FORM OF AMENDED AND RESTATED
DEALER MANAGER AGREEMENT
EXHIBIT 1.1
XXXXX TIMBER REAL ESTATE INVESTMENT TRUST, INC.
UP TO 85,000,000 SHARES OF COMMON STOCK
DEALER MANAGER AGREEMENT
November 10, 2005
As Amended and Restated
on
__________ , 2006
Xxxxx Investment Securities, Inc.
0000 Xxx Xxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000-0000
Ladies and Gentlemen:
Xxxxx Timber Real Estate Investment Trust, Inc., a Maryland corporation
(the "COMPANY"), has registered shares of its common stock, $.01 par value per
share (the "SHARES"), for sale to the public, of which (i) 75,000,000 shares are
intended to be offered in the primary offering and (ii) 10,000,000 shares are
intended to be offered pursuant to the Company's dividend reinvestment plan (the
"DRP"). The Company reserves the right to reallocate the Shares being offered
between the primary offering and the DRP. The Company desires for Xxxxx
Investment Securities, Inc. (the "DEALER MANAGER") to act as its agent in
connection with the offer and sale of the Shares to the public (the "OFFERING").
Except as described in the Prospectus or in Section 5.4 hereof, the Shares are
to be sold for a per Share cash price as follows:
DISTRIBUTION CHANNEL PRIMARY SHARES DRP SHARES
-------------------- -------------- ----------
Dealers $10.00 $9.55
Advisers affiliated with a Dealer* $ 9.30 $9.55
Advisers (not affiliated with a broker-dealer) $ 9.20 $9.55
* This distribution channel refers to sales through investment advisory
representatives affiliated with a participating broker-dealer in which the
representative is compensated on a fee-for-service basis by the investor.
Throughout the remainder of this agreement and the Selected Dealer
Agreement, we refer to this channel as "ADVISERS AFFILIATED WITH A DEALER".
In connection with the sale of Shares, the Company hereby agrees with you, the
Dealer Manager, as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As an inducement to the
Dealer Manager to enter into this Agreement, the Company represents and
warrants to the Dealer Manager that:
1.1. The Company has prepared and filed with the Securities and Exchange
Commission a registration statement on Form S-11 for the registration
of the Shares under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and the applicable rules and regulations of the SEC
promulgated thereunder (the "SECURITIES ACT RULES AND REGULATIONS").
Copies of such registration statement as initially filed and each
amendment thereto have been or will be delivered to the Dealer
Manager. The registration statement and the prospectus contained
therein, as finally amended at the effective date of the registration
statement (the "EFFECTIVE DATE"), are respectively hereinafter
referred to as the "REGISTRATION STATEMENT" and the "PROSPECTUS",
except that if the Company files a prospectus or prospectus supplement
pursuant to Rule 424(b) under the Securities Act, or if the Company
files a post-effective amendment to the Registration Statement, the
term "PROSPECTUS" includes the prospectus filed pursuant to Rule
424(b) or the prospectus included in such post-effective amendment.
The term "PRELIMINARY PROSPECTUS" as used herein shall mean a
preliminary prospectus related to the Shares as contemplated by Rule
430 or Rule 430A of the Securities Act Rules and Regulations included
at any time as part of the Registration Statement.
1.2. On the date that any Preliminary Prospectus was filed with the SEC, on
the Effective Date, on the date of the Prospectus, on the date the
Minimum Offering (as hereinafter defined) is obtained and when any
post-effective amendment to the Registration Statement becomes
effective or any amendment or supplement to the Prospectus is filed
with the SEC, the Registration Statement, each Preliminary Prospectus
and the Prospectus, as applicable, including the financial statements
contained therein, complied or will comply with the Securities Act and
the Securities Act Rules and Regulations. On the Effective Date, the
Registration Statement did not or will not, as the case may be,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. On the date of the Prospectus,
as amended or supplemented, as applicable, and on the date the Minimum
Offering is obtained, the Prospectus did not or will not, as the case
may be, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the foregoing provisions of this Section 1.2 will not
extend to such statements contained in or omitted from the
Registration Statement or the Prospectus, as amended or supplemented,
as are primarily within the knowledge of the Dealer Manager or any of
the Dealers (as defined in Section 5.1 hereof) and are based upon
information furnished by the Dealer Manager in writing to the Company
specifically for inclusion therein.
1.3. No order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus has been issued and no proceedings for
that purpose are pending, threatened, or, to the knowledge of the
Company, contemplated by the SEC; and to the knowledge of the Company,
no order suspending the offering of the Shares in any jurisdiction has
been issued and no proceedings for that purpose have been instituted
or threatened or are contemplated.
1.4. The Company intends to use the funds received from the sale of the
Shares as set forth in the Prospectus.
1.5. The Company has full legal right, power and authority to enter into
this Agreement and to perform the transactions contemplated hereby,
and the Company has duly authorized, executed and delivered this
Agreement.
1.6. The execution and delivery of this Agreement, the consummation of the
transactions herein contemplated and the compliance with the terms of
this Agreement by the Company will not conflict with or constitute a
default or violation under any charter, by-law, contract, indenture,
mortgage, deed of trust, lease, rule, regulation, writ, injunction or
decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company, except to
the extent that the enforceability of the indemnity and contribution
provisions contained in Section 6 of this Agreement may be limited
under applicable securities laws.
1.7. No consent, approval, authorization or other order of any governmental
authority is required in connection with the execution or delivery by
the Company of this Agreement or the
-2-
issuance and sale by the Company of the Shares, except such as may be
required under the securities laws of certain states, if any, which we
have identified to you.
1.8. The Shares have been duly authorized and, upon payment therefor as
provided in this Agreement, will be validly issued, fully paid and
nonassessable and will conform to the description thereof contained in
the Prospectus.
2. REPRESENTATIONS AND WARRANTIES OF THE DEALER MANAGER. As an inducement to
the Company to enter into this Agreement, the Dealer Manager represents and
warrants to the Company that:
2.1. The Dealer Manager is a member of the National Association of
Securities Dealers, Inc. (the "NASD") in good standing and a
broker-dealer registered as such under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT") and under the securities laws of
the states in which the Shares are to be offered and sold. The Dealer
Manager and its employees and representatives possess all required
licenses and registrations to act under this Agreement.
2.2. The Dealer Manager has full legal right, power and authority to enter
into this Agreement and to perform the transactions contemplated
hereby, and the Dealer Manager has duly authorized, executed and
delivered this Agreement.
2.3. The execution and delivery of this Agreement, the consummation of the
transactions herein contemplated and the compliance with the terms of
this Agreement by the Dealer Manager will not conflict with or
constitute a default or violation under any charter, by-law, contract,
indenture, mortgage, deed of trust, lease, rule, regulation, writ,
injunction or decree of any government, governmental instrumentality
or court, domestic or foreign, having jurisdiction over the Dealer
Manager, except to the extent that the enforceability of the indemnity
and contribution provisions contained in Section 6 of this Agreement
may be limited under applicable securities laws.
2.4. No consent, approval, authorization or other order of any governmental
authority is required in connection with the execution, delivery or
performance by the Dealer Manager of this Agreement.
2.5. The Dealer Manager represents and warrants to the Company and each
person that signs the Registration Statement that the information
under the caption "Plan of Distribution" in the Prospectus and all
other information furnished to the Company by the Dealer Manager in
writing expressly for use in the Registration Statement, any
Preliminary Prospectus, or the Prospectus, does not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading.
3. COVENANTS OF THE COMPANY. The Company covenants and agrees with the Dealer
Manager that:
3.1. It will, at no expense to the Dealer Manager, furnish the Dealer
Manager with such number of printed copies of the Registration
Statement, including all amendments and exhibits thereto, as the
Dealer Manager may reasonably request. It will similarly furnish to
the Dealer Manager and others designated by the Dealer Manager as many
copies as the Dealer Manager may reasonably request in connection with
the offering of the Shares of: (a) the Prospectus; (b) this Agreement;
and (c) any other printed sales literature or other materials
-3-
(provided that the use of said sales literature and other materials
have been first approved for use by the Company and all appropriate
regulatory agencies).
3.2. It will furnish such information and execute and file such documents
as may be necessary for the Company to qualify the Shares for offer
and sale under the securities laws of such jurisdictions as the Dealer
Manager may reasonably designate and will file and make in each year
such statements and reports as may be required. The Company will
furnish to the Dealer Manager a copy of such papers filed by the
Company in connection with any such qualification.
3.3. It will: (a) furnish copies of any proposed amendment or supplement of
the Registration Statement or the Prospectus to the Dealer Manager;
(b) file every amendment or supplement to the Registration Statement
or the Prospectus that may be required by the SEC or any state
securities administration; and (c) if at any time the SEC shall issue
any stop order suspending the effectiveness of the Registration
Statement or any state securities administration shall issue any order
or take other action to suspend or enjoin the sale of the Shares, it
will promptly notify the Dealer Manager and will use its best efforts
to obtain the lifting of such order or to prevent such other action at
the earliest possible time.
3.4. If at any time when a prospectus is required to be delivered under the
Securities Act any event occurs as a result of which, in the opinion
of either the Company or the Dealer Manager, the Prospectus would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, the
Company will promptly notify the Dealer Manager thereof (unless the
information shall have been received from the Dealer Manager) and will
effect the preparation of an amendment or supplement to the Prospectus
which will correct such statement or omission.
3.5. It will comply with all requirements imposed upon it by the Securities
Act, the Securities Act Rules and Regulations, the Exchange Act and
the applicable rules and regulations of the SEC promulgated thereunder
(the "EXCHANGE ACT RULES AND REGULATIONS" and collectively with the
Securities Act Rules and Regulations, the "RULES AND REGULATIONS"),
and by all state securities laws and regulations of those states in
which an exemption has been obtained or qualification of the Shares
has been effected, to permit the continuance of offers and sales of
the Shares in accordance with the provisions hereof and of the
Prospectus.
3.6. It will pay all expenses incident to the performance of its
obligations under this Agreement, including (a) the preparation,
filing and printing of the Registration Statement as originally filed
and of each amendment thereto, (b) the preparation, printing and
delivery to the Dealer Manager of this Agreement, the Selected Dealer
Agreement and such other documents as may be required in connection
with the offering, sale, issuance and delivery of the Shares, (c) the
fees and disbursements of the Company's counsel, accountants and other
advisers, (d) the fees and expenses related to the review of the terms
and fairness of the Offering by the NASD, (e) the fees and expenses
related to the qualification of the Shares under the securities laws
in accordance with the provisions of Section 3.2 hereof, including the
fees and disbursements of counsel in connection with the preparation
of any Blue Sky survey and any supplement thereto, (f) the printing
and delivery to the Dealer Manager of copies of any Preliminary
Prospectus and the Prospectus, (g) the fees and expenses of any
registrar, transfer agent or paying agent in connection with the
Shares and (h) the costs and expenses of the Company relating to
investor presentations undertaken in connection with the marketing of
the offering of the Shares, including, without limitation, expenses
associated
-4-
with the production of slides and graphics, fees and expenses of any
consultants engaged in connection with presentations with the prior
approval of the Company, and travel and lodging expenses of the
representatives of the Company and any such consultants.
4. COVENANTS OF THE DEALER MANAGER. The Dealer Manager covenants and agrees
with the Company that:
4.1. In connection with the offer and sale of the Shares, the Dealer
Manager will comply with all requirements imposed upon it by the
Securities Act, the Exchange Act, the Rules and Regulations or other
federal regulations applicable to the Offering, the sale of Shares or
its activities and by all applicable state securities laws and
regulations, as from time to time in effect, and by this Agreement,
including the obligation to deliver a copy of the Prospectus as
required by the Securities Act, the Exchange Act or the Rules and
Regulations. The Dealer Manager will not offer the Shares for sale in
any jurisdiction unless and until it has been advised that the Shares
are either registered in accordance with, or exempt from, the
securities and other laws applicable thereto.
4.2. The Dealer Manager will make no representations concerning the
Offering except as set forth in the Prospectus.
4.3. The Dealer Manager will provide the Company with such information
relating to the offer and sale of the Shares by it as the Company may
from time to time reasonably request or as may be requested to enable
the Company to prepare such reports of sale as may be required to be
filed under applicable federal or state securities laws.
5. OBLIGATIONS AND COMPENSATION OF DEALER MANAGER.
5.1. The Company hereby appoints the Dealer Manager as its agent and
principal distributor during the Offering Period (each defined in
Section 5.3) for the purpose of finding, on a best efforts basis,
purchasers for the Shares for cash through such securities dealers
that the Dealer Manager may retain (individually, a "DEALER", and
collectively, the "DEALERS"), all of whom shall be members of the
NASD, pursuant to a Selected Dealer Agreement in the form attached to
this Agreement as Exhibit A. The Dealer Manager may also arrange for
the sale of Shares for cash directly to its own clients and customers
at the public offering price and subject to the terms and conditions
stated in the Prospectus. The Dealer Manager hereby accepts such
agency and distributorship and agrees to use its best efforts to find
purchasers for the Shares on said terms and conditions, commencing as
soon as practicable.
5.2. The Dealer Manager agrees to be bound by the terms of (a) the Amended
and Restated Escrow Agreement, dated November 10, 2005, as amended and
restated as of ________, 2006 among Wachovia Bank, National
Association, as escrow agent (the "ESCROW AGENT"), the Dealer Manager
and the Company, and (b) the Amended and Restated Escrow Agreement for
Pennsylvania Subscribers, dated November 10, 2005, as amended and
restated as of _________, 2006 among the Escrow Agent, the Dealer
Manager and the Company, in each case as such agreements may be
amended from time to time.
5.3. The "OFFERING PERIOD" shall mean that period during which Shares may
be offered for sale, commencing on the date the Registration Statement
was filed with the SEC, during which period offers and sales of the
Shares shall occur continuously unless and until the Offering is
terminated as provided in Section 11 hereof, except that the Dealer
Manager and the Dealers shall suspend or terminate the offering of the
Shares upon request of the Company at any time and shall resume
offering the Shares upon subsequent request of the Company.
-5-
The Offering Period shall in all events terminate upon the sale of all
of the Shares. Upon termination of the Offering Period, the Dealer
Manager's agency and this Agreement shall terminate without obligation
on the part of the Dealer Manager or the Company except as set forth
in this Agreement.
5.4. Except as may be provided in the "Plan of Distribution" section of the
Prospectus, as compensation for the services rendered by the Dealer
Manager, the Company agrees that it will pay to the Dealer Manager
selling commissions plus a dealer manager fee as follows:
SELLING COMMISSIONS
---------------------------
DISTRIBUTION CHANNEL PRIMARY SHARES DRP SHARES
-------------------- -------------- ----------
Dealers 7.00% 0.00%
Advisers affiliated with a Dealer 0.00% 0.00%
Advisers (not affiliated with a broker-dealer) 0.00% 0.00%
DEALER MANAGER FEE
---------------------------
DISTRIBUTION CHANNEL PRIMARY SHARES DRP SHARES
-------------------- -------------- ----------
Dealers 1.80% 0.00%
Advisers affiliated with a Dealer 1.80% 0.00%
Advisers (not affiliated with a broker-dealer) 0.80% 0.00%
No selling commissions or dealer manager fees will be paid to the
Dealer Manager in connection with Shares sold under the DRP.
Shareholders purchasing through Advisers Affiliated with a Dealer or
through advisers not affiliated with a dealer are referred to in this
agreement as "ADVISER AFFILIATED SHAREHOLDERS".
Reduced selling commissions will be paid to the Dealer Manager and
reduced per share selling prices shall be recovered on large purchases
in the primary offering in accordance with the following table:
SHARES PURCHASED IN THE TRANSACTION COMMISSION RATE PRICE PER SHARE
----------------------------------- --------------- ---------------
1 - 50,000 7.00% $10.00
50,001 - 100,000 6.00% $ 9.90
100,001 - 200,000 5.00% $ 9.80
200,001 - 300,000 4.00% $ 9.70
300,001 - 400,000 3.00% $ 9.60
400,001 - 500,000 2.00% $ 9.50
500,001 - and up 1.00% $ 9.40
The discounts noted in the above table will be applied on a
transaction-by-transaction basis and in a progressive fashion. All
commissions will be paid based on a $10.00 per share issue price
without regard to any discounts based on volume. By way of example,
an investment transaction of $1,250,000 would pay 7.00% commission on
the first $500,000 (or $35,000), which would purchase 50,000 shares,
and then 6.00% on the next $495,000 (or $30,000), which would purchase
50,000 shares, and then 5.00% on the amount remaining $255,000 (or
$12,750), which would purchase 26,020 shares ($255,000 divided by
$9.80 per share).
-6-
The Company will also reimburse the Dealer Manager for its
reimbursement of the bona fide due diligence expenses of the Dealers
in the amount of up to 0.5% of the gross offering proceeds
attributable to such Dealer.
Notwithstanding the foregoing, no commissions, payments or amounts
whatsoever will be paid to the Dealer Manager under this Section 5.4
unless or until $2,000,000 has been raised from the sale of Shares in
the Offering (the "MINIMUM OFFERING"). Until the Minimum Offering is
obtained, investments will be held in escrow. Until $37,500,000 (the
"PENNSYLVANIA MINIMUM") has been raised, subscription payments from
Pennsylvania investors will be held in a separate escrow account and
no commissions, payments or amounts whatsoever will be paid thereon to
the Dealer Manager under this Section 5.4 unless and until the
Pennsylvania Minimum has been raised, and then only with respect to
such investments from Pennsylvania investors as are released to the
Company from such escrow. If the Minimum Offering is not obtained
within the time periods specified in the Prospectus, investments will
be returned to the investors in accordance with the Prospectus. If the
Pennsylvania Minimum is not obtained within the time periods specified
in the Prospectus, the investments from Pennsylvania investors will be
returned or held for subsequent escrow periods in accordance with the
Prospectus. The Company will not be liable or responsible to any
Dealer for direct payment of commissions to such Dealer, it being the
sole and exclusive responsibility of the Dealer Manager for payment of
commissions to Dealers. Notwithstanding the above, at its discretion,
the Company may act as agent of the Dealer Manager by making direct
payment of commissions to such Dealers without incurring any liability
therefore.
5.5. Notwithstanding anything to the contrary contained herein, in the
event that the Company pays any commission to the Dealer Manager for
sale by a Dealer 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 Dealer
Manager by the Company under this Agreement by an amount equal to the
commission rate established in Section 5.4 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 Dealer Manager after such withdrawal
occurs, the Dealer Manager shall pay the amount specified in the
preceding sentence to the Company within ten (10) days following
receipt of notice by the Dealer Manager from the Company stating the
amount owed as a result of rescinded subscriptions.
5.6. The Dealer Manager will not represent or imply that the Escrow Agent
has investigated the desirability or advisability of investment in the
Company or has approved, endorsed or passed upon the merits of the
Shares or the Company, nor will the Dealer Manager use the name of the
Escrow Agent in any manner whatsoever in connection with the offer or
sale of the Shares other than by acknowledgment that it has agreed to
serve as escrow agent.
5.7. Notwithstanding anything else herein to the contrary, Dealer Manager
agrees that it will not sell any Shares through the DRP to any Adviser
Affiliated Shareholder while such shareholder may still purchase
Shares in the primary offering for a price less than the price
available under the DRP. After the primary offering closes, or if at
any time the shares offered under the DRP are offered at a price per
share less than that offered pursuant to this agreement to Adviser
Affiliated Shareholders, the Dealer Manager may sell Shares through
the DRP to an Adviser Affiliated Shareholder at the then applicable
DRP purchase price.
-7-
6. INDEMNIFICATION.
6.1. The Company will indemnify and hold harmless the Dealers and (to the
extent permitted by the Company's charter) the Dealer Manager, their
officers and directors and each person, if any, who controls such
Dealer or Dealer Manager within the meaning of Section 15 of the
Securities Act (the "INDEMNIFIED PERSONS") from and against any
losses, claims, damages or liabilities ("LOSSES"), joint or several,
to which such Indemnified Persons may become subject, under the
Securities Act or otherwise, insofar as such Losses (or actions in
respect thereof) arise out of or are based upon (a) any untrue
statement or alleged untrue statement of a material fact contained (i)
in the Registration Statement or any post-effective amendment thereto
or in the Prospectus or (ii) in any blue sky application or other
document executed by the Company or on its behalf specifically for the
purpose of qualifying any or all of the Shares for sale under the
securities laws of any jurisdiction or based upon written information
furnished by the Company under the securities laws thereof (any such
application, document or information being hereinafter called a "BLUE
SKY APPLICATION"), or (b) the omission or alleged omission to state in
the Registration Statement (including the Prospectus as a part
thereof) or any post-effective amendment thereto or in any Blue Sky
Application a material fact required to be stated therein or necessary
to make the statements therein not misleading, or (c) any untrue
statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, if used prior to the effective date of the
Registration Statement, or in the Prospectus or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. The Company will reimburse each Indemnified Person for any
legal or other expenses reasonably incurred by such Indemnified
Person, in connection with investigating or defending such Loss.
Notwithstanding the foregoing provisions of this Section 6.1, the
Company will not be liable in any such case to the extent that any
such Loss or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information
furnished (x) to the Company by the Dealer Manager or (y) to the
Company or the Dealer Manager by or on behalf of any Dealer
specifically for use in the preparation of the Registration Statement
or any such post-effective amendment thereto, any such Blue Sky
Application or any such Preliminary Prospectus or the Prospectus, and,
further, the Company will not be liable in any such case if it is
determined that such Dealer or the Dealer Manager was at fault in
connection with the Loss, expense or action. Notwithstanding the
foregoing, the Company shall not indemnify or hold harmless an
Indemnified Person for any Losses or expenses arising from or out of
an alleged violation of federal or state securities laws by such party
unless one or more of the following conditions are met: (a) there has
been a successful adjudication on the merits of each count involving
alleged securities law violations as to the particular Indemnified
Person, (b) such claims have been dismissed with prejudice on the
merits by a court of competent jurisdiction as to the particular
Indemnified Person and (c) a court of competent jurisdiction approves
a settlement of the claims against a particular Indemnified Person and
finds that indemnification of the settlement and the related costs
should be made, and the court considering the request for
indemnification has been advised of the position of the Securities and
Exchange Commission and of the published position of any state
securities regulatory authority in which securities of the Company
were offered or sold as to indemnification for violations of
securities laws.
6.2 The Dealer Manager will indemnify and hold harmless the Company, each
director of the Company (including any person named in the
Registration Statement, with his consent, as
-8-
about to become a director), each other person who has signed the
Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act (each a
"COMPANY INDEMNITEE"), from and against any Losses to which any of the
Company Indemnitees may become subject, under the Securities Act or
otherwise, insofar as such Losses (or actions in respect thereof)
arise out of or are based upon (a) any untrue statement of a material
fact contained (i) in the Registration Statement (including the
Prospectus as a part thereof) or any post-effective amendment thereto
or (ii) any Blue Sky Application, or (b) the omission to state in the
Registration Statement (including the Prospectus as a part thereof) or
any post-effective amendment thereto or in any Blue Sky Application a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or (c) any untrue statement or
alleged untrue statement of a material fact contained in any
Preliminary Prospectus, if used prior to the effective date of the
Registration Statement, or in the Prospectus or the omission to state
therein a material fact required to be stated therein or necessary in
order to make the statements therein in the light of the circumstances
under which they were made not misleading, in the case of each of
clauses (a)-(c) to the extent, but only to the extent, that such
untrue statement or omission was made in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of the Dealer Manager specifically for use with reference to
the Dealer Manager in the preparation of the Registration Statement or
an such post-effective amendments thereto or any such Blue Sky
Application or any such Preliminary Prospectus or the Prospectus, or
(d) any unauthorized use of sales materials or use of unauthorized
verbal representations concerning the Shares by the Dealer Manager.
The Dealer Manager will reimburse the aforesaid parties for any legal
or other expenses reasonably incurred by them in connection with
investigating or defending such Loss, expense or action. This
indemnity agreement will be in addition to any liability that the
Dealer Manager may otherwise have.
6.3 Each Dealer severally will indemnify and hold harmless the Company,
the Dealer Manager, each of their directors (including any person
named in the Registration Statement, with his consent, as about to
become a director), each other person who has signed the Registration
Statement and each person, if any, who controls the Company and the
Dealer Manager within the meaning of Section 15 of the Securities Act
(each, a "DEALER INDEMNIFIED PERSON") from and against any Losses to
which a Dealer Indemnified Person may become subject, under the
Securities Act or otherwise, insofar as such Losses (or actions in
respect thereof) arise out of or are based upon (a) any untrue
statement or alleged untrue statement of a material fact contained (i)
in the Registration Statement (including the Prospectus as a part
thereof) or any post-effective amendment thereto or (ii) in any Blue
Sky Application, or (b) the omission or alleged omission to state in
the Registration Statement (including the Prospectus as a part
thereof) or any post-effective amendment thereto or in any Blue Sky
Application a material fact required to be stated therein or necessary
to make the statements therein not misleading, or (c) any untrue
statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, if used prior to the effective date of the
Registration Statement, or in the Prospectus or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, in the case of each of clauses (a)-(c) to the extent, but
only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company or
the Dealer Manager by or on behalf of such Dealer specifically for use
with reference to such Dealer in the preparation of the Registration
Statement or any such post-effective amendments thereto or any such
Blue Sky Application or any such Preliminary Prospectus,
-9-
or (d) any unauthorized use of sales materials or use of unauthorized
verbal representations concerning the Shares by such Dealer or
Dealer's representatives or agents in violation of Section VII of the
Selected Dealer Agreement or otherwise. Each such Dealer will
reimburse each Dealer Indemnified Person for any legal or other
expenses reasonably incurred by them in connection with investigating
or defending any such Loss, expense or action. This indemnity
agreement will be in addition to any liability that such Dealer may
otherwise have.
6.4. Promptly after receipt by an indemnified party under this Section 6 of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against any indemnifying
party under this Section 6, notify in writing the indemnifying party
of the commencement thereof. The failure of an indemnified party so to
notify the indemnifying party will relieve the indemnifying party from
any liability under this Section 6 as to the particular item for which
indemnification is then being sought, but not from any other liability
that it may have to any indemnified party. In case any such action is
brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be
entitled, to the extent it may wish, jointly with any other
indemnifying party similarly notified, to participate in the defense
thereof, with separate counsel. Such participation shall not relieve
such indemnifying party of the obligation to reimburse the indemnified
party for reasonable legal and other expenses (subject to Section 6.5)
incurred by such indemnified party in defending itself, except for
such expenses incurred after the indemnifying party has deposited
funds sufficient to effect the settlement, with prejudice, of the
claim in respect of which indemnity is sought. Any such indemnifying
party shall not be liable to any such indemnified party on account of
any settlement of any claim or action effected without the consent of
such indemnifying party. Any indemnified party shall not be bound to
perform or refrain from performing any act pursuant to the terms of
any settlement of any claim or action effected without the consent of
such indemnified party.
6.5. The indemnifying party shall pay all legal fees and expenses of the
indemnified party in the defense of such claims or actions; provided,
however, that the indemnifying party shall not be obliged to pay legal
expenses and fees to more than one law firm in connection with the
defense of similar claims arising out of the same alleged acts or
omissions giving rise to such claims notwithstanding that such actions
or claims are alleged or brought by one or more parties against more
than one indemnified party. If such claims or actions are alleged or
brought against more than one indemnified party, then the indemnifying
party shall only be obliged to reimburse the expenses and fees of the
one law firm that has been selected by a majority of the indemnified
parties against which such action is finally brought; and in the event
a majority of such indemnified parties is unable to agree on which law
firm for which expenses or fees will be reimbursable by the
indemnifying party, then payment shall be made to the first law firm
of record representing an indemnified party against the action or
claim. Such law firm shall be paid only to the extent of services
performed by such law firm and no reimbursement shall be payable to
such law firm on account of legal services performed by another law
firm.
7. SURVIVAL OF PROVISIONS.
7.1 The respective agreements, representations and warranties of the
Company and the Dealer Manager set forth in this Agreement shall
remain operative and in full force and effect regardless of (a) any
investigation made by or on behalf of the Dealer Manager or any Dealer
or any person controlling the Dealer Manager or any Dealer or by or on
behalf of the
-10-
Company or any person controlling the Company, and (b) the acceptance
of any payment for the Shares.
7.2. The obligations of the Company to pay the Dealer Manager pursuant to
Section 5.4, and the provisions of Section 5.5, Sections 6 through 10
and Section 12 shall survive the termination of this Agreement.
8. APPLICABLE LAW. This Agreement was executed and delivered in, and its
validity, interpretation and construction shall be governed by, the laws of
the State of Georgia; provided however, that causes of action for
violations of federal or state securities laws shall not be governed by
this Section.
9. COUNTERPARTS. This Agreement may be executed in any number of counterparts.
Each counterpart, when executed and delivered, shall be an original
contract, but all counterparts, when taken together, shall constitute one
and the same Agreement.
10. SUCCESSORS AND AMENDMENT.
10.1. This Agreement shall inure to the benefit of and be binding upon the
Dealer Manager and the Company and their respective successors.
Nothing in this Agreement is intended or shall be construed to give to
any other person any right, remedy or claim, except as otherwise
specifically provided herein.
10.2. This Agreement may be amended by the written agreement of the Dealer
Manager and the Company.
11. TERM. Any party to this Agreement shall have the right to terminate this
Agreement on 60 days' written notice.
11.1 In addition to any other obligations of the Dealer Manager that
survive the expiration or termination of this Agreement, the Dealer
Manager, 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 Section 5.4, or, to the extent that such
escrow account has been closed by the Company because the Minimum
Offering or the Pennsylvania Minimum, as applicable, has been
satisfied, the Dealer Manager shall promptly deliver to the Company
any funds in its possession that would have otherwise been deposited
in such escrow account, 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 Dealer Manager, at its
sole expense, may make and retain copies of all such records and
documents, but shall keep all such information confidential. The
Dealer Manager 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.
11.2 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 Dealer
Manager all commissions and fees to which the Dealer Manager is or
becomes entitled under Section 5.4 at such time or times as such
commissions and fees become payable pursuant to this Agreement.
12. CONFIRMATION. The Company hereby agrees and assumes the duty to confirm on
its behalf and on behalf of Dealers and the Dealer Manager all orders for
purchase of Shares accepted by the
-11-
Company. Such confirmations will comply with the rules of the SEC and the
NASD and will comply with applicable laws of such other jurisdictions to
the extent the Company is advised of such laws in writing by the Dealer
Manager.
13. SUITABILITY OF INVESTORS; COMPLIANCE WITH PRIVACY AND ANTI-MONEY LAUNDERING
REGULATIONS.
13.1. The Dealer Manager will offer Shares, and in its agreements with
Dealers will require that the Dealers offer Shares, only to persons
who meet the financial qualifications set forth in the Prospectus or
in any suitability letter or memorandum sent to it by the Company and
will only make offers to persons in the states in which it is advised
in writing that the Shares are qualified for sale or that such
qualification is not required. In offering Shares, the Dealer Manager
will, and in its agreements with Dealers, the Dealer Manager will,
require that the Dealer comply with the provisions of all applicable
rules and regulations relating to suitability of investors, including
without limitation, the provisions of Article III.C. of the Statement
of Policy Regarding Real Estate Investment Trusts of the North
American Securities Administrators Association, Inc. (the "NASAA
GUIDELINES"). In making the determinations as to suitability required
by the NASAA Guidelines, the Dealer Manager may rely on
representations from (i) investment advisers who are not affiliated
with a Dealer or (ii) banks acting as trustees or fiduciaries. With
respect to the maintenance of records required by the NASAA
Guidelines, the Company agrees that the Dealer Manager can satisfy its
obligation by contractually requiring such information to be
maintained by the investment advisers or banks discussed in the
preceding sentence.
13.2. The Company, the Dealer Manager and each Dealer shall: (x) abide by
and comply with (i) the privacy standards and requirements of the
Xxxxx-Xxxxx-Xxxxxx Act of 1999 ("GLB ACT"), (ii) the privacy standards
and requirements of any other applicable federal or state law, and
(iii) its own internal privacy policies and procedures, each as may be
amended from time to time; and (y) refrain from the use or disclosure
of nonpublic personal information (as defined under the GLB Act) of
all customers who have opted out of such disclosures except as
necessary to service the customers or as otherwise necessary or
required by applicable law. The Dealer Manager and each Dealer shall
be responsible for determining which customers have opted out of the
disclosure of nonpublic personal information by periodically reviewing
and, if necessary, retrieving a list of such customers (the "LIST") as
provided by each to identify customers that have exercised their
opt-out rights. The Company shall have the right to consult the List
to determine whether any opt-outs would affect the Company's
disclosure or use of nonpublic personal information of customers.
13.3. The Company, the Dealer Manager and each Dealer agree to comply with
the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (the "USA
PATRIOT ACT") and any applicable U.S. Treasury Department regulations
issued thereunder that require reasonable efforts to verify the
identity of new customers, maintain customer records, and check the
names of new customers against the list of Specially Designated
Nationals and Blocked Persons. In addition, the Company, the Dealer
Manager, and each Dealer, agree to comply with all applicable
Executive Orders and federal regulations administered by the U.S.
Treasury Department's Office of Foreign Asset Control. Further, the
Dealer Manager agrees, upon receipt of an "information request" issued
under Section 314 (a) of the USA Patriot Act, to provide the Financial
Crimes Enforcement Network with information regarding: (i) the
identity of a specified individual or organization; (ii) account
number; (iii) all identifying information provided by the account
holder; and (iv) the date and type of transaction. The Dealer
-12-
Manager from time to time will monitor account activity to identify
patterns of unusual size or volume, geographic factors, and any other
potential signals of suspicious activity, including possible money
laundering or terrorist financing. The Company reserves the right to
reject account applications from new customers who fail to provide
necessary account information or who intentionally provide misleading
information.
14. SUBMISSION OF ORDERS.
14.1. Those persons who purchase Shares will be instructed by the Dealer
Manager or the Dealer to make their checks payable to "Wachovia Bank,
as escrow agent for WTREIT" unless and until the Minimum Offering or
the Pennsylvania Minimum, as applicable, is obtained. Thereafter
persons who purchase Shares will be instructed by the Dealer Manager
or the Dealer to make their checks payable to "Xxxxx Timber Real
Estate Investment Trust, Inc." The Dealer Manager may authorize
certain Dealers who have "net capital," as defined in the applicable
federal securities regulations, of $250,000 or more to instruct their
customers to make their checks for Shares subscribed for payable
directly to the Dealer. In such case, the Dealer will collect the
proceeds of the subscribers' checks and issue a check made payable to
the order of the Company for the aggregate amount of the subscription
proceeds or wire such funds to the Escrow Agent. The Dealer Manager
and any Dealer receiving a check prior to the time that the Minimum
Offering or the Pennsylvania Minimum, as applicable, is obtained that
does not conform to the foregoing instructions shall return such check
directly to such subscriber not later than the end of the next
business day following its receipt. Checks received by the Dealer
Manager or Dealer which conform to the foregoing instructions shall be
transmitted for deposit pursuant to one of the methods described in
this Section 14.
14.2. Where, pursuant to a Dealer's internal supervisory procedures,
internal supervisory review is conducted at the same location at which
subscription documents and checks are received from subscribers,
checks will be transmitted by the end of the next business day
following receipt by the Dealer for deposit either to the escrow agent
for the Company or, after the Minimum Offering or the Pennsylvania
Minimum, as applicable, has been achieved, to the Company.
14.3. Where, pursuant to a Dealer's internal supervisory procedures, final
internal supervisory review is conducted at a different location,
checks will be transmitted by the end of the next business day
following receipt by the Dealer to the office of the Dealer conducting
such final internal supervisory review (the "FINAL REVIEW OFFICE").
The Final Review Office will in turn, by the end of the next business
day following receipt by the Final Review Office, transmit such checks
for deposit either to the escrow agent for the Company or, after the
Minimum Offering or the Pennsylvania Minimum, as applicable, has been
achieved, to the Company.
14.4. Where the Dealer Manager is involved in the distribution process,
checks will be transmitted by the Dealer Manager for deposit either to
Escrow Agent or, after the Minimum Offering or the Pennsylvania
Minimum, as applicable, has been achieved, to the Company as soon as
practicable but in any event by noon of the next business day
following receipt by the Dealer Manager. Checks of rejected potential
investors will be promptly returned to such potential investors.
14.5. If the Dealer Manager or any Dealer receives a check that is made
payable to the Escrow Agent after the Minimum Offering or the
Pennsylvania Minimum, as applicable, is obtained, the Dealer Manager
or Dealer shall deposit such check with the Escrow Agent.
-13-
If the foregoing correctly sets forth our understanding, please indicate your
acceptance thereof in the space provided below for that purpose, whereupon this
letter and your acceptance shall constitute a binding agreement between us as of
the date first above written.
Very truly yours,
XXXXX TIMBER REAL ESTATE INVESTMENT
TRUST, INC.
By:
------------------------------------
Name:
Title:
Accepted and agreed as of the date
first above written.
XXXXX INVESTMENT SECURITIES, INC.
By:
------------------------------------
Name:
Title:
-14-
EXHIBIT A
XXXXX TIMBER REAL ESTATE INVESTMENT TRUST, INC.
UP TO 85,000,000 SHARES OF COMMON STOCK
SELECTED DEALER AGREEMENT
Ladies and Gentlemen:
Xxxxx Investment Securities, Inc., as the dealer manager ("DEALER MANAGER")
for Xxxxx Timber Real Estate Investment Trust, Inc. (the "COMPANY"), a Maryland
corporation, invites you (the "DEALER") to participate in the distribution of
shares of common stock ("SHARES") of the Company subject to the following terms.
Capitalized terms not otherwise defined herein shall have the meanings set forth
in the Amended and Restated Dealer Manager Agreement between the Dealer Manager
and the Company dated November 10, 2005, as amended and restated as of
_________, 2006, in the form attached hereto as Exhibit "A" (the "Dealer Manager
Agreement").
I. DEALER MANAGER AGREEMENT
By your acceptance of this Agreement, you will become one of the Dealers
referred to in such Dealer Manager Agreement between the Company and the Dealer
Manager and will be entitled and subject to the indemnification provisions
contained in such Dealer Manager Agreement, including specifically the
provisions of such Dealer Manager Agreement (Section 6.3) wherein each Dealer
severally agrees to indemnify and hold harmless the Company, the Dealer Manager
and each officer and director thereof, and each person, if any, who controls the
Company and the Dealer Manager within the meaning of the Securities Act of 1933,
as amended.
Dealer hereby agrees to use its best efforts to sell the Shares for cash on
the terms and conditions stated in the Prospectus. Nothing in this Agreement
shall be deemed or construed to make Dealer an employee, agent, representative
or partner of the Dealer Manager or of the Company, and Dealer is not authorized
to act for the Dealer Manager or the Company or to make any representations on
their behalf except as set forth in the Prospectus and such other printed
information furnished to Dealer by the Dealer Manager or the Company to
supplement the Prospectus ("SUPPLEMENTAL INFORMATION").
II. SUBMISSION OF ORDERS
Those persons who purchase Shares will be instructed by the Dealer to make
their checks payable to "Wachovia Bank, as escrow agent for WTREIT" unless and
until the Minimum Offering is obtained. Thereafter persons who purchase Shares
will be instructed by the Dealer to make their checks payable to "Xxxxx Timber
Real Estate Investment Trust, Inc." Any Dealer receiving a check prior to the
time that the Minimum Offering or the Pennsylvania Minimum, as applicable, is
obtained that does not conform to the foregoing instructions shall return such
check directly to such subscriber not later than the end of the next business
day following its receipt. Checks received by the Dealer which conform to the
foregoing instructions shall be transmitted for deposit pursuant to one of the
following methods:
Where, pursuant to the Dealer's internal supervisory procedures, internal
supervisory review is conducted at the same location at which subscription
documents and checks are received from subscribers, checks will be transmitted
by the end of the next business day following receipt by the Dealer for deposit
either to an escrow agent for the Company or, after the Minimum Offering or the
Pennsylvania Minimum, as applicable, has been achieved, to the Company.
Where, pursuant to the Dealer's internal supervisory procedures, final
internal supervisory review is conducted at a different location, checks will be
transmitted by the end of the next business day following receipt by the Dealer
to the office of the Dealer conducting such final internal supervisory review
(the "FINAL REVIEW OFFICE"). The Final Review Office will in turn by the end of
the next business day following receipt by the Final Review Office, transmit
such checks for deposit to either the escrow
agent for the Company or, after the Minimum Offering has been achieved, to the
Company, except for investments from Pennsylvania Investors. The Final Review
Office will transmit checks from Pennsylvania investors for deposit to either
the escrow agent for the Company or, after the Pennsylvania Minimum has been
achieved, to the Company.
If the Dealer receives a check that is made payable to the Escrow Agent
after the Minimum Offering or the Pennsylvania Minimum, as applicable, is
obtained, the Dealer shall deposit such check with the Escrow Agent.
III. PRICING
Except as described in the Prospectus or with respect to volume discounts
as described below, Dealer agrees to sell the Shares for a per Share cash price
as follows:
DISTRIBUTION CHANNEL PRIMARY SHARES DRP SHARES
-------------------- -------------- ----------
Dealers $10.00 $9.55
Advisers affiliated with a Dealer $ 9.30 $9.55
The Shares shall be sold at reduced prices as follows:
SHARES PURCHASED IN THE TRANSACTION PRICE PER SHARE
----------------------------------- ---------------
1 - 50,000 $10.00
50,001 - 100,000 $ 9.90
100,001 - 200,000 $ 9.80
200,001 - 300,000 $ 9.70
300,001 - 400,000 $ 9.60
400,001 - 500,000 $ 9.50
500,001 - and up $ 9.40
The discounts noted in the above table will be applied on a
transaction-by-transaction basis and in a progressive fashion. All commissions
will be paid based on a $10.00 per share issue price without regard to any
discounts based on volume. By way of example, an investment transaction of
$1,250,000 would pay 7.00% commission on the first $500,000 (or $35,000), which
would purchase 50,000 shares, and then 6.00% on the next $495,000 (or $30,000),
which would purchase 50,000 shares, and then 5.00% on the amount remaining
$255,000 (or $12,750), which would purchase 26,020 shares ($255,000 divided by
$9.80 per share)
IV. DEALERS' COMMISSIONS
Except for discounts described in or as otherwise provided in the "Plan of
Distribution" section of the Prospectus, the Dealer's selling commission
applicable to the total public offering price of Shares sold by Dealer which it
is authorized to sell hereunder is as follows:
DISTRIBUTION CHANNEL PRIMARY SHARES
-------------------- --------------
Dealers 7.00%
Advisers affiliated with a Dealer 0.00%
No selling commissions or dealer manager fees will be payable in connection
with Shares sold under the DRP.
The preceding commissions (for the Dealer distribution channel) shall be
adjusted for sales under the volume discount program discussed above as follows:
-2-
SHARES PURCHASED IN THE TRANSACTION COMMISSION RATE
----------------------------------- ---------------
1 - 50,000 7.00%
50,001 - 100,000 6.00%
100,001 - 200,000 5.00%
200,001 - 300,000 4.00%
300,001 - 400,000 3.00%
400,001 - 500,000 2.00%
500,001 - and up 1.00%
The above selling commissions shall be based on the gross proceeds of Shares
sold by such Dealer and accepted and confirmed by the Company, which commission
will be paid by the Dealer Manager. For these purposes, a "sale of Shares" shall
occur if and only if a transaction has closed with a securities purchaser
pursuant to all applicable offering and subscription documents and the Company
has thereafter distributed the commission to the Dealer Manager in connection
with such transaction. The Dealer affirms that the Dealer Manager's liability
for commissions payable is limited solely to the proceeds of commissions
receivable associated therewith, and the Dealer hereby waives any and all rights
to receive payment of commissions due until such time as the Dealer Manager is
in receipt of the commission from the Company. In addition, as set forth in the
Prospectus, the Dealer Manager may, in its sole discretion, reallow a portion of
the dealer manager fee earned on the proceeds raised by a Dealer. This
reallowance would be in the form of a marketing fee and may also include a
reimbursement of certain of a Dealer's distribution-related costs, such as the
costs and expenses of attending educational conferences sponsored by the Dealer
Manager and direct attendance fees the Company may pay for employees of the
Dealer Manager or its affiliates to attend a seminar sponsored by a Dealer. The
Dealer Manager may also reimburse bona fide due diligence expenses of a Dealer
in an amount up to 0.5% of the gross offering proceeds attributable to such
Dealer.
The parties hereby agree that the foregoing commission is not in excess of
the usual and customary distributors' or sellers' commission received in the
sale of securities similar to the Shares, that Dealer's interest in the offering
is limited to such commission from the Dealer Manager and Dealer's indemnity
referred to in Section 6 of the Dealer Manager Agreement, and that the Company
is not liable or responsible for the direct payment of such commission to the
Dealer.
V. PAYMENT
Payments of selling commissions or any reallowance of a portion of the
dealer manager fee will be made by the Dealer Manager (or by the Company as
provided in the Dealer Manager Agreement) to Dealer within 30 days of the
receipt by the Dealer Manager of the gross commission payments from the Company.
Dealer acknowledges that if the Company pays selling commissions to the Dealer
Manager, Company is relieved of any obligation for selling commissions to the
Dealer. Company may rely on and use the preceding acknowledgment as a defense
against any claim by Dealer for selling commissions Company pays to Dealer
Manager but that Dealer Manager fails to remit to Dealer.
VI. RIGHT TO REJECT ORDERS OR CANCEL SALES
All orders, whether initial or additional, are subject to acceptance by and
shall only become effective upon confirmation by the Company, which reserves the
right to reject any order. Orders not accompanied by a Subscription Signature
Page and the required check in payment for the Shares may be rejected. Issuance
and delivery of the Shares will be made only after actual receipt of payment
therefor. If any check is not paid upon presentment, or if the Company is not in
actual receipt of clearinghouse funds or cash, certified or cashier's check or
the equivalent in payment for the Shares within 15 days of
-3-
sale, the Company reserves the right to cancel the sale without notice. In the
event an order is rejected, canceled or rescinded for any reason, the Dealer
agrees to return to the Dealer Manager any commission theretofore paid with
respect to such order.
VII. PROSPECTUS AND SUPPLEMENTAL INFORMATION
Dealer is not authorized or permitted to give, and will not give, any
information or make any representation concerning the Shares except as set forth
in the Prospectus and supplemental information. The Dealer Manager will supply
Dealer with reasonable quantities of the Prospectus, as well as any Supplemental
Information, for delivery to investors, and Dealer will deliver a copy of the
Prospectus as required by the Securities Act, the Exchange Act, and the Rules
and Regulations. The Dealer agrees that it will not send or give any
Supplemental Information to an investor unless it has previously sent or given a
Prospectus to that investor or has simultaneously sent or given a Prospectus
with such Supplemental Information. Dealer agrees that it will not show or give
to any investor or prospective Investor or reproduce any material or writing
that is supplied to it by the Dealer Manager and marked "dealer only" or
otherwise bearing a legend denoting that it is not to be used in connection with
the sale of Shares to members of the public. Dealer agrees that it will not use
in connection with the offer or sale of Shares any material or writing that
relates to another company supplied to it by the Company or the Dealer Manager
bearing a legend that states that such material may not be used in connection
with the offer or sale of any securities of the Company. Dealer further agrees
that it will not use in connection with the offer or sale of Shares any
materials or writings that have not been previously approved by the Dealer
Manager. Each Dealer agrees, if the Dealer Manager so requests, to furnish a
copy of any revised Preliminary Prospectus to each person to whom it has
furnished a copy of any previous Preliminary Prospectus, and further agrees that
it will itself mail or otherwise deliver all preliminary and final Prospectuses
required for compliance with the provisions of Rule 15c2-8 under the Securities
Exchange Act of 1934. Regardless of the termination of this Agreement, Dealer
will deliver a Prospectus in transactions in the Shares for a period of 90 days
from the effective date of the Registration Statement or such longer period as
may be required by the Exchange Act or the Exchange Act Rules and Regulations
thereunder. On becoming a Dealer, and in offering and selling Shares, Dealer
agrees to comply with all the applicable requirements under the Securities Act
and the Exchange Act.
VIII. LICENSE AND ASSOCIATION MEMBERSHIP
Dealer's acceptance of this Agreement constitutes a representation to the
Company and the Dealer Manager that Dealer is a broker-dealer properly
registered with the SEC, duly authorized to sell Shares under federal and state
securities laws and regulations and in all states where it offers or sells
Shares, and that it is a member in good standing of the NASD. This Agreement
shall automatically terminate if the Dealer ceases to be a member in good
standing of such association. Dealer agrees to notify the Dealer Manager
immediately if Dealer ceases to be a member in good standing. The Dealer Manager
hereby agrees to abide by the Rules of Fair Practice of the NASD and to comply
with Rules 2730, 2740, 2420 and 2750 of the NASD Conduct Rules.
IX. ANTI-MONEY LAUNDERING COMPLIANCE PROGRAMS
Dealer's acceptance of this Agreement constitutes a representation to the
Company and the Dealer Manager that Dealer has established and implemented
anti-money laundering compliance programs in accordance with NASD Rule 3011,
Section 352 of the Money Laundering Abatement Act and Sections 103.19, 103.35,
and 103.122 of the regulations of the U.S. Treasury Department, and is in
compliance with all applicable Executive Orders and Federal Regulations
administered by the U.S. Treasury Department's Office of Foreign Assets Control.
Further, Dealer agrees, upon receipt of an "information request" issued under
Section 314 (a) of the USA Patriot Act to provide the Financial Crimes
-4-
Enforcement Network with information regarding: (i) the identity of a specified
individual or organization; (ii) account number; (iii) all identifying
information provided by the account holder; and (iv) the date and type of
transaction. The Dealer Manager from time to time will monitor account activity
to identify patterns of unusual size or volume, geographic factors, and any
other potential signals of suspicious activity, including possible money
laundering or terrorist financing. The Company and the Dealer Manager reserve
the right to reject account applications from new customers who fail to provide
necessary account information or who intentionally provide misleading
information.
X. LIMITATION OF OFFER
Dealer will offer Shares only to persons who meet the financial
qualifications set forth in the Prospectus or in any suitability letter or
memorandum sent to it by the Company or the Dealer Manager and will only make
offers to persons in the states in which it is advised in writing that the
Shares are qualified for sale or that such qualification is not required. In
offering Shares, Dealer will comply with the provisions of the Rules of Fair
Practice set forth in the NASD Manual, as well as all other applicable rules and
regulations relating to suitability of investors, including without limitation,
the provisions of Article III.C. of the Statement of Policy Regarding Real
Estate Investment Trusts of the North American Securities Administrators
Association, Inc.
XI. TERMINATION
Dealer will suspend or terminate its offer and sale of Shares upon the
request of the Company or the Dealer Manager at any time and will resume its
offer and sale of Shares hereunder upon subsequent request of the Company or the
Dealer Manager. Any party may terminate this Agreement by written notice. Such
termination shall be effective 48 hours after the mailing of such notice. This
Agreement and the exhibits hereto are the entire agreement of the parties and
supersede all prior agreements, if any, relating to the subject matter hereof
between the parties hereto.
This Agreement may be amended at any time by the Dealer Manager by written
notice to the Dealer, and any such amendment shall be deemed accepted by Dealer
upon placing an order for sale of Shares after he has received such notice.
XII. PRIVACY LAWS
The Dealer Manager and Dealer (each referred to individually in this
section as "party") agree as follows:
A. Each party agrees to abide by and comply with (i) the privacy standards
and requirements of the Xxxxx-Xxxxx-Xxxxxx Act of 1999 ("GLB ACT"), (ii) the
privacy standards and requirements of any other applicable federal or state law,
and (iii) its own internal privacy policies and procedures, each as may be
amended from time to time.
B. Each party agrees to refrain from the use or disclosure of nonpublic
personal information (as defined under the GLB Act) of all customers who have
opted out of such disclosures except as necessary to service the customers or as
otherwise necessary or required by applicable law; and
C. Each party shall be responsible for determining which customers have
opted out of the disclosure of nonpublic personal information by periodically
reviewing and, if necessary, retrieving a list of such customers (the "LIST") as
provided by each to identify customers that have exercised their opt-out rights.
The List shall be made available to both parties and to the Company. Each party
understands that
-5-
each is prohibited from using or disclosing any nonpublic personal information
of any customer that is identified on the List as having opted out of such
disclosures.
XIII. NOTICE
All notices or other communications required or permitted hereunder shall
be in writing and shall be deemed given or delivered: (i) when delivered
personally or by commercial messenger; (ii) one business day following deposit
with a recognized overnight courier service, provided such deposit occurs prior
to the deadline imposed by such service for overnight delivery; (iii) when
transmitted, if sent by facsimile copy, provided confirmation of receipt is
received by sender and such notice is sent by an additional method provided
hereunder, in each case above provided such communication is addressed to the
intended recipient thereof as set forth below:
If to the Dealer Manager: Xxxxx Investment Securities, Inc.
0000 Xxx Xxxxxxx Xxxxxxx,
Xxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxxx
Facsimile No. (000) 000-0000
If to a Dealer, to the address or facsimile number and address specified by
Dealer on the signature page hereto.
XIV. ATTORNEY'S FEES AND APPLICABLE LAW
In any action to enforce the provisions of this Agreement or to secure
damages for its breach, the prevailing party shall recover its costs and
reasonable attorney's fees. This Agreement shall be construed under the laws of
the State of Georgia and shall take effect when signed by Dealer and
countersigned by the Dealer Manager.
THE DEALER MANAGER:
XXXXX INVESTMENT SECURITIES, INC.
Attest:
By: By:
--------------------------------- ------------------------------------
Name: Xxxxxx X. Xxxxxx
------------------------------- President
Title:
------------------------------
-6-
We have read the foregoing Agreement and we hereby accept and agree to the
terms and conditions therein set forth. We hereby represent that the list below
of jurisdictions in which we are registered or licensed as a broker or dealer
and are tally authorized to sell securities is true and correct, and we agree to
advise you of any change in such list during the term of this Agreement.
1. IDENTITY OF DEALER:
Name: __________________________________________________________________________
Type of entity: _______________________________________________________________
(to be completed by Dealer) (corporation,
partnership or proprietorship)
Organized in the State of ______________________________________________________
(to be completed by Dealer) (State)
Licensed as broker-dealer in the following States:
________________________________________________________________________________
(to be completed by Dealer)
Tax I.D. #: ____________________________________________________________________
2. PERSON TO RECEIVE NOTICE PURSUANT TO SECTION XIII.
Name: __________________________________________________________________________
Company: _______________________________________________________________________
Address: _______________________________________________________________________
City, State and Zip Code: ______________________________________________________
Telephone No.: _________________________________________________________________
Facsimile No.: _________________________________________________________________
E-mail Address: ________________________________________________________________
AGREED TO AND ACCEPTED BY THE DEALER:
Date:
------------------------------------- ---------------------
(Dealer's Firm Name)
By:
---------------------------------
Signature
Title:
------------------------------
-7-
