shall comply with all requirements set forth in the Registration Statement and Prospectus. The Participating Broker understands and will advise potential investors that all sales of the Units will be for Units of limited partnership interest in COMMONWEALTH INCOME & GROWTH FUND VI. The Participating Broker shall use and distribute, in connection with the offer and sale of the Units, only the Prospectus and such sales materials and advertising as shall conform in all respects to any restrictions of local law and the applicable requirements of the Securities Act and which has been approved in writing by the General Partner or the Dealer Manager. The Participating Broker will make a record of its distribution of each preliminary prospectus, and Participating Broker will, upon the request of the Dealer Manager, promptly forward copies thereof to each person to whom Participating Broker has theretofore distributed a preliminary prospectus. The Dealer Manager reserves the right to establish such additional procedures as it may deem necessary to ensure compliance with the requirements of the Registration Statement, and the Participating Broker shall comply with all such additional procedures to the extent that it has received written notice thereof.
(c) The Participating Broker shall be permitted to accept subscriptions for the Units (the "Subscription(s)") by telephone from residents of those states identified on Schedule A attached hereto and made a part hereof provided that (1) the registered representative and branch manager of the Participating Broker execute the subscription agreement attached to the Prospectus (the "Subscription Agreement") on behalf of any investor who subscribes for Units by telephone; and (2) the Participating Broker does not charge any additional fees, including but not limited to, fees relating to the opening of an account with the Participating Broker, to any investor who telephonically or orally subscribes for Units. It is understood and agreed between the Dealer Manager and the Participating Broker that the Dealer Manager may,
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in its discretion, change, modify, add to or delete from the list of states identified on Schedule A. Any such modification shall be effective three (3) days from the date written notice to the Participating Broker has been mailed by the Dealer Manager. The Participating Broker shall not execute a Subscription Agreement on behalf of any investor who subscribes for Units by telephone unless such investor has specifically authorized the registered representative and the branch manager of the Participating Broker to execute the Subscription Agreement on behalf of such investor and has made or agreed to make full payment for all Units covered by such Subscription Agreement. Notwithstanding anything contained herein to the contrary, the Participating Broker shall have no authority to make representations on behalf of an investor or to initial representations contained in the Subscription Agreement on behalf of an investor. In connection with telephonic or other oral Subscriptions for Units, the Participating Broker represents and warrants as follows: (i) that a Prospectus was delivered to the investor before the investor made a decision to invest; (ii) that the investor meets the suitability requirements set forth in the Prospectus; and (iii) that, in compliance with Rule 2810 of the NASD's Conduct Rules, the Participating Broker has reasonable grounds to believe and does believe that the investment in the Partnership is suitable for the investor, based upon information supplied by the investor to such Participating Broker.
(d) Notwithstanding anything to the contrary contained in Section 2 of this Agreement, in the event that the Dealer Manager pays any commission to the Participating Broker for sale of one or more Units, including, but not limited to, those Units sold pursuant to a telephonic or other oral Subscription therefore, where representatives of the Participating Broker execute the Subscription Agreement relating to such Units, and the Subscription is rescinded as to one or more of the Units covered by such Subscription, the Dealer Manager shall decrease the next payment of commission or other compensation otherwise payable to the Participating Broker by the Dealer Manager under this Agreement by an amount equal to the commissions rate established in Section 2 and Exhibit A of this Agreement, multiplied by the number of Units as to which the Subscription is rescinded. In the event that no payment of commissions or other compensation is due to the Participating Broker after such withdrawal occurs, the Participating Broker shall pay the amount specified in the preceding sentence to the Dealer Manager within ten (10) days following mailing of notice to the Participating Broker by the Dealer Manager stating the amount owed as a result of rescinded Subscriptions.
(e) All monies received for purchase of any of the Units shall be forwarded by the Participating Broker to the Dealer Manager for delivery to J.P.Morgan Trust Company (the "Escrow Agent") or, if final internal supervisory review is conducted at a different location, to such final review office by the end of such next business day, which in turn will transmit same to the Escrow Agent by the end of the next business day following its receipt thereof, where such monies will be deposited in an escrow account established by the Partnership solely for such Subscriptions ("Escrow Account") until such time (if any) that such monies are deliverable to the Partnership pursuant to the escrow agreement between the Partnership and the Escrow Agent ("Escrow Agreement"), except the Participating Broker shall return any check not made payable to "J.P.Morgan Trust Company, Escrow Agent" directly to the Subscriber who submitted the check. After such time that monies are deliverable to the Partnership, the Participating Broker may accept checks made payable to either the Partnership or the Escrow Agent. Subscriptions will be executed as described in the Registration Statement or as directed by the Dealer Manager. The monies shall be deposited or transmitted by the Participating Broker to the Dealer Manager no later than the close of business of the next business day after receipt of the Subscription documents by the Participating Broker; provided, however, that if the Participating Broker maintains a branch office, the branch office shall transmit the Subscription documents and check
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to the Participating Broker by the close of business on the first business day following their receipt by the branch office and the Participating Broker shall review the Subscription documents and check to ensure their proper execution and form and, if they are acceptable, transmit the check to the Dealer Manager by the close of business on the first business day after their receipt by the Participating Broker. Pursuant to the terms of the Dealer Manager Agreement, the Dealer Manager will transmit the check or monies to the Escrow Agent by no later than the close of business on the next business day after the check is received from the Participating Broker, unless a final supervisory review is being conducted as set forth above, in which instance the final review office will transmit the same to the Escrow Agent by the end of the next business day following receipt thereof.
(f) During the term of this Agreement, the Dealer Manager shall have authority to take such action as it may deem advisable in respect to all matters pertaining to the performance of the Participating Broker under this Agreement.
(g) The Units shall be offered and sold by the Participating Broker only where the Units may be legally offered and sold, and only to such persons in such states who shall be legally qualified to purchase the Units. The Dealer Manager shall give the Participating Broker written notice at the time of effectiveness of those states in which the offering and sale of Units may be made, and shall amend such notice thereafter as additional states are added; no Units shall be offered or sold in any other states.
(h) The Participating Broker shall have no obligation under this Agreement to purchase any of the Units for its own account.
(i) The Participating Broker will use every reasonable effort to assure that Units are sold only to investors who:
(1) meet the investor suitability standards, including the minimum income and net worth standard established by the Partnership, and minimum purchase requirements set forth in the Registration Statement;
(2) can reasonably benefit from investment in the Partnership based on the prospective investor's overall investment objectives and portfolio structure;
(3) is able to bear the economic risk of the investment based on the prospective investor's overall financial situation; and
(4) has apparent understanding of: (a) the fundamental risks of the investment; (b) the risk that the prospective investor may lose the entire investment; (c) the lack of liquidity of the Units; (d) the restrictions on transferability of the Units; (e) the background and qualifications of the General Partner; and (f) the tax consequences of an investment in the Units.
(j) The Participating Broker will make the determinations required to be made by it pursuant to Section 1(i) based on information it has obtained from a prospective investor, including, at a minimum, but not limited to, the prospective investor's age, investment objectives, investment experience, income, net worth, financial situation, other investments of the prospective investor, as well as any other pertinent factors deemed by the Participating Broker to be relevant.
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(k) In addition to complying with the provisions of Section 1(i) above, and not in limitation of any other obligations of the Participating Broker to determine suitability imposed by state or federal law, the Participating Broker agrees that it will comply fully with all of the provisions of Rules 2310 and 2810 of the NASD's Conduct Rules, including specifically the following provisions:
(1) In recommending to a customer the purchase, sale or exchange of any security, the Participating Broker shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his other security holdings and as to his financial situation and needs.
(2) Prior to the execution of a transaction recommended to a non-institutional customer, other than transactions with customers where investments are limited to money market mutual funds, the Participating Broker shall make reasonable efforts to obtain information concerning:
(a) the customer's financial status;
(b) the customer's tax status;
(c) the customer's investment objectives;
and
(d) such other information used or
considered to be reasonable by such
member or registered representative in
making recommendations to the customer.
(3) The Participating Broker shall have reasonable grounds to believe and shall believe, based upon information provided by the investor concerning the investor's other investments, financial situation and needs, and upon any other information known by the Participating Broker, that (a) each investor to whom the Participating Broker sells Units is or will be in a financial position appropriate to enable the investor to realize to a significant extent the benefits (including tax benefits) of an investment in the Units, (b) each investor to whom the Participating Broker sells Units has a net worth sufficient to sustain the risks inherent in an investment in the Units (including |
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| Re: Commonwealth Income & Growth Fund VI |
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http://www.secinfo.com/d12atd.v7Qm.c.htm
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| Re: Commonwealth Income & Growth Fund VI |
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SUBSCRIPTION ESCROW AGREEMENT
Subscription Escrow Agreement (the "Escrow Agreement") dated as of the effective date (the "Effective Date") set forth on schedule 1 attached hereto ("Schedule 1") by and among the limited partnership identified on Schedule 1 (the "Issuer"), the corporation identified on Schedule 1 (the "Depositor") and J.P.Morgan Trust Company, National Association, as escrow agent hereunder (the "Escrow Agent").
WHEREAS, the Issuer has filed a registration statement on Form S-1 under the Securities Act of 1933, as amended, with the Securities and Exchange Commission, File No. ____________ (the "Registration Statement"), relating to the subscription for and sale of limited partnership units ("Units") in the Issuer, with a minimum investment required of ____ Units (the "Minimum Subscription Amount"), at a price of $ ____ per Unit;
WHEREAS, the Depositor has been named as the underwriter in connection with the proposed offering of the Units in accordance with the terms of the underwriting agreement dated as of __________ among the Issuer, its general partner and the Depositor (the "Underwriting Agreement"); and
WHEREAS, in compliance with Rule 15c2-4 under the Securities Exchange Act of 1934, as amended, the Issuer and the Depositor propose to establish an escrow fund to be held by the Escrow Agent until the sale of Units terminates;
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the parties hereto agree as follows:
1. Appointment. The Issuer and Depositor hereby appoint the Escrow Agent as their escrow agent for the purposes set forth herein, and the Escrow Agent hereby accepts such appointment under the terms and conditions set forth herein.
2. Escrow Fund. All funds received by the Depositor and the Issuer in connection with the sale of Units shall be deposited with the Escrow Agent (the "Escrow Deposit"). The Escrow Agent shall hold the Escrow Deposit and, subject to the terms and conditions hereof, shall invest and reinvest the Escrow Deposit and the proceeds thereof (the "Escrow Fund") as directed in Section 3.
3. Investment of Escrow Fund. During the term of this Escrow Agreement, the Escrow Fund shall be invested and reinvested by the Escrow Agent in the investment indicated on Schedule 1 or such other investments as shall be directed in writing by the Issuer and the Depositor and as shall be acceptable to the Escrow Agent. All investment orders involving U.S. Treasury obligations, commercial paper and other direct investments will be executed through JPMorgan Fleming Asset Management (JPMFAM), in the investment management division of JPMorgan Chase. Subject to principles of best execution, transactions are effected on behalf of the Escrow Fund through broker-dealers selected by JPMFAM. In this regard, JPMFAM seeks to attain the best overall result for the Escrow Fund, taking into consideration quality of service and reliability. An agency fee will be assessed in connection with each transaction. Periodic statements will be provided to Issuer and Depositor reflecting transactions executed on behalf of the Escrow Fund. The Issuer and Depositor, upon written request, will receive a statement of transaction details upon completion of any securities transaction in the Escrow Fund without any additional cost. The Escrow Agent shall have the right to liquidate any investments held in order to provide funds necessary to make required payments under this Escrow Agreement. The Escrow Agent shall have no liability for any loss sustained as a result of any investment in an investment indicated on Schedule 1 or any investment made pursuant to the instructions of the parties hereto or as a result of any liquidation of any investment prior to its maturity or for the failure of the parties to give the Escrow Agent instructions to invest or reinvest the Escrow Fund.
4. Disposition and Termination. The Depositor and the Issuer agree to notify the Escrow Agent in writing of the closing date of the offering (the "Offering Closing Date") and whether or not the Issuer received subscriptions for the Minimum Subscription Amount. Upon receipt of such written notification the following procedure will take place.
(i) If the Issuer has received subscriptions for the Minimum Subscription
Amount by the Offering Closing Date, the Escrow Fund will be promptly
paid to or credited to the account of, or otherwise transferred to the
Issuer pursuant to instructions from the Issuer.
(ii) If the Issuer has not received subscriptions for the Minimum
Subscription Amount, the Escrow Agent shall be provided with a list
containing the amount received from each subscriber whose funds have
been deposited with the Escrow Agent (with respect to each subscriber
the "Subscriber Investment Amount") and the name, address and Taxpayer
Identification Number ("TIN") of each subscriber. In addition, the
Issuer or Depositor shall calculate the interest earned on each
Subscriber Investment Amount as of the Offering Closing Date and
provide such information to the Escrow Agent. The aggregate of all
Subscriber Investment Amounts and interest thereon shall be equal to
the amount of the Escrow Fund on the Offering Closing Date. The Escrow
Agent shall distribute to each subscriber the appropriate Subscriber
Investment Amount and interest thereon pursuant to joint written
instructions of the Issuer and Depositor within 45 days of receipt of
the information described in this Section 4(ii).
Upon delivery of the Escrow Fund to the Issuer or the subscribers as the case may be, by the Escrow Agent, this Escrow Agreement shall terminate, subject to the provisions of Section 8.
5. Escrow Agent. The Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no duties shall be implied. The Escrow Agent shall have no liability under and no duty to inquire as to the provisions of any agreement other than this Escrow Agreement. The Escrow Agent may rely upon and shall not be liable for acting or refraining from acting upon any written notice, instruction or request furnished to it hereunder and believed by it to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document. The Escrow Agent shall have no duty to solicit any payments which may be due it or the Escrow Fund. The Escrow Agent shall not be liable for any action taken or omitted by it in good faith except to the extent that a court of competent jurisdiction determines that the Escrow Agent's gross negligence or willful misconduct was the primary cause of any loss to the Issuer or Depositor. The Escrow Agent may execute any of its powers and perform any of its duties hereunder directly or through agents or attorneys (and shall be liable only for the careful selection of any such agent or attorney) and may consult with counsel, accountants and other skilled persons to be selected and retained by it. The Escrow Agent shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons. In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from any party hereto which, in its opinion, conflict with any of the provisions of this Escrow Agreement, it shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow until it shall be directed otherwise in writing by all of the other parties hereto or by a final order or judgment of a court of competent jurisdiction. Anything in this Escrow Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.
6. Succession. The Escrow Agent may resign and be discharged from its duties or obligations hereunder by giving 10 days advance notice in writing of such resignation to the other parties hereto specifying a date when such resignation shall take effect. The Escrow Agent shall have the right to withhold an amount equal to any amount due and owing to the Escrow Agent, plu ...
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| Re: Commonwealth Income & Growth Fund VI |
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Form of Participating Broker Agreement
1.Engagement.
(a) Subject to the terms and conditions herein set forth, the Dealer Manager hereby engages the Participating Broker and the Participating Broker hereby agrees and covenants to use its best efforts to sell for the account of the Partnership a portion of the Units described in the Registration Statement, as specified on Exhibit A hereto.The Participating Broker hereby accepts such engagement and covenants, warrants and agrees to sell the Units according to all of the terms and conditions of the Registration Statement, all applicable state and federal laws, including the Securities Act and any and all regulations and rules pertaining thereto, heretofore or hereafter issued by the SEC and FINRA, including but not limited to FINRA’s Conduct Rules.
(b) The Participating Broker shall use its best efforts, promptly following receipt of written notice from the Dealer Manager of the effective date of the Registration Statement, to sell the Units in such quantities and for the account of such Partnership as shall be agreed between the Participating Broker and Dealer Manager and specified on Exhibit A hereto, and to such persons and according to all such terms as are contained in the Registration Statement and the Prospectus.The Participating Broker shall comply with all requirements set forth in the Registration Statement and Prospectus.The Participating Broker understands and will advise potential investors that all sales of the Units will be for Units of limited partnership interest in COMMONWEALTH INCOME & GROWTH FUND VII.The Participating Broker shall use and distribute, in connection with the offer and sale of the Units, only the Prospectus and such sales materials and advertising as shall conform in all respects to any restrictions of local law and the applicable requirements of the Securities Act and which has been approved in writing by the General Partner or the Dealer Manager.The Participating Broker will make a record of its distribution of each preliminary prospectus, and Participating Broker will, upon the request of the Dealer Manager, promptly forward copies of such record to the Dealer Manager.The Dealer Manager reserves the right to establish such additional procedures as it may deem necessary to ensure compliance with the requirements of the Registration Statement, and the Participating Broker shall comply with all such additional procedures to the extent that it has received written notice thereof.
(c)The Participating Broker shall be permitted to accept subscriptions for the Units (the “Subscription(s)”) by telephone from residents of those states identified on Schedule A attached hereto and made a part hereof provided that (1) the registered representative and branch manager of the Participating Broker execute the subscription agreement attached to the Prospectus (the “Subscription Agreement”) on behalf of any investor who subscribes for Units by telephone; and (2) the Participating Broker does not charge any additional fees, including but not limited to, fees relating to the opening of an account with the Participating Broker, to any investor who telephonically or orally subscribes for Units.It is understood and agreed between the Dealer Manager and the Participating Broker that the Dealer Manager may, in its discretion, change, modify, add to or delete from the list of states identified on Schedule A.Any such modification shall be effective three (3) days from the date written notice to the Participating Broker has been mailed by the Dealer Manager.The Participating Broker shall not execute a Subscription Agreement on behalf of any investor who subscribes for Units by telephone unless such investor has specifically authorized the registered representative and the branch manager of the Participating Broker to execute the Subscription Agreement on behalf of such investor and has made or agreed to make full payment for all Units covered by such Subscription Agreement.Notwithstanding anything contained herein to the contrary, the Participating Broker shall have no authority to make representations on behalf of an investor or to initial representations contained in the Subscription Agreement on behalf of an investor.In connection with telephonic or other oral Subscriptions for Units, the Participating Broker represents and warrants as follows:(i) that a Prospectus was delivered to the investor before the investor made a decision to invest; (ii) that the investor meets the suitability requirements set forth in the Prospectus; and (iii) that, in compliance with Rule 2810 of FINRA’s Conduct Rules, the Participating Broker has reasonable grounds to believe and does believe that the investment in the Partnership is suitable for the investor, based upon information supplied by the investor to such Participating Broker.
(d) Notwithstanding anything to the contrary contained in Section 2 of this Agreement, in the event that the Dealer Manager pays any commission to the Participating Broker for sale of one or more Units, including, but not limited to, those Units sold pursuant to a telephonic or other oral Subscription therefore, where representatives of the Participating Broker execute the Subscription Agreement relating to such Units, and the Subscription is rescinded as to one or more of the Units covered by such Subscription, the Dealer Manager shall decrease the next payment of commission or other compensation otherwise payable to the Participating Broker by the Dealer Manager under this Agreement by an amount equal to the commissions rate established in Section 2 and Exhibit A of this Agreement, multiplied by the number of Units as to which the Subscription is rescinded.In the event that no payment of commissions or other compensation is due to the Participating Broker after such withdrawal occurs, the Participating Broker shall pay the amount specified in the preceding sentence to the Dealer Manager within ten (10) days following mailing of notice to the Participating Broker by the Dealer Manager stating the amount owed as a result of rescinded Subscriptions.
(e)All monies received for purchase of any of the Units shall be forwarded by the Participating Broker to the Dealer Manager for delivery to JPMorgan Trust Company (the “Escrow Agent”) or, if final internal supervisory review is conducted at a different location, to such final review office by the end of such next business day, which in turn will transmit same to the Escrow Agent by the end of the next business day following its receipt thereof, where such monies will be deposited in an escrow account established by the Partnership solely for such Subscriptions (“Escrow Account”) until such time (if any) that such monies are deliverable to the Partnership pursuant to the escrow agreement between the Partnership and the Escrow Agent (“Escrow Agreement”), except the Participating Broker shall return any check not made payable to “J.P.Morgan Trust Company, Escrow Agent” directly to the Subscriber who submitted the check.Subscriptions will be executed as described in the Registration Statement or as directed by the Dealer Manager.The monies shall be deposited or transmitted by the Participating Broker to the Dealer Manager no later than the close of business of the next business day after receipt of the Subscription documents by the Participating Broker; provided, however, that if the Participating Broker maintains a branch office, the branch office shall transmit the Subscription documents and check to the Participating Broker by the close of business on the first business day following their receipt by the branch office and the Participating Broker shall review the Subscription documents and check to ensure their proper execution and form and, if they are acceptable, transmit the check to the Dealer Manager by the close of business on the first business day after their receipt by the Participating Broker.Pursuant to the terms of the Dealer Manager Agreement, the Dealer Manager will transmit the check or monies to the Escrow Agent by no later than the close of business on the next business day after the check is received from the Participating Broker, unless a final supervisory review is being conducted as set forth above, in which instance the final review office will transmit the same to the Escrow Agent by the end of the next business day following receipt thereof.
(f)During the term of this Agreement, the Dealer Manager shall have authority to take such action as it may deem advisable in respect to all matters pertaining to the performance of the Participating Broker under this Agreement.
(g)The Units shall be offered and sold by the Participating Broker only where the Units may be legally offered and sold, and only to such persons in such states who shall be legally qualified to purchase the Units.The Dealer Manager shall give the Participating Broker written notice at the time of effectiveness of those states in which the offering and sale of Units may be made, and shall amend such notice thereafter as additional states are added; no Units shall be offered or sold in any other states.
(h) The Participating Broker shall have no obligation under this Agreement to purchase any of the Units for its own account.
(i)The Participating Broker will use every reasonable effort to assure that Units are sold only to investors who:
(1) meet the investor suitability standards, including the minimum income and net worth standard established by the Partnership, and minimum purchase requirements set forth in the Registration Statement;
(2)can reasonably benefit from investment in the Partnership based on the prospective investor’s overall investment objectives and portfolio structure;
(3) is able to bear the economic risk of the investment based on the prospective investor’s overall financial situation; and
(4)has apparent understanding of:(a) the fundamental risks of the investment; (b) the risk that the prospective investor may lose the entire investment; (c) the lack of liquidity of the Units; (d) the restrictions on transferability of the Units; (e) the background and qualifications of the General Partner; and (f) the tax consequences of an investment in the Units.
(j) The Participating Broker will make the determinations required to be made by it pursuant to Section 1(i) based on information it has obtained from a prospective investor, including, at a minimum, but not limited to, the prospective investor’s age, investment objectives, investment experience, income, net worth, financial situation, other investments of the prospective investor, as well as any other pertinent factors deemed by the Participating Broker to be relevant.
(k) In addition to complying with the provisions of Section 1(i) above, and not in limitation of any other obligations of the Participating Broker to determine suitability imposed by state or federal law, the Participating Broker agrees that it will comply fully with all of the provisions of Rules 2310 and 2810 of FINRA’s Conduct Rules, including specifically the following provisions:
(1)In recommending to a customer the purchase, sale or exchange of any security, the Participating Broker shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his other security holdings and as to his financial situation and needs.
(2)Prior to the execution of a transaction recommended to a non-institutional customer, other than transactions with customers where investments are limited to money market mutual funds, the Participating Broker shall make reasonable efforts to obtain information concerning:
(a)the customer’s financial status;
(b)the customer’s tax status;
(c)the customer’s investment objectives; and
(d)
such
other information used or considered to be reasonable by such member or
registered representative in making recommendations to the
customer.
(3)The Participating Broker shall have reasonable grounds to believe and shall believe, based upon information provided by the investor concerning the investor’s other investments, financial situation and needs, and upon any other information known by the Participating Broker, that (a) each investor to whom the Participating Broker sells Units is or will be in a financial position appropriate to enable the investor to realize to a significant extent the benefits (including tax benefits) of an investment in the Units, (b) each investor to whom the Participating Broker sells Units has a net worth sufficient to sustain the risks inherent in an investment in the Units (including potential loss and lack of liquidity), and (c) the Units otherwise are or will be suitable investment for each investor to whom it sells Units, and the Participating Broker shall maintain files disclosing the basis upon which the determination of suitability was made;
(4)The Participating Broker shall not execute any transaction involving the purchase of Units in a discretionary account without prior written approval of the transaction by the investor;
(5) The Participating Broker shall have reasonable grounds to believe and shall believe, based upon the information made available to it, that all material facts are adequately and accurately disclosed in the Registration Statement and provide a basis for evaluating the Units;
(6) In making the determination set forth in subparagraph (3) above, the Participating Broker shall evaluate items of compensation, physical properties, tax aspects, financial stability and experience of the sponsor, conflicts of interest and risk factors, appraisals, as well as any other information deemed pertinent by it;
(7) If the Participating Broker relies upon the results of any inquiry conducted by another member of FINRA with respect to the obligations set forth in Section 1 (k)(5) or (6) above, the Participating Broker shall have reasonable grounds to believe and shall believe that such inquiry was conducted with due care, that the member or members conducting or directing the inquiry consented to the disclosure of the results of the inquiry and that the person who participated in or conducted the inquiry is not a sponsor or an affiliate of the sponsor of the Partnership; and
(8) Prior to executing a purchase transaction in the Units, the Participating Broker shall have informed the prospective investor of all pertinent facts relating to the liquidity and marketability of the Units.
(l) The Participating Broker agrees that it will comply with FINRA Conduct Rules 2730, 2740 and 2750.
(m) The Participating Broker agrees to retain in its files, for a period of at least 6 years, information which will establish that each purchaser of Units falls within the permitted class of investors.
(n) The Participating Broker shall not, directly or indirectly, pay or award any finder’s fees, commissions or other compensation to any persons engaged by a potential Limited Partner for investment advice as an inducement to such advisor to advise the potential investor to purchase Units in the Partnership.
(o) The Participating Broker either (i) shall not purchase Units for its own account or (ii) shall hold for investment any Units purchased for its own account.
(p) The Participating Broker hereby confirms that it is familiar with Securities Act Release No. 4968 and Rule 15c2-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to the distribution of preliminary and final prospectuses, and confirms that it has and will comply therewith.
(q)The Participating Broker represents and warrants that it is (i) an entity, as designated in Exhibit A hereto, organized and presently in good standing in the state or states designated in Exhibit A hereto, (ii) duly registered as a broker-dealer under the provisions of the Exchange Act, and the regulations promulgated there under, (iii) a member in good standing of FINRA; (iv) presently licensed by the appropriate regulatory agency of each state in which it will offer and sell the Units as a securities broker-dealer qualified to offer and sell to members of the public securities of the type represented by the Units; and (v) neither Participating Broker nor any of Participating Broker’s officers, directors or agents is the subject of any federal or state administrative or judicial proceeding or order which would disqualify it from participating in offerings registered under the Securities Act.
(r)The Participating Broker agrees to have in place and to adhere to a commercially reasonable program of customer privacy in compliance with applicable laws and industry best practices designed to assure the confidentiality and security of confidential investor information, as required by Regulation S-P and other applicable laws.The Participating Broker will promptly notify the Dealer Manager of any breaches of security or loss of confidential customer information in respect of investors in the Partnership.
(s)The Participating Broker shall verify the identity of each investor to whom it offers and sells Units under its “customer identification program” and verify the source of the investor’s funds as required by the anti-money laundering rules of FINRA, the SEC and the Department of Treasury, and screen such investors against current lists of individuals and organizations available from the Office of ...
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