Exhibit 1.1
Form of Managing Dealer Agreement
MANAGING DEALER AGREEMENT
THIS AGREEMENT, dated as of ___________, 1998, is made by and between CNL
HOSPITALITY PROPERTIES, INC., a Maryland corporation (the "Company"); and CNL
SECURITIES CORP., a Florida corporation (the "Managing Dealer").
WHEREAS, the Company proposes to offer and sell up to an aggregate of
27,500,000 shares of common stock in the Company (the "Shares") to the public
pursuant to a public offering and 1,000,000 shares of common stock in the
Company issuable upon the exercise of warrants granted to the Managing Dealer;
WHEREAS, the Managing Dealer is registered with the National Association
of Securities Dealers, Inc. as a broker-dealer, and is presently or, prior to
any offers or sales of Shares, will be licensed in all fifty states, the
District of Columbia, and the Commonwealth of Puerto Rico as a broker-dealer
qualified to offer and sell to the public securities of the type represented by
the Shares; and
WHEREAS, the Company desires to retain the Managing Dealer to use its best
efforts to sell the Shares and to manage the sale by others of the Shares, and
the Managing Dealer is willing and desires to serve as the Managing Dealer for
the Company for the sale of the Shares upon the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the Company and the Managing
Dealer agree as follows:
SECTION 1
DEFINITIONS
Whenever used in this Agreement, the following terms shall have the
following specified meanings.
1.1 "NASD" means the National Association of Securities Dealers, Inc.
1.2 "Offering" means the offering of up to 27,500,000 Shares of CNL
HOSPITALITY PROPERTIES, INC. to the public pursuant to the terms and conditions
of the Registration Statement.
1.3 "Offering Period" means the period commencing on the effective date of
the Registration Statement and ending on the earliest of the following: (i) the
later of one year after the initial date of the Prospectus or, at the Company's
election, two years after the initial date of the Prospectus; (ii) the
acceptance by the Company of subscriptions for 27,500,000 Shares, with 2,500,000
of such Shares available only to investors who participate in the Company's
dividend reinvestment plan, subject to Paragraph 3.8 hereof; (iii) the
termination of the Offering by the Company; (iv) the termination of the
effectiveness of the Registration Statement; or (v) the termination of the
Company.
1.4 "Participating Brokers" mean those broker-dealers engaged by the
Managing Dealer to participate in the Offering pursuant to Paragraph 3.2.
1.5 "Prospectus" means the final prospectus included in the Registration
Statement, pursuant to which the Company will offer Shares to the public, as the
same may be amended or supplemented from time to time after the effective date
of the Registration Statement.
1.6 "Registration Statement" means the registration statement pursuant to
which the Company has registered the Shares with the SEC as provided in the
Securities Act of 1933, as amended, as such registration statement may be
amended or supplemented from time to time.
1.7 "SEC" means the Securities and Exchange Commission.
1.8 "Shares" mean the shares of Common Stock of the Company, par value
$0.01 per share, with a purchase price of $10.00 per share. An aggregate of up
to 27,500,000 Shares will be offered pursuant to the Registration Statement.
1.9 "Soliciting Dealer Warrant" means a warrant to purchase one share of
common stock of the Company for every 25 Shares sold through the Offering, which
are issuable to the Managing Dealer (all or a portion of which may be reallowed
to Soliciting Dealers with prior written approval from, and in the sole
discretion of, the Managing Dealer and are to be exercised during the five-year
period commencing with the date the Offering begins (the "Exercise Period"), at
a price of $12.00 per share.
1.10 "State Regulatory Authorities" mean the commissions, departments,
agencies or other authorities in the fifty states, the District of Columbia, and
the Commonwealth of Puerto Rico which regulate the offer and sale of securities.
1.11 "Company" means CNL Hospitality Properties, Inc., a Maryland
corporation.
SECTION 2
APPOINTMENT
Subject to the terms and conditions set forth in this Agreement, including
Paragraph 3.8 hereof, the Company hereby appoints the Managing Dealer as the
managing dealer of the Offering to use its best efforts to sell up to 27,500,000
Shares of the Company and to manage the sale by others of such Shares for the
Company's account. The Managing Dealer hereby accepts such appointment.
SECTION 3
SALE OF SHARES
3.1 Best Efforts. The Managing Dealer shall use its best efforts during
the Offering Period to sell or cause to be sold the Shares in such quantities
and to such persons and in accordance with such terms as are set forth in this
Agreement, the Prospectus and the Registration Statement. Notwithstanding
anything herein to the contrary, the Managing Dealer shall have no obligation
under this Agreement to purchase any of the Shares for its own account.
3.2 Association of Other Broker-Dealers. The Company hereby acknowledges
and agrees that the Managing Dealer may engage Participating Brokers to
participate in the Offering, provided that (i) all Participating Brokers are
registered with the NASD and are duly licensed by the State Regulatory
Authorities in the jurisdictions in which they will offer and sell Shares or
exempt from broker-dealer registration with the NASD and the State Regulatory
Authorities, and (ii) all such engagements are evidenced by written agreements,
the terms and conditions of which substantially conform to the form of
Participating Broker Agreement approved by the Company and attached hereto as
Exhibit A (the "Participating Broker Agreement"). The Managing Dealer is
authorized to reallow so much of the commissions which it receives under
Paragraph 4.1 to Participating Brokers as it sees fit.
3.3 Telephonic Subscriptions.
(a) The Managing Dealer may permit certain Participating Brokers to
accept telephonic or other oral subscriptions for Shares; provided,
however, that any such Participating Broker agrees that: (i) the
registered representative and branch manager of the Participating Broker
shall execute the subscription agreement on behalf of any investor who
telephonically or orally subscribes for Shares; (ii) the Participating
Broker shall not charge investors who telephonically or orally subscribe
for Shares any additional fees, including but not limited to fees relating
to opening an account with the Participating Broker; and (iii) the
Participating Broker shall not accept telephonic or oral subscriptions for
Shares from any investor unless such investor has received a copy of the
Company's Prospectus prior to making a decision to invest. The Managing
Dealer shall enter into a written agreement with each Participating Broker
who wishes to accept telephonic or other oral subscriptions for Shares
from investors in certain states more particularly identified in the
Prospectus, pursuant to which the Participating Broker shall agree to
explain to such investor that: (i) the investor shall have the right to
rescind such subscription for a period of ten (10) days following the
receipt of the Confirmation (as hereinafter defined); and (ii) unless the
investor rescinds such subscription within the applicable period of time,
the investor shall be bound by the subscription agreement. The Managing
Dealer shall confirm the receipt of subscriptions for Shares which have
been subscribed for by telephone or other oral instructions by written
notice to the investor (the "Confirmation"). Such Confirmation shall be
mailed to the investor not later than seven (7) days after the date on
which the investor's funds are deposited, shall contain a statement that
the investor has a right to rescind his subscription, and shall be
accompanied by a Prospectus and a Subscriber's Signature Page.
(b) Notwithstanding anything to the contrary contained in Paragraph
4.3(a) of this Agreement, in the event that the Company pays any
commission to the Managing Dealer for sale by a Participating Broker of
one or more Shares pursuant to a telephonic or other oral subscription
where representatives of such Participating Broker execute the
subscription agreement relating to such Shares, and the subscription is
rescinded as to one or more of the Shares covered by such subscription,
the Company shall decrease the next payment of commissions or other
compensation otherwise payable to the Managing Dealer by the Company under
this Agreement by an amount equal to the commission rate established in
Paragraph 4.1 of this Agreement, multiplied by the number of Shares as to
which the subscription is rescinded. In the event that no payment of
commissions or other compensation is due to the Managing Dealer after such
withdrawal occurs, the Managing Dealer shall pay the amount specified in
the preceding sentence to the Company within ten (10) days following
receipt of notice by the Managing Dealer from the Company stating the
amount owed as a result of rescinded subscriptions.
3.4 Suitability and Minimum Purchase Requirements.
(a) The Managing Dealer will use every reasonable effort, to the
extent it sells Shares to investors, to assure that any such Shares are
sold only to investors who:
(i) meet the investor suitability standards, including the
minimum income and net worth standard established by the Company,
and minimum purchase requirements set forth in the Registration
Statement;
(ii) can reasonably benefit from the Company based on the
prospective investor's overall investment objectives and portfolio
structure;
(iii) are able to bear the economic risk of the investment
based on each prospective investor's overall financial situation;
and
(iv) have 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 Shares;
(D) the restrictions on transferability of the Shares; (E) the
background and qualifications of the officers and directors of CNL
Hospitality Advisors, Inc., the advisor to the Company (the
"Advisor"); and (F) the tax consequences of an investment in the
Shares.
(b) The Managing Dealer will make the determinations required to be
made by it pursuant to Paragraph 3.4(a) above 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 Managing Dealer to be relevant.
(c) The Managing Dealer shall maintain such records evidencing
compliance with the determination of the investor suitability standards
and minimum purchase requirements set forth in the Registration Statement,
as required by Paragraphs 3.4(a) and 3.4(b) above for a period of not less
than six (6) years, or for such greater time period as shall comply with
all applicable federal, state and other regulatory requirements.
(d) In addition to the foregoing, the Managing Dealer shall comply
fully with all the applicable provisions of the NASD's Conduct Rules and
the following provisions:
(i) the Managing Dealer shall have reasonable grounds to
believe, based upon information provided by the investor concerning
his investment objectives, other investments, financial situation
and needs, and upon any other information known by the Managing
Dealer, that (A) each investor to whom the Managing Dealer sells
Shares is or will be in a financial position appropriate to enable
him to realize to a significant extent the benefits (including tax
benefits) of an investment in the Shares, (B) each investor to whom
the Managing Dealer sells Shares has a fair market net worth
sufficient to sustain the risks inherent in an investment in the
Shares (including potential loss and lack of liquidity), and (C) the
Shares otherwise are or will be a suitable investment for each
investor to whom the Managing Dealer sells Shares, and the Managing
Dealer shall maintain files disclosing the basis upon which the
determination of suitability was made;
(ii) the Managing Dealer shall not execute any transaction
involving the purchase of Shares in a discretionary account without
prior written approval of the transaction by the investor;
(iii) the Managing Dealer shall have reasonable grounds to
believe, based upon the information made available to it, that all
material facts are adequate and accurately disclosed in the
Registration Statement and provide a basis for evaluating the
Shares;
(iv) in making the determination set forth in item (iii)
above, the Managing Dealer shall evaluate items of compensation,
properties, tax aspects, financial stability and experience of the
sponsor, conflicts of interest and risk factors, and any other
information deemed pertinent by it; and
(v) prior to executing a purchase transaction in the Shares,
the Managing Dealer shall have informed the prospective investor of
all pertinent facts relating to the liquidity and marketability of
the Shares.
(e) The Managing Dealer shall comply with the requirements for
determining the suitability of investors who elect to participate in the
Reinvestment Plan (the "Reinvestment Plan") in accordance with the
procedure set forth in Paragraph 6 of such Reinvestment Plan in the form
of Appendix A to the Prospectus.
3.5 Sales Literature. The Managing Dealer shall use and distribute in
conjunction with the offer and sale of any Shares only the Prospectus and such
sales literature and advertising as shall have been previously approved in
writing by the Company.
3.6 Jurisdictions. The Managing Dealer shall cause Shares to be offered
and sold only in those jurisdictions specified in writing by the Company for
whose account Shares are then offered for sale, and such list of jurisdictions
shall be updated by the Company as additional states are added. The Company
shall specify only such jurisdictions in which the offering and sale of its
Shares has been authorized by appropriate State Regulatory Authorities. No
Shares shall be offered or sold for the account of the Company in any other
states.
3.7 Escrow. All funds received by the Managing Dealer for the sale of
Shares shall be deposited in an escrow account established by the Company at
SouthTrust Asset Management Company of Florida, N.A. (the "Escrow Agent"), by
the close of the first business day following receipt of such funds by the
Managing Dealer. Such escrow account shall be denominated "ESCROW ACCOUNT FOR
THE BENEFIT OF SUBSCRIBERS FOR COMMON STOCK OF CNL HOSPITALITY PROPERTIES, INC."
Until such time (if any) as the funds held in escrow are deliverable to the
Company pursuant to the Escrow Agreement between the Company and the Escrow
Agent, the Managing Dealer shall, and shall cause Participating Brokers to,
instruct subscribers to make checks for subscriptions payable to the order of
"SOUTHTRUST ASSET MANAGEMENT COMPANY OF FLORIDA, N.A., ESCROW AGENT," and shall
return checks made payable to another party to the Participating Broker or
subscriber who submitted the check. Thereafter, checks may be made payable to
either the Escrow Agent or the Company. The Managing Dealer may authorize
certain Participating Brokers which are "$250,000 broker-dealers" to instruct
their customers to make their checks for Shares subscribed for payable directly
to the Participating Broker. In such case, the Soliciting Dealer will collect
the proceeds of the subscribers' checks and issue a check made payable to the
order of the Escrow Agent for the aggregate amount of the subscription proceeds.
SECTION 4
COMPENSATION
4.1 Commissions.
(a) The Company shall pay to the Managing Dealer, as compensation
for all services to be rendered by the Managing Dealer pursuant to this
Agreement, a commission equal to seven and one-half percent (7.5%) of the
selling price of each Share for which a sale is completed, regardless of
whether such Share is sold by the Managing Dealer or a Participating
Broker; provided, however, that the Company will pay reduced commissions
or may eliminate commissions on certain sales of Shares, including the
reduction or elimination of commissions in accordance with, and on the
terms set forth in, the Prospectus and the following paragraph of this
Paragraph 4.1, which reduction or elimination of commissions will not
change the net proceeds to the Company. Shareholders who elect to
participate in the Reinvestment Plan will be charged commissions on Shares
purchased for their accounts on the same basis as investors who otherwise
purchase Shares in the Offering.
(b) A registered principal or representative of the Managing Dealer
or a Participating Broker, employees, officers, and directors of the
Company or the Advisor, any of their Affiliates (and the families of any
of the foregoing persons), and any Plan (as defined in the Prospectus)
established exclusively for the benefit of such persons or entities may
purchase Shares net of 7% commissions, at a per Share purchase price of
$9.30. In addition, clients of an investment adviser registered under the
Investment Advisers Act of 1940, as amended, who have been advised by such
adviser on an ongoing basis regarding investments other than in the
Company, and who are not being charged by such adviser or its Affiliates,
through payment of commissions or otherwise, for the advice rendered by
such adviser in connection with the purchase of the Shares, may purchase
the Shares net of commissions. In addition, brokers that have a
contractual arrangement with their clients for the payment of fees which
is consistent with accepting selling commissions, in their sole
discretion, may elect not to accept any selling commissions offered by the
Company for Shares that they sell. In that event, such Shares shall be
sold to the investor net of all selling commissions, at a per share
purchase price of $9.30.
4.2 Marketing Support and Due Diligence. The Company shall pay to the
Managing Dealer a nonaccountable fee for expenses incurred in selling and
marketing the Shares and for bona fide expenses incurred in connection with due
diligence activities. This marketing support and due diligence expense
reimbursement fee shall be equal to one-half of one percent (0.5%) of the
selling price of each Share for which a sale is completed, regardless of whether
such Share is sold by the Managing Dealer or a Participating Broker. All due
diligence expense reimbursements shall be paid by the Managing Dealer from this
fee.
4.3 Completed Sale.
(a) A sale of a Share shall be deemed to be completed under
Paragraph 4.1 if and only if (i) the Company has received a properly
completed and executed subscription agreement, together with payment of
the full purchase price of each purchased Share, from or, in accordance
with Paragraph 3.3(a), on behalf of an investor who satisfies the
applicable suitability standards and minimum purchase requirements set
forth in the Registration Statement as determined by the Managing Dealer
in accordance with the provisions of this Agreement; (ii) the Company has
accepted such subscription; and (iii) such investor has been admitted as a
shareholder of the Company.
(b) The Managing Dealer hereby acknowledges and agrees that the
Company, in its sole and absolute discretion, may accept or reject any
subscription, in whole or in part, for any reason whatsoever, and no
commission will be paid to the Managing Dealer with respect to that
portion of any subscription which is rejected.
4.4 Payment. Except as provided in "The Offering -- Plan of Distribution"
of the Prospectus, the commissions specified in Paragraph 4.1 for the sale of
any Share shall be payable in cash by the Company, as specified in Paragraph
4.1, no later than the end of the calendar month in which the investor
subscribing for the Share is admitted as a shareholder of the Company. Investors
whose subscriptions for Shares are accepted shall be admitted no later than the
end of the calendar month in which such subscriptions are accepted. The Company
will accept or reject all subscriptions within 30 days after receipt.
Notwithstanding anything to the contrary contained herein, in the event that the
Company pays any commission to the Managing Dealer for sale by a Participating
Broker of one or more Shares and the
subscription is rescinded as to one or more of the Shares covered by such
subscription, the Company shall decrease the next payment of commissions or
other compensation otherwise payable to the Managing Dealer by the Company under
this Agreement by an amount equal to the commission rate established in
Paragraph 4.1 of this Agreement, multiplied by the number of Shares as to which
the subscription is rescinded. In the event that no payment of commissions or
other compensation is due to the Managing Dealer after such withdrawal occurs,
the Managing Dealer shall pay the amount specified in the preceding sentence to
the Company within ten (10) days following receipt of notice by the Managing
Dealer from the Company stating the amount owed as a result of rescinded
subscriptions.
Certain stockholders may agree with their participating Soliciting Dealer
and the Managing Dealer to have Selling Commissions relating to their Shares
paid over a seven year period pursuant to a deferred commission arrangement (the
"Deferred Commission Option"). Stockholders electing the Deferred Commission
Option will be required to pay a total of $9.40 per Share purchased upon
subscription, rather than $10.00 per Share, with respect to which $0.15 per
Share will be payable as Selling Commissions due upon subscription, $0.10 of
which may be reallowed to the Soliciting Dealer by the Managing Dealer. For each
of the six (6) years following such subscription on a date to be determined by
the Managing Dealer, $0.10 per Share will be paid by the Company as deferred
Selling Commissions with respect to Shares sold pursuant to the Deferred
Commission Option, which amounts will be deducted from and paid out of
distributions otherwise payable to such stockholders holding such Shares and may
be reallowed to the Soliciting Dealer by the Managing Dealer. The net proceeds
to the Company will not be affected by the election of the Deferred Commission
Option. Under this arrangement, a stockholder electing the Deferred Commission
Option will pay a one-percent (1%) Selling Commission per year thereafter for
the next six (6) years which will be deducted from and paid by the Company out
of distributions otherwise payable to such stockholder.
4.5 Sales Incentives. The Company or its Affiliates also may provide
incentive items for registered representatives of the Managing Dealer and the
Participating Brokers, which in no event shall exceed an aggregate of $100 per
annum per participating salesperson. In the event other incentives are provided
to registered representatives of the Managing Dealer or the Participating
Brokers, they will only be paid in cash and such payments will only be made to
the Managing Dealer or the Participating Brokers rather than their registered
representatives. Before any such sales incentive program is offered, the Company
agrees to obtain prior approval of the terms of such program from the NASD.
4.6 Wholesaling Compensation. The Company hereby acknowledges that the
Managing Dealer may pay each of its wholesalers one-percent (1%) of the gross
sales price (computed at $10.00 per Share) of all Shares sold in such
wholesaler's geographic territory (as the same may be established from time to
time by agreement between the Managing Dealer and one or more of its
wholesalers) but not in excess, in the aggregate, of one-percent (1%) of the
gross sales price (computed at $10.00 per Share) of all Shares sold, or a
maximum of 27,500,000 Shares. The Company and the Managing Dealer hereby agree
that the Company shall have no obligation to pay any portion of such amounts.
The Company hereby agrees to reimburse reasonable out-of-pocket expenses that
such wholesalers incur in connection with the distribution of its Shares from
and after such time as at least 250,000 Shares have been sold for the account of
the Company; provided, however, that in no event will the Managing Dealer or the
Company pay any amounts to any person if (i) such amounts constitute
"underwriting compensation," and (ii) payment of such amounts could cause total
underwriting compensation paid to underwriters, broker-dealers, or affiliates
thereof from any source, and deemed to be in connection with or related to the
distribution of the Offering, to exceed then-applicable compensation NASD
guidelines.
4.7 Soliciting Dealer Warrants. The Company shall issue to the Managing
Dealer a Soliciting Dealer Warrant for every 25 Shares sold through the
Offering, up to a maximum of 1,000,000 Soliciting Dealer Warrants to purchase an
equivalent number of shares of common stock of the Company. The Soliciting
Dealer Warrants will be issued quarterly commencing 60 days after the date on
which the Shares are first sold pursuant to the Offering. All or any part of
such Soliciting Dealer Warrants may be reallowed
to certain Soliciting Dealers with prior written approval from, and in the sole
discretion of, the Managing Dealer unless prohibited by federal or state
securities laws. The Company will not issue Soliciting Dealer Warrants to the
Managing Dealer, and the Managing Dealer will not transfer Soliciting Dealer
Warrants, in connection with the sale of Shares to residents of Minnesota or
Texas. Each Soliciting Dealer Warrant will entitle the holder to purchase one
share of common stock from the Company for $12.00 during the five-year period
commencing with the date the Offering begins (the "Exercise Period"); provided
however, that Soliciting Dealer Warrants will not be exercisable until one year
from the date of issuance. Holders of Soliciting Dealer Warrants may not
exercise the Soliciting Dealer Warrants to the extent such exercise would
jeopardize the Company's status as a REIT.
SECTION 5
TERM OF AGREEMENT
5.1 Commencement and Expiration. This Agreement shall commence as of the
date first above written and, unless sooner terminated pursuant to Paragraph 5.2
or by operation of law or otherwise, shall expire at the end of the Offering
Period.
5.2 Termination. Any party may terminate this agreement at any time and
for any reason by giving 30 days prior written notice of intention to terminate
to each other party hereto.
5.3 Obligations Surviving Expiration or Termination.
(a) In addition to any other obligations of the Managing Dealer that
survive the expiration or termination of this Agreement, the Managing
Dealer, upon the expiration or termination of this Agreement, shall (i)
promptly deposit any and all funds in its possession which were received
from investors for the sale of Shares into the appropriate escrow account
specified in Paragraph 3.7 or, if the minimum number of Shares have been
sold and accepted by the Company, into such other account as the Company
may designate; and (ii) promptly deliver to the Company all records and
documents in its possession which relate to the Offering and are not
designated as dealer copies. The Managing 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 Dealer shall use its best
efforts to cooperate with the Company to accomplish an orderly transfer of
management of the Offering to a party designated by the Company.
(b) In addition to any other obligations of the Company that survive
the expiration or termination of this Agreement, the Company, upon
expiration or termination of this Agreement, shall pay to the Managing
Dealer all commissions to which the Managing Dealer is or becomes entitled
under Section 4 at such time or times as such commissions become payable
pursuant to Paragraph 4.3.
SECTION 6
COVENANTS OF THE MANAGING DEALER
The Managing Dealer covenants, warrants and represents, during the full
term of this Agreement, that:
(a) it is (i) a corporation duly organized and validly existing
under the laws of the State of Florida, (ii) a member of the NASD, and
(iii) a broker-dealer registered under the securities laws of all fifty
states, the District of Columbia, and the Commonwealth of Puerto Rico.
(b) it will use its best efforts to assure that all Shares are
offered and sold in accordance with (i) the terms of the Registration
Statement, the Prospectus and this Agreement,
(ii) the requirements of applicable federal and state securities laws and
regulations, and (iii) the applicable rules of the NASD, including,
without limitation, the NASD's Conduct Rules;
(c) it will cause the Shares to be offered or sold only in those
jurisdictions specified in writing by the Company;
(d) it will not use any offering or selling materials other than
materials furnished or previously approved in writing by the Company; and
(e) it either (i) will not purchase Shares for its own account or
(ii) will hold all such Shares for investment.
SECTION 7
COVENANTS OF THE COMPANY
The Company covenants, warrants and represents, during the full term of
this Agreement, that:
(a) it will use its best efforts to maintain the effectiveness of
the Registration Statement, and will file, or cause to be filed, such
amendments to the Registration Statement as may be reasonably necessary
for that purpose;
(b) it will use its best efforts to (i) prevent the issuance of any
order by the SEC, any State Regulatory Authority or any other regulatory
authority which suspends the effectiveness of the Registration Statement,
prevents the use of the Prospectus, or otherwise prevents or suspends the
Offering, and (ii) obtain the lifting of any such order if issued;
(c) it will give the Managing Dealer written notice when the
Registration Statement becomes effective and shall deliver to the Managing
Dealer a signed copy of the Registration Statement, including its
exhibits, and such number of copies of the Registration Statement, without
exhibits, and the Prospectus, and any supplements and amendments thereto
which are finally approved by the SEC, as the Managing Dealer may
reasonably request for sale of the Shares, which Prospectus shall not
contain any untrue statement of a material fact required to be stated
therein or omit any material statement necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading;
(d) if at any time any event occurs and becomes known to the Company
prior to the end of the Offering Period, as a result of which the
Registration Statement or 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 Company will effect the preparation of an
amended or supplemented Registration Statement or Prospectus which will
correct such statement or omission;
(e) it will promptly notify the Managing Dealer of any
post-effective amendments or supplements to the Registration Statement or
Prospectus;
(f) it will, during the full term of this Agreement, abide by all
applicable provisions of its governing instruments, as the same may be
amended; and
(g) it will use its best efforts to cause, at or prior to the time
the Registration Statement becomes effective, the qualification or
registration of the Shares for offering and sale under the securities laws
of such jurisdictions as shall be determined by the Company.
SECTION 8
PAYMENT OF COSTS AND EXPENSES
8.1 Managing Dealer. The Managing Dealer shall pay all costs and expenses
incident to the performance of its obligations under this Agreement which are
not expressly assumed by the Company under Paragraph 8.2 below.
8.2 Company. The Company shall pay all costs and expenses related to:
(a) the registration of the offer and sale of the Shares with the
SEC, including the cost of preparation, printing, filing and delivery of
the Registration Statement and all copies of the Prospectus used in the
Offering, and any amendments or supplements to such documents;
(b) the preparation and printing of the form of subscription
agreement to be used in the sale of the Shares;
(c) the qualification or registration of the Shares under state
securities or "blue sky" laws of states where the Shares are to be offered
or sold;
(d) the filing of the Registration Statement and any related
documents, including any amendments or supplements to such documents, with
the NASD;
(e) any filing fees, and fees and disbursements to counsel,
accountants and escrow agents which are in any way related to any of the
above items; and
(f) the preparation, printing and filing of all advertising
originated by it relating to the sale of Shares.
SECTION 9
INDEMNIFICATION
The Managing Dealer agrees to indemnify, defend and hold harmless the
Company from all losses, claims, demands, liabilities and expenses, including
reasonable legal and other expenses incurred in defending such claims or
liabilities, whether or not resulting in any liability to the Company, which the
Company may incur in connection with the offer or sale of any Shares, either by
the Managing Dealer pursuant to this Agreement or any Participating Broker
acting on the Managing Dealer's behalf pursuant to the Participating Broker
Agreement which arise out of or are based upon (i) an untrue statement or
alleged untrue statement of a material fact, or any omission or alleged omission
of a material fact, other than a statement or omission contained in the
Prospectus, the Registration Statement, or any state securities filing which was
not based on information supplied to the Company by the Managing Dealer or a
Participating Broker; or (ii) the breach by the Managing Dealer or any
Participating Broker acting on its behalf of any of the terms and conditions of
this Agreement or any Participating Broker Agreement, including, but not limited
to, alleged violations of the Securities Act of 1933, as amended.
SECTION 10
MISCELLANEOUS
10.1 Notices. Any notice, approval, request, authorization, direction or
other communication under this Agreement shall be given in writing and shall be
deemed to be delivered when delivered in person or deposited in the United
States mail, properly addressed and stamped with the required postage,
registered or certified mail, return receipt requested, to the intended
recipient as set forth below.
If to the Company: 000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Xx.,
Chairman of the Board
If to the Managing Dealer: CNL Securities Corp.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, President
Any party may change its address specified above by giving each other party
notice of such change in accordance with this Paragraph 10.1.
10.2 Invalid Provision. The invalidity or unenforceability of any
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
10.3 No Partnership. Nothing in this Agreement shall be construed or
interpreted to constitute the Managing Dealer as in association with or in
partnership with the Company, and instead, this Agreement only shall constitute
the Managing Dealer as a dealer authorized by the Company to sell and to manage
the sale by others of the Shares according to the terms set forth in the
Registration Statement, the Prospectus or this Agreement.
10.4 No Third Party Beneficiaries. No provision of this Agreement is
intended to be for the benefit of any person or entity not a party to this
Agreement, and no third party shall be deemed to be a beneficiary of any
provision of this Agreement. Further, no third party shall by virtue of any
provision of this Agreement have a right of action or an enforceable remedy
against either party to this Agreement.
10.5 Survival. Paragraph 5.3 and Section 9 and all provisions of this
Agreement which may reasonably be interpreted or construed as surviving the
expiration or termination of this Agreement shall survive the expiration or
termination of this Agreement.
10.6 Entire Agreement. This Agreement constitutes the complete
understanding among the parties hereto, and no variation, modification or
amendment to this Agreement shall be deemed valid or effective unless and until
it is signed by all parties hereto.
10.7 Successors and Assigns. No party shall assign (voluntarily, by
operation of law or otherwise) this Agreement or any right, interest or benefit
under this Agreement without the prior written consent of each other party.
Subject to the foregoing, this Agreement shall be fully binding upon, inure to
the benefit of, and be enforceable by, the parties hereto and their respective
successors and assigns.
10.8 Nonwaiver. The failure of any party to insist upon or enforce strict
performance by any other party of any provision of this Agreement or to exercise
any right under this Agreement shall be construed as a waiver or relinquishment
to any extent of such party's right to assert or rely upon any such provision or
right in that or any other instance; rather, such provision or right shall be
and remain in full force and effect.
10.9 Applicable Law. This Agreement shall be interpreted, construed and
enforced in all respects in accordance with the laws of the State of Florida.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Company: CNL HOSPITALITY PROPERTIES, INC.
By: __________________________________
XXXXX X. XXXXXX, XX., Chairman of the Board
Managing Dealer: CNL SECURITIES CORP.
By: __________________________________
XXXXXX X. XXXXXX, President
