EX-1.3 2 d926091dex13.htm SELECTED DEALER AGREEMENT CNL HEALTHCARE PROPERTIES, INC. UP TO $1,000,000,000 SHARES OF COMMON STOCK SELECTED DEALER AGREEMENT February 25, 2015 SELECTED DEALER AGREEMENT Ameriprise Financial Services, Inc.
Exhibit 1.3
CNL HEALTHCARE PROPERTIES, INC.
UP TO $1,000,000,000 SHARES OF COMMON STOCK
February 25, 2015
Ameriprise Financial Services, Inc.
000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Ladies and Gentlemen:
Each of CNL Healthcare Properties, Inc., a Maryland corporation (the “Company”), CNL Securities Corp., a Florida corporation (the “Dealer Manager”), CNL Healthcare Corp., a Florida corporation (the “Advisor”), and CNL Financial Group, LLC, a Florida limited liability company ( the “Sponsor”), hereby confirms its agreement with Ameriprise Financial Services, Inc., a Delaware corporation (“Ameriprise”), as follows:
1. Introduction. This Selected Dealer Agreement (the “Agreement”) sets forth the understandings and agreements whereby Ameriprise will offer and sell on a best efforts basis for the account of the Company shares of common stock (the “Common Stock”), par value $0.01 per share (each a “Share,” and collectively, the “Shares”), of the Company registered pursuant to the Registration Statement (as defined below) at the per share price set forth in the Registration Statement from time to time (subject to certain volume and other discounts described therein) (the “Offering”), pursuant to which Shares are also being offered pursuant to the Company’s Distribution Reinvestment Plan (the “DRIP”). The Shares are more fully described in the Registration Statement referred to below.
Ameriprise is hereby invited to act as a Selected Dealer for the Offering, subject to the other terms and conditions set forth below.
2. Representations and Warranties of the Company, the Dealer Manager, the Advisor and the Sponsor.
The Company, the Dealer Manager, the Advisor and the Sponsor (collectively, the “Issuer Entities”), jointly and severally, represent, warrant and covenant with Ameriprise for Ameriprise’s benefit that, as of the date hereof and at all times during the term of this Agreement:
(a) Registration Statement and Prospectus. The Company has filed with the Securities and Exchange Commission (the “Commission”) an effective registration statement on Form S-11 (File No. 333-196108), for the registration of up to $1,000,000,000 Shares under the Securities Act of 1933, as amended (the “Securities Act”) and the regulations thereunder (the “Regulations”). The registration statement, as amended, and the prospectus, as amended or supplemented, on file with the Commission at the Effective Date (as defined below) of the registration statement (including financial statements, exhibits and all other documents related thereto filed as a part thereof or incorporated therein), and any registration statement filed under Rule 462(b) of the Securities Act, are respectively hereinafter referred to as the “Registration Statement” and the “Prospectus,” except that if the Registration Statement is amended by a post-effective amendment, the term “Registration Statement” shall, from and after the declaration of effectiveness of such post-effective amendment, refer to the Registration Statement as so amended and the term “Prospectus” shall refer to the Prospectus as so amended or supplemented to date, and if any Prospectus filed by the Company pursuant to Rule 424(b) or 424(c) of the Regulations shall differ from the Prospectus on file at the time the Registration Statement or any post-effective amendment shall become effective, the term “Prospectus” shall refer to the Prospectus filed pursuant to either of such Rules from and after the date on which it shall have been filed with the Commission. Further, if a
separate prospectus is filed and becomes effective with respect solely to the DRIP, the term “Prospectus” shall refer to such prospectus from and after the declaration of effectiveness of the same, as such prospectus may be amended or supplemented from time to time.
(b) Compliance with the Securities Act. The Registration Statement has been prepared and filed by the Company and has been declared effective by the Commission, and the Shares have been qualified for sale under the respective securities laws of such jurisdictions as indicated in the Blue Sky Memorandum (defined in Section 4(d) herein), as updated from time to time pursuant to the terms of Section 4(d). Neither the Commission nor any state securities authority has issued any order preventing or suspending the use of any Prospectus filed with the Registration Statement or any amendments or supplements thereto and no proceedings for that purpose have been instituted, or to the Company’s knowledge, are threatened or contemplated by the Commission or by the states securities authorities. At the time the Registration Statement became effective (the “Effective Date”) and at the time that any post-effective amendments thereto or any additional registration statement filed under Rule 462(b) of the Securities Act becomes effective, the Registration Statement or any amendment thereto (1) complied, or will comply, as to form in all material respects with the requirements of the Securities Act and the Regulations and (2) did not or will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading. When the Prospectus or any amendment or supplement thereto is filed with the Commission pursuant to Rule 424(b) or 424(c) of the Regulations and at all times subsequent thereto through the date on which the Offering is terminated (“Termination Date”), the Prospectus will comply in all material respects with the requirements of the Securities Act and the Regulations, and will not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Any Prospectus delivered to Ameriprise will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(c) The Company. The Company has been duly incorporated and validly exists as a corporation in good standing under the laws of the State of Maryland with full power and authority to conduct the business in which it is engaged as described in the Prospectus, including without limitation to acquire properties as more fully described in the Prospectus, including land and buildings, as well as properties upon which properties are to be constructed for the Company or to be owned by the Company (the “Properties”), make or invest in mortgage loans or other debt instruments, or make other permitted investments, as referred to in the Prospectus. The Company and each of its subsidiaries is duly qualified to do business as a foreign corporation, limited liability company or limited partnership, as applicable, and is in good standing in each other jurisdiction in which it owns or leases property of a nature, or transacts business of a type that would make such qualification necessary except where the failure to be so qualified or in good standing could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The term “Material Adverse Effect” means a material adverse effect on, or material adverse change in, the general affairs, business, prospects, properties, operations, condition (financial or otherwise) or results of operations of the Company and its subsidiaries, taken as a whole, whether or not arising in the ordinary course of business.
(d) The Shares. The Shares, when issued, will be duly and validly issued, fully paid and non-assessable and will conform in all material respects to the description thereof contained in the Prospectus; no holder thereof will be subject to personal liability for the obligations of the Company solely by reason of being such a holder; such Shares are not subject to the preemptive rights of any stockholder of the Company; and all corporate action required to be taken for the authorization, issuance and sale of such Shares has been validly and sufficiently taken. All shares of the Company’s issued and outstanding capital stock have been duly authorized and validly issued and are fully paid and non-assessable; none of the outstanding shares of capital stock of the Company were issued in violation of the preemptive or other similar rights of any stockholder of the Company.
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(e) Capitalization. The authorized capital stock of the Company conforms in all material respects to the description thereof contained in the Prospectus under the caption “Summary of the Charter and Bylaws — Description of Capital Stock.” Except as disclosed in the Prospectus, no shares of Common Stock have been or are to be reserved for any purpose; there are no outstanding securities convertible into or exchangeable for any shares of Common Stock; and there are no outstanding options, rights (preemptive or otherwise) or warrants to purchase or subscribe for shares of Common Stock or any other securities of the Company.
(f) Violations. No Issuer Entity or any respective subsidiary thereof is (i) in violation of its charter or bylaws, its partnership agreement, declaration of trust or trust agreement, or limited liability company agreement (or other similar agreement), as the case may be; (ii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which such Issuer Entity is a party or by which any of them may be bound or to which any of the respective properties or assets of such Issuer Entity is subject (collectively, “Agreements and Instruments”); or (iii) in violation of any law, order, rule or regulation, writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its property, except in the case of clauses (ii) and (iii), where such conflict, breach, violation or default would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The execution, delivery and performance by each Issuer Entity, as applicable, of this Agreement, that certain Dealer Manager Agreement between the Dealer Manager and the Company (the “Dealer Manager Agreement”), the Selected Dealer Agreements between the Dealer Manager and, with the exception of Ameriprise, each of the selected dealers soliciting subscriptions for shares of the Company’s common stock pursuant to the Offering (collectively, the “Selected Dealer Agreements”) and the Advisory Agreement between the Company and the Advisor (as amended, the “Advisory Agreement”), and the consummation of the transactions contemplated herein and therein (including the issuance and sale of the Shares and the use of the proceeds from the sale of the Shares as described in the Prospectus under the caption “Estimated Use of Proceeds”) and compliance by the Issuer Entities with their obligations hereunder and thereunder do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, default or Repayment Event (as defined below) under any of the Agreements and Instruments, or result in the creation or imposition of any Lien (as defined below) upon any property or assets of any Issuer Entity or any respective subsidiary thereof (except for such conflicts, breaches, defaults or Repayment Events or Liens that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect) nor will such action result in any violation of the provisions of the charter or bylaws (or similar document) of any Issuer Entity or respective subsidiary thereof or any applicable law, rule, regulation, or governmental or court judgment, order, writ or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over Issuer Entities or any of their properties, except for such violations that would not reasonably be expected to have a Material Adverse Effect. As used herein, a “Repayment Event” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by an Issuer Entity or any respective subsidiary thereof. “Lien” means any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on any asset.
(g) Financial Statements. The consolidated financial statements of the Company and the financial statements of each entity acquired by the Company (each, an “Acquired Entity”), including the schedules and notes thereto, filed as part of the Registration Statement and those included or incorporated
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by reference in the Prospectus present fairly in all material respects the financial position of the Company, its consolidated subsidiaries and each Acquired Entity, as applicable, as of the date indicated and the results of its operations, stockholders’ equity and cash flows of the Company, and its consolidated subsidiaries and each Acquired Entity, as applicable, for the periods specified; said financial statements have been prepared in conformity with U.S. generally accepted accounting principles applied on a consistent basis or, if such entity is a foreign entity, such other accounting principles applicable to such foreign entity, (except as may be expressly stated in the related notes thereto) and comply with the requirements of Regulation S-X promulgated by the Commission. PricewaterhouseCoopers LLP, whose report is filed with the Commission as a part of the Registration Statement, are, with respect to the Company and its subsidiaries, independent accountants as required by the Securities Act and the Regulations and have been registered with the Public Company Accounting Oversight Board. The selected financial data and the summary financial information included in or incorporated by reference in the Prospectus present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included or incorporated by reference in the Registration Statement. The pro forma financial statements and the related notes thereto included in the Registration Statement and the Prospectus, or incorporated by reference therein, present fairly the information shown therein, have been prepared in accordance with the Commission’s rules and guidelines with respect to pro forma financial statements and have been properly compiled on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. All disclosures contained in the Registration Statement or the Prospectus, or incorporated by reference therein, regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission) comply in all material respects with Regulation G of the Securities Exchange Act of 1934 (the “Exchange Act”) and Item 10 of Regulation S-K of the Securities Act, to the extent applicable.
(h) Reserved.
(i) No Subsequent Material Events. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as may otherwise be stated in or contemplated by the Registration Statement and the Prospectus, (a) there has not been any Material Adverse Effect, (b) there have not been any material transactions entered into by the Company except in the ordinary course of business, (c) there has not been any material increase in the long-term indebtedness of the Company and (d) except for regular dividends on theCompany’s common stock, there has been no distribution of any kind declared, paid or made by the Company on any class of its capital stock.
(j) Investment Company Act. The Company is not, will not become by virtue of the transactions contemplated by this Agreement and the application of the net proceeds therefrom as contemplated in the Prospectus, and does not intend to conduct its business so as to be, an “investment company” as that term is defined in the Investment Company Act of 1940, as amended and the rules and regulations thereunder, and it will exercise reasonable diligence to ensure that it does not become an “investment company” within the meaning of the Investment Company Act of 1940.
(k) Authorization of Agreements. This Agreement, the Dealer Manager Agreement, the Selected Dealer Agreements and the Advisory Agreement between the Company, the Dealer Manager and the Advisor, as applicable, have been duly and validly authorized, executed and delivered by the Company, the Dealer Manager and the Advisor, as applicable, and constitute valid, binding and enforceable agreements of the Company, the Dealer Manager and the Advisor, as applicable, except to the extent that (i) enforceability may be limited by (a) the effect of bankruptcy, insolvency or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally; or (b) the effect of general principles of equity; or (ii) the enforceability of the indemnity and/or contribution provisions contained in the Dealer Manager Agreement, the Selected Dealer Agreements, the Advisory Agreement
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and Section 8 of this Agreement may be limited under applicable securities laws and/or the Statement of Policy Regarding Real Estate Investment Trusts, as reviewed and adopted by membership of the North American Securities Administrators Association ( the “NASAA Guidelines”).
(l) The Advisor. The Advisor has been duly organized and validly exists as a corporation in good standing under the laws of the State of Florida with full power and authority to conduct the business in which it is engaged as described in the Prospectus. The Advisor is duly qualified to do business as a foreign limited liability company and is in good standing in each other jurisdiction in which it owns or leases property of a nature, or transacts business of a type, that would make such qualification necessary except where the failure to be so qualified or in good standing could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(m) The Dealer Manager. The Dealer Manager has been duly organized and validly exists as a corporation in good standing under the laws of the State of Florida with full power and authority to conduct the business in which it is engaged as described in the Prospectus. The Dealer Manager is duly qualified to do business as a foreign limited liability company and is in good standing in each other jurisdiction in which it owns or leases property of a nature, or transacts business of a type, that would make such qualification necessary except where the failure to be so qualified or in good standing could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(n) The Sponsor. The Sponsor has been duly organized and validly exists as a limited liability company in good standing under the laws of the State of Florida with full power and authority to conduct the business in which it is engaged as described in the Prospectus. The Sponsor is duly qualified to do business as a foreign limited liability company and is in good standing in each other jurisdiction in which it owns or leases property of a nature, or transacts business of a type, that would make such qualification necessary except where the failure to be so qualified or in good standing could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(o) Description of Agreements. The Company is not a party to or bound by any contract or other instrument of a character required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement that is not described and filed as required.
(p) Qualification as a Real Estate Investment Trust. Commencing with its taxable year ended December 31, 2012, the Company has been organized and has operated in conformity with the requirements for qualification as a real estate investment trust under the Internal Revenue Code of 1986 as amended (the “Code”) and its actual method of operation as described in the Prospectus will enable it to continue to meet the requirements for qualification and taxation as a real estate investment trust under the Code.
(q) Xxxxx-Xxxxx-Xxxxxx Act and USA Patriot Act. The Company complies in all material respects with applicable privacy provisions of the Xxxxx-Xxxxx-Xxxxxx Act and applicable provisions of the USA Patriot Act.
(r) Sales Material. All advertising and supplemental sales literature prepared or approved by the Company or any of its affiliates (whether designated solely for broker-dealer use or otherwise) to be used or delivered by the Company or any of its affiliates or Ameriprise in connection with the Offering of the Shares will not contain an untrue statement of material fact or omit to state a material fact required to be stated therein, in light of the circumstances under which they were made and when read in conjunction with the Prospectus, not misleading. Furthermore, all such advertising and supplemental sales literature has, or will have, received all required regulatory approval, which may include but is not limited to, the Commission, the Financial Industry Regulatory Authority, Inc. (“FINRA”) and state securities agencies,
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as applicable. Any required consent and authorization has been obtained for the use of any trademark or service xxxx in any sales literature or advertising delivered by the Company to Ameriprise or approved by the Company for use by Ameriprise and, to the Company’s knowledge, its use does not constitute the unlicensed use of intellectual property.
(s) Good Standing of Subsidiaries. Each “significant subsidiary” of the Company (as such term is defined in Rule 1-02 of Regulation S-X) and each other entity in which the Company holds a direct or indirect ownership interest that is material to the Company (each a “Subsidiary” and, collectively, the “Subsidiaries”) has been duly organized or formed and is validly existing as a corporation, partnership, limited liability company or similar entity in good standing under the laws of the jurisdiction of its incorporation, has power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect. Except as otherwise disclosed in the Registration Statement, all of the issued and outstanding equity securities of each such Subsidiary have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the Company, directly or through subsidiaries, free and clear of Lien, claim or equity other than such Liens, claims or equities that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. None of the outstanding shares of capital stock of any Subsidiary was issued in violation of the preemptive or similar rights of any stockholder of such Subsidiary. The only Subsidiaries of the Company as of the date of the Registration Statement or the most recent amendment to the Registration Statement, as applicable, are the subsidiaries listed on Exhibit 21.1 to the Registration Statement or such amendment to the Registration Statement.
(t) No Pending Action. Except as disclosed in the Registration Statement, there is no action, suit or proceeding pending, or, to the knowledge of the Company, threatened or contemplated before or by any arbitrator, court or other government body, domestic or foreign, against or affecting any Issuer Entity or any respective subsidiary thereof which is required to be disclosed in the Registration Statement (other than as disclosed therein), or which would reasonably be expected to result in a Material Adverse Effect, or which would reasonably be expected to materially and adversely affect the consummation of the transactions contemplated by this Agreement. The aggregate of all pending legal or governmental proceedings to which any Issuer Entity or any respective subsidiary thereof is a party or of which any of their respective properties or assets is the subject which are not described in the Registration Statement, including ordinary routine litigation incidental to the business, would not reasonably be expected to result in a Material Adverse Effect.
(u) Possession of Intellectual Property. The Company and its Subsidiaries own or possess, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, “Intellectual Property”) necessary to carry on the business now operated by them, and neither the Company nor any of its Subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its Subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.
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(v) Absence of Further Requirements. No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Company of its obligations under this Agreement, the Dealer Manager Agreement, the Selected Dealer Agreements and the Advisory Agreement, in connection with the offering, issuance or sale of the Shares or the consummation of the other transactions contemplated by this Agreement, the Dealer Manager Agreement, the Selected Dealer Agreements and the Advisory Agreement, except such as have been already made or obtained under the Securities Act, the Exchange Act, the rules of FINRA, including NASD rules, or as may be required under the securities laws of the fifty states, the District of Columbia and U.S. territories indicated in the Blue Sky Memorandum (defined in Section 4(d) of this Agreement).
(w) Possession of Licenses and Permits. The Company and its Subsidiaries possess such permits, licenses, approvals, consents and other authorizations (collectively, “Governmental Licenses”) issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by them (except such Governmental Licenses, the failure of which to possess, would not reasonably be expected to have a Material Adverse Effect), and the Company and its Subsidiaries are in compliance in all material respects with the terms and conditions of all such Governmental Licenses. All of the Governmental Licenses are valid and in full force and effect; and neither the Company nor any of its Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses.
(x) Partnership Agreements. Each of the partnership agreements, declarations of trust or trust agreements, limited liability company agreements (or other similar agreements) and, if applicable, joint venture agreements to which the Company or any of its Subsidiaries is a party has been duly authorized, executed and delivered by the Company or the relevant Subsidiary, as the case may be, and constitutes the valid and binding agreement of the Company or such Subsidiary, as the case may be, enforceable in accordance with its terms, except as the enforcement thereof may be limited by (A) the effect of bankruptcy, insolvency or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally or (B) the effect of general principles of equity, and the execution, delivery and performance of such agreements did not, at the time of execution and delivery, and does not constitute a breach of or default under the charter or bylaws, partnership agreement, declaration of trust or trust agreement, or limited liability company agreement (or other similar agreement), as the case may be, of the Company or any of its Subsidiaries or any of the Agreements and Instruments or any law, administrative regulation or administrative or court order or decree.
(y) Properties. Except as otherwise disclosed in the Prospectus: (i) the Company and its Subsidiaries have good and insurable or good, valid and, with respect to U.S. properties, insurable title (either in fee simple or pursuant to a valid leasehold, permit or concession interest) to all Properties and assets described in the Prospectus as being owned or leased, permitted or concessioned, as the case may be, by them and to all properties reflected in the Company’s most recent consolidated financial statements included or incorporated by reference in the Prospectus, and neither the Company nor any of its Subsidiaries has received notice of any claim that has been or may be asserted by anyone adverse to the rights of the Company or any Subsidiary with respect to any such Properties or assets (or any such lease, permit or concession interest) or affecting or questioning the rights of the Company or any such Subsidiary to the continued ownership, lease, possession or occupancy of such Property or assets, except for such claims that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (ii) there are no Liens, claims or restrictions on or affecting the properties and assets of the Company or any of its Subsidiaries which would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; (iii) no person or entity, including, without limitation, any tenant under any of the leases pursuant to which the Company or any of its Subsidiaries leases (as lessor) any of its Properties (whether directly or indirectly through other partnerships, limited liability companies, business trusts, joint ventures or otherwise) has an option or right of first refusal or any other right to purchase any of such Properties, except for such options, rights of first refusal or other rights to
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purchase which, individually or in the aggregate, are not material with respect to the Company and its Subsidiaries taken as a whole; (iv) to the Company’s knowledge, each of the Properties of the Company or any of its Subsidiaries has access to public rights of way, either directly or through easements (insured easements with respect to U.S. properties), except where the failure to have such access would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (v) to the Company’s knowledge, each of the Properties of the Company or any of its Subsidiaries is served by all public utilities necessary for the current operations on such Property in sufficient quantities for such operations, except where the failure to have such public utilities could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (vi) to the knowledge of the Company, each of the Properties of the Company or any of its Subsidiaries complies with all applicable codes and zoning and subdivision laws and regulations, except for such failures to comply which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (vii) all of the leases, permits or concession interests under which the Company or any of its Subsidiaries holds or uses any real property or improvements or any equipment relating to such real property or improvements are in full force and effect, except where the failure to be in full force and effect could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and neither the Company nor any of its Subsidiaries is in default in the payment of any amounts due under any such leases, permits or concession interests or in any other default thereunder and the Company knows of no event which, with the passage of time or the giving of notice or both, could constitute a default under any such lease, permit or concession interest except such defaults that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (viii) to the knowledge of the Company, there is no pending or threatened condemnation, zoning change, or other proceeding or action that could in any manner affect the size of, use of, improvements on, construction on or access to the Properties of the Company or any of its Subsidiaries, except such proceedings or actions that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; and (ix) neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any lessee of any of the real property or improvements of the Company or any of its Subsidiaries is in default in the payment of any amounts due or in any other default under any of the leases pursuant to which the Company or any of its Subsidiaries leases (as lessor) any of its real property or improvements (whether directly or indirectly through partnerships, limited liability companies, joint ventures or otherwise), and the Company knows of no event which, with the passage of time or the giving of notice or both, would constitute such a default under any of such leases, except in each case such defaults as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(z) Insurance. The Company and/or its Subsidiaries have title insurance on all U.S. real property and improvements described in the Prospectus as being owned or leased under a ground lease, permit or concession interest as the case may be, by them and to all U.S. real property and improvements reflected in the Company’s most recent consolidated financial statements included or incorporated by reference in the Prospectus in an amount at least equal to the original purchase price paid to the sellers of such Property, except as otherwise disclosed in the Prospectus, and the Company and its subsidiaries are entitled to all benefits of the insured thereunder. Each Property described in the Prospectus is insured by extended coverage hazard and casualty insurance carried by either the tenant or the Company and its Subsidiaries in amounts and on such terms as are customarily carried by owners or lessors of properties similar to those owned by the Company and its Subsidiaries (in the markets in which the Company’s and Subsidiaries’ respective properties are located), and either the tenant or the Company or its Subsidiaries carry comprehensive general liability insurance and such other insurance as is customarily carried by owners or lessors of properties similar to those owned by the Company and its Subsidiaries in amounts and on such terms as are customarily carried by owners or lessors of properties similar to those owned by the Company and its subsidiaries (in the markets in which the Company’s and its Subsidiaries’ respective Properties are located) and the Company or one of its Subsidiaries is named as an additional insured and/or loss payee, as applicable, on all policies (except workers’ compensation) required under the leases for such Properties.
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(aa) Environmental Matters. Except as otherwise disclosed in the Prospectus: (i) all real property and improvements owned or leased by the Company or any of its Subsidiaries, including, without limitation, the Environment (as defined below) associated with such real property and improvements, is free of any Contaminant (as defined below) in violation of applicable Environmental Laws (as defined below) except for such violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (ii) neither the Company, nor any of its Subsidiaries has caused or suffered to exist or occur any Release (as defined below) of any Contaminant into the Environment in violation of any applicable Environmental Law that would reasonably be expected to have a Material Adverse Effect or could result in a violation of any applicable Environmental Laws, except for such violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (iii) neither the Company nor any of its Subsidiaries is aware of any notice from any governmental body claiming any violation of any Environmental Laws or requiring or calling for any work, repairs, construction, alterations, removal or remedial action or installation by the Company or any of its subsidiaries on or in connection with such real property or improvements, whether in connection with the presence of asbestos-containing materials or mold in such properties or otherwise, except for any such violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, or any such work, repairs, construction, alterations, removal or remedial action or installation, if required or called for, which would not result in the incurrence of liabilities by the Company, which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect, nor is the Company aware of any information which may serve as the basis for any such notice that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (iv) neither the Company nor any of its Subsidiaries has caused or suffered to exist or occur any environmental condition on any of the properties or improvements of the Company or any of its Subsidiaries that could reasonably be expected to give rise to the imposition of any Lien under any Environmental Laws except such Liens which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect; and (v) to the Company’s knowledge, no real property or improvements owned or leased by the Company or any of its Subsidiaries is being used or has been used for manufacturing or for any other operations that involve or involved the use, handling, transportation, storage, treatment or disposal of any Contaminant, where such operations require or required permits or are or were otherwise regulated pursuant to the Environmental Laws and where such permits have not been or were not obtained or such regulations are not being or were not complied with, except in all instances where any failure to obtain a permit or comply with any regulation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. “Contaminant” means any pollutant, hazardous substance, toxic substance, hazardous waste, special waste, petroleum or petroleum-derived substance or waste, asbestos or asbestos-containing materials, PCBs, lead, pesticides or regulated radioactive materials or any constituent of any such substance or waste, as identified or regulated under any Environmental Law. “Environmental Laws” means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq., the Clean Air Act, 42 U.S.C. 7401, et seq., the Clean Water Act, 33 U.S.C. 1251, et seq., the Toxic Substances Control Act, 15 U.S.C. 2601, et seq., the Occupational Safety and Health Act, 29 U.S.C. 651, et seq., and all other federal, state and local laws, ordinances, regulations, rules, orders, decisions and permits, which are directed at the protection of human health or the Environment. “Environment” means any surface water, drinking water, ground water, land surface, subsurface strata, river sediment, buildings, structures, and ambient air. “Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing of any Contaminant into the Environment, including, without limitation, the abandonment or discard of barrels, containers, tanks or other receptacles containing or previously containing any Contaminant or any release, emission or discharge as those terms are defined or used in any applicable Environmental Law.
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(bb) Registration Rights. There are no persons, other than the Company, with registration or other similar rights to have any securities registered pursuant to the Registration Statement or otherwise registered by the Company under the Securities Act, or included in the Offering contemplated hereby.
(cc) Finders’ Fees. Neither the Company nor any affiliate thereof has received or is entitled to receive, directly or indirectly, a finder’s fee or similar fee from any person other than that as described in the Prospectus in connection with the acquisition, or the commitment for the acquisition, of the Properties by the Company.
(dd) Taxes. The Company and each of its Subsidiaries has filed all material federal, state and foreign income tax returns and all other material tax returns which have been required to be filed on or before the due date thereof (taking into account all extensions of time to file) and all such tax returns are correct and complete in all material respects. The Company has paid or provided for the payment of all taxes reflected on its tax returns and all assessments received by the Company and each of its Subsidiaries to the extent that such taxes or assessments have become due, except where the Company is contesting such assessments in good faith and except for such taxes and assessments of immaterial amounts, the failure of which to pay would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. There are no audits, deficiencies or assessments pending against the Company or its Subsidiaries relating to income taxes, except where the Company is contesting such audit, deficiency or assessments in good faith.
(ee) Internal Controls. The Company maintains a system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) that complies with the requirements of the Exchange Act and has been designed by the Company’s principal executive officer and principal financial officer, or under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting is effective as of September 30, 2014 and the Company is not aware of any material weaknesses in its internal control over financial reporting. Since the date of the latest audited financial statements included or incorporated by reference in the Registration Statement, there has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
(ff) Disclosure Controls and Procedures. The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that comply with the requirements of the Exchange Act; such disclosure controls and procedures have been designed to ensure that material information relating to the Company and its Subsidiaries is made known to the Company’s principal executive officer and principal financial officer by others within those entities; and such disclosure controls and procedures are effective as of September 30, 2014.
(gg) Compliance with the Xxxxxxxx-Xxxxx Act. There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply in all material respects with any applicable provision of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations promulgated in connection therewith, including Section 402 related to loans and Sections 302 and 906 related to certifications.
(hh) No Fiduciary Duty. Each Issuer Entity acknowledges and agrees that Ameriprise is acting solely in the capacity of an arm’s length contractual counterparty to it with respect to the Offering of the Shares (including in connection with determining the terms of the Offering) and not as a financial advisor or a fiduciary to, or an agent of, such Issuer Entity or any other person. Additionally, Ameriprise is not advising the Issuer Entities or any other person as to any legal, tax, investment, accounting or
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regulatory matters in any jurisdiction. The Issuer Entities shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and Ameriprise shall have no responsibility or liability to the Issuer Entities with respect thereto. Any review by Ameriprise of the Issuer Entities, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of Ameriprise and shall not be on behalf of the Issuer Entities.
(ii) Insurance. The Dealer Manager and Advisor are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged and which they deem adequate; all policies of insurance insuring the Dealer Manager and Advisor or its respective business, assets, employees, officers and trustees, including their employees and officers errors and omissions insurance policy, are in full force and effect; the Dealer Manager and Advisor are in compliance with the terms of such policy in all material respects; and there are no claims by the Dealer Manager or Advisor under any such policy as to which any insurance company is denying liability or defending under a reservation of rights clause; the Dealer Manager or Advisor have not been refused any insurance coverage sought or applied for; and neither the Dealer Manager nor Advisor has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a material adverse effect on, or material adverse change in, the general affairs, business, operations, condition (financial or otherwise) or results of operations of the Dealer Manager and Advisor, taken as a whole, whether or not arising in the ordinary course of business, except as set forth in or contemplated in the Registration Statement and the Prospectus (exclusive of any supplement thereto).
(jj) Financial Resources. Each of the Dealer Manager and Advisor has the financial resources available to it necessary for the performance of its respective services and obligations as contemplated in the Registration Statement, the Prospectus, this Agreement, the Dealer Manager Agreement and Advisory Agreement, as applicable.
(kk) Advisory Internal Controls. The Advisor and the Company maintain a system of internal controls sufficient to provide reasonable assurance that (a) transactions effectuated by it under the Advisory Agreement are executed in accordance with its management’s general or specific authorization; and (b) access to the Company’s assets is permitted only in accordance with its management’s general or specific authorization.
(ll) Valuation.
(i) General. The Company’s Board of Directors (the “Board”) will value the Shares consistent with FINRA requirements and this Section 2(ll), and shall disclose such value in the Registration Statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q and/or Current Report on Form 8-K (collectively referred to as the “SEC Disclosure Documents”) filed with the Commission and in the Annual Report sent to investors in accordance with regulatory requirements. At a minimum, the Company will provide an estimated per share value based on the estimated fair value of the Company’s assets less liabilities under market conditions existing as of the date of valuation, referred to as Net Asset Value (“NAV”), and assuming the allocation of the resulting NAV among the Company’s common stockholders, to arrive at a Net Asset Value Per Share (“Per Share NAV”). The NAV and Per Share NAV will be determined by the Board in a manner consistent with the definition of fair value under generally accepted accounting principles of the Financial Accounting Standards Board, primarily as set forth in ASC 820, and the International Accounting Standards Board (as applicable), and consistent with the methodology set forth in Exhibit D. The Board will appoint the Audit Committee or another committee comprised of a majority of independent directors of the Company to be responsible for oversight of the valuation process (“Valuation Committee”), subject to the final approval of the Board.
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(ii) Independent Valuation Firm. The Company, with the approval of the Valuation Committee and the Board, will engage an independent third-party firm(s) (the “Independent Valuation Firm(s)”) for purposes of determining the reasonable range of Per Share NAV, provided, however, the Company will consult in advance with and thereafter notify Ameriprise in writing prior to the engagement of an Independent Valuation Firm (as used in this section, “in writing” to include electronic communications). However, for the avoidance of doubt, the engagement of the Independent Valuation Firm shall be the sole responsibility of the Company.
(iii) Independent Valuations. The Independent Valuation Firm has determined the reasonable range of Per Share NAV by the Effective Date. The Company shall have the Independent Valuation Firm determine the reasonable range of Per Share NAV no less frequently than every other year (i.e., the Independent Valuation Firm shall conduct a valuation at least every two (2) years).
As part of each valuation performed, the Independent Valuation Firm will perform or obtain current appraisals, utilizing recognized industry standards prescribed by the Uniform Standards of Professional Appraisal Practice (“USPAP”) or the similar industry standard for the country where the property appraisal is conducted, of each of the real estate properties and assign a discrete value for each such property pursuant to the methodology set forth in Exhibit D. All appraisals shall be conducted by appraisers possessing a Member Appraisal Institute (“MAI”) or similar designation or, for international appraisals, a public certified expert for real estate valuations, qualified to perform and oversee the appraisal work of the scope and nature described in Exhibit D. All appraisals shall be conducted on the basis of the income capitalization approach (including the discounted cash flow approach), the sales comparison approach or the cost approach, using whichever approaches and timing assumptions as are deemed the most appropriate by the Independent Valuation Firm based on the highest and best use of the properties being appraised, with consideration given to the income capitalization approach as the primary indicator of value, which method(s) shall be disclosed in the Company’s SEC Disclosure Documents.
(iv) Interim Valuations. In each year between independent valuations, the Board shall provide a Per Share NAV, which is reviewed and confirmed as within a reasonable range by the Independent Valuation Firm (each an “Interim Valuation”). The Company shall perform the first interim valuation no later than one (1) year after the effective date of the Offering. The Independent Valuation Firm shall include a review and confirmation of each of the following items relating to the Interim Valuation:
• | the reasonableness of the valuation process and methodology and conformity with real estate industry standards and practices relating to valuations; |
• | the reasonableness of the assumptions and data used in connection with the valuation of each real estate investment, including but not limited to rental rates, tenant improvements and concessions, lease renewal and option exercise probabilities, revenue and expense growth rates, going-in and residual capitalization rates, discount rates, and other assumptions and data deemed material to the valuation; and |
• | the final real estate investment valuation assigned by the Board. |
(v) Reports. For all determinations of Per Share NAV, the Company will obtain from the Independent Valuation Firm a written report, which shall set forth a summary analysis of the Independent Valuation Firm’s process and methodology undertaken in the valuation, a description of the
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scope of the review performed and any limitations thereto, the data and assumptions used for the review, the applicable industry standards used for the valuation, any other matters related to the valuation analysis and an opinion as to a reasonable range of NAV and reasonable range of Per Share NAV.
Upon the issuance of the Independent Valuation Firm’s report to Company, as part of Ameriprise’s on-going due diligence review of the Company, the Company will immediately notify and thereafter, subject to Ameriprise’s execution and delivery to the Company and the Independent Valuation Firm of a non-disclosure agreement, substantially consistent with the form attached hereto as Exhibit E, provide Ameriprise with access to and sufficient time to review supporting materials related to the Independent Valuation report, which includes, but may not be limited to, the data and assumptions used for the review and the appraisals of each of the real estate properties.
For the avoidance of doubt, the final determination of NAV and Per Share NAV shall be the sole responsibility of the Company and the Board. To the extent the Per Share NAV assigned by the Board and disclosed by the Company does not fall within the range of Per Share NAV provided by the Independent Valuation Firm, the Company will provide an explanation in its SEC Disclosure Documents.
In addition, immediately following the final determination and disclosure of the NAV and Per Share NAV by the Company, the Company will send a copy of the Independent Valuation Firm’s report to Ameriprise and schedule a reasonable number of meetings or teleconferences with the Independent Valuation Firm so that Ameriprise may perform its on-going due diligence review of Company.
(vi) Disclosure. The Per Share NAV as determined by the Board and the Independent Valuation Firm’s opinion as to a reasonable range of Per Share NAV will be reported in the SEC Disclosure Documents filed with the Commission and in the Annual Report sent to investors with sufficient narrative disclosure to meet FINRA regulatory requirements and in a clear and concise manner so as to be understood by the average investor. In addition, if Company has knowledge of a material impairment or appreciation, or a material other-than-temporary change in the value of any real property or real estate related asset which would result in a material change in the NAV or Per Share NAV, then the Company shall consider such change prior to the issuance of a Per Share NAV and shall otherwise file such SEC Disclosure Documents as required.
Notwithstanding any agreements to the contrary, nothing shall preclude Ameriprise from taking any action, such as suspending sales of any offering by the Company and its’ affiliates, or withholding disclosure of Per Share NAV on its account statements, on the basis of the due diligence review of the valuation materials and the Independent Valuation Firm’s report. Subject to the fair disclosure requirements of Regulation FD and any agreements between Ameriprise and the Independent Valuation Firm, nothing shall preclude Ameriprise from providing the name of the Independent Valuation Firm and/or a summary of its review to its clients and/or its financial advisors. In no event will the Company engage in a follow-on offering or any subsequent offering of non-listed securities without first performing and disclosing a Per Share NAV. In addition, notwithstanding anything to the contrary in this Section 2(ll), the Company acknowledges and agrees that it shall cooperate with, provide access to, and afford sufficient time in advance for Ameriprise to conduct its on-going due diligence review of Company from the effective date of this Agreement through the date of a merger, listing of its shares on an exchange or other similar significant event.
(vii) Policies and Certification. The Company has designed and will implement policies and procedures reasonably designed to ensure compliance with this Section 2(jj), and will provide Ameriprise with a copy of those policies and procedures. In no event will the Company effect a change to such policies and procedures without prior written notice to Ameriprise. In addition, the Company will disclose its valuation policies and procedures, including a description of the role and responsibilities of an Independent Valuation Firm, in the Prospectus, amendments thereto or other offering materials filed with the Commission.
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All Orders solicited by Ameriprise will be strictly subject to review and acceptance by the Company and the Company reserves the right in its absolute discretion to reject any Order or to accept or reject Orders in the order of their receipt by the Company or otherwise. Within 30 days of receipt of an Order, the Company must accept or reject such Order. If the Company elects to reject such Order, within 10 business days after such rejection, it will notify the purchaser and Ameriprise of such fact and cause the return of such purchaser’s funds submitted with such Subscription Agreement. No payment of Selling Commissions or the Marketing Fee will be made with respect to Orders (or portions thereof) which are rejected by the Company. If Ameriprise receives no notice of rejection within the foregoing time limits the Order shall be deemed accepted. Ameriprise agrees to make commercially reasonable efforts to determine that the purchase of Shares is a suitable and appropriate investment for each potential purchaser of Shares based on information provided by such purchaser regarding, among other things, such
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purchaser’s age, investment experience, financial situation and investment objectives. Ameriprise agrees to maintain copies of the Orders received from investors and of the other information obtained from investors, including the Subscription Agreements for a minimum of six (6) years from the date of sale and will make such information available to the Company upon request by the Company.
Amount of Shares Purchased | Purchase Price per Incremental Share in Volume Discount Range | Reallowed Commissions on Sales per Incremental Share in Volume Discount Range | ||||||||||
Percent | Dollar Amount | |||||||||||
Up to $500,000 | $ | 10.580 | 7.0 | % | $ | 0.741 | ||||||
$500,001—$750,000 | $ | 10.474 | 6.0 | % | $ | 0.635 | ||||||
$750,001—$1,000,000 | $ | 10.368 | 5.0 | % | $ | 0.529 | ||||||
$1,000,001—$2,500,000 | $ | 10.263 | 4.0 | % | $ | 0.423 | ||||||
$2,500,001—$5,000,000 | $ | 10.157 | 3.0 | % | $ | 0.317 | ||||||
Over $5,000,000 | $ | 10.051 | 2.0 | % | $ | 0.212 |
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The Company will apply the reduced selling price per Share and Selling Commissions to the incremental Shares within the indicated range only. Thus, for example, a total subscription amount of $1,250,000 would result in the purchase of 119,599.173 shares at a weighted average purchase price of $10.452 per share as shown below:
• | $500,000 at $10.580 per share = 47,258.979 shares (7% selling commission + 3% marketing support fee); |
• | $250,000 at $10.474 per share = 23,868.171 shares (6% selling commission + 3% marketing support fee); |
• | $250,000 at $10.368 per share = 24,111.724 shares (5% selling commission + 3% marketing support fee); and |
• | $250,000 at $10.263 per share = 24,360.299 shares (4% selling commission + 3% marketing support fee). |
Subscriptions may be combined for the purpose of determining volume and other discounts described above in the case of subscriptions made by any purchaser, provided all shares are purchased through the same managing dealer, participating broker or registered investment advisor. The discounts will be prorated among the separate subscribers considered to be a single purchaser.
The Company expects the Dealer Manager to authorize other broker-dealers that are members of FINRA and/or other Persons exempt from broker-dealer registration, all of which the Company refers to as participating broker-dealers, to sell the Company’s shares. Except as provided in the Prospectus, the Dealer Manager will reallow all of its selling commissions attributable to a participating broker-dealer. The Company may also sell Shares at a discount to the offering price per share as set forth in the Prospectus through the following distribution channels in the event that the investor: pays a broker a single fee, e.g., a percentage of assets under management, for investment advisory and broker services, which is frequently referred to as a “wrap fee”; has engaged the services of a registered investment adviser with whom the investor has agreed to pay compensation for investment advisory services or other financial or investment advice (other than a registered investment adviser that is also registered as a broker-dealer who does not have a fixed or “wrap fee” feature or other asset fee arrangement with the investor); or is investing through a bank acting as trustee or fiduciary. The Company will pay reduced selling commissions and/or marketing support fees reflecting a discount from the public offering price, in connection with sales through these channels.
The Dealer Manager will also re-allow to Ameriprise a marketing support fee of up to one and one half percent (1.5%) of the full price of each Share (except for Shares sold pursuant to the DRIP) sold by Ameriprise (the “Marketing Support Fee”); provided however, the Company will not pay Ameriprise a Marketing Support Fee if the aggregate underwriting compensation to be paid to all parties in connection with the Offering exceeds the limitations prescribed by FINRA.
For purposes of determining investors eligible for volume discounts, to the extent consistent with the definition of “single purchaser” contained in the Prospectus, investments made by accounts with the same primary account holder, as determined by the account tax identification number, may be combined. This includes individual accounts and joint accounts that have the same primary holder as an individual account. Investments made through individual retirement accounts may also be combined with accounts
that have the same tax identification number as the beneficiary of the individual retirement account. In the event Orders are combined, the commission payable with respect to the subsequent purchase of Shares will equal the commission per share which would have been payable in accordance with the table set forth above if all purchases had been made simultaneously. Any reduction of the Selling Commission otherwise payable to Ameriprise will be credited to the purchaser as additional Shares. Unless purchasers, or Ameriprise on behalf of purchasers, indicate that Orders are to be combined and provide all other requested information, the Company will not be held responsible for failing to combine Orders properly.
No payment of commissions or the Marketing Support Fee will be made in respect of Orders (or portions thereof) which are rejected by the Company. Pursuant to the AIP Networking Agreement, Ameriprise shall transfer to the Company’s transfer agent (“Transfer Agent”) the total amount debited from the investor accounts for the purchase of the Shares, net of the applicable Selling Commission payable to Ameriprise. Selling Commissions and the Marketing Support Fee will be payable only with respect to transactions lawful in the jurisdictions where they occur. Purchases of Shares by the Company, Ameriprise or its or their respective affiliates or any of their respective directors, trustees, officers and employees shall be net of commissions. Ameriprise affirms that the Dealer Manager’s liability for commissions payable is limited solely to the proceeds of commissions receivable from the Company and Ameriprise 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.
No Selling Commissions shall be paid to Ameriprise for purchases made by an investor pursuant to the DRIP.
The Dealer Manager will pay or cause to be paid to Ameriprise, the amount of any bona fide, itemized, separately invoiced due diligence expenses, consistent with the language in the Prospectus and applicable regulations and FINRA rules.
Except for the arrangements described in the “Plan of Distribution” section of the Prospectus, the Company represents that neither it nor any of its affiliates have offered or sold any Shares pursuant to this Offering, other than directly to the Company’s officers and directors and Advisor, in each case as disclosed in the Prospectus, and agrees that, through the Termination Date, the Company will not offer or sell any Shares otherwise than through the Dealer Manager as provided in the Dealer Manager Agreement, Ameriprise as herein provided, the selected dealers other than Ameriprise as provided in the participating broker agreements and agreements with registered investment advisors, except to the Company’s and its affiliates’ officers and directors, employees and family members and the Advisor as set forth in the Prospectus.
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(c) “Blue Sky” Qualifications. Endeavor in good faith to seek and maintain the approval of the Offering by FINRA, and to qualify the Shares for offering and sale under the securities laws of all 50 states and the District of Columbia and to maintain such qualification, except in those jurisdictions Ameriprise may reasonably designate; provided, however, the Company shall not be obligated to subject itself to taxation as a party doing business in any such jurisdiction. In each jurisdiction where such qualification shall be effected, the Company will, unless Ameriprise agrees that such action is not at the time necessary or advisable, file and make such statements or reports as are or may reasonably be required by the laws of such jurisdiction.
(d) “Blue Sky” Memorandum. To furnish to Ameriprise, and Ameriprise may be allowed to rely upon, a “Blue Sky” Memorandum (the “Blue Sky Memorandum”), prepared by counsel reasonably acceptable to Ameriprise, in customary form naming the jurisdictions in which the Shares have been qualified for sale under the respective securities laws of such jurisdiction. The Blue Sky Memorandum shall be promptly updated by counsel and provided to Ameriprise from time to time to reflect changes and updates to the jurisdictions in which the Shares have been qualified for sale. In each jurisdiction where the Shares have been qualified, the Company will make and file such statements and reports in each year as are or may be required by the laws of such jurisdiction.
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(g) Periodic Financial Information. Within one business day following the date on which there shall be released to the general public interim financial statement information related to the Company with respect to each of the first three quarters of any fiscal year or preliminary financial statement information with respect to any fiscal year, the Company shall furnish such information to Ameriprise, confirmed in writing (as used in this section, “in writing” to include electronic communications), and shall file such information pursuant to the rules and regulations promulgated under the Securities Act or the Exchange Act as required thereunder.
(i) as soon as practicable after they have been sent or made available by the Company to its stockholders or filed with the Commission, a copy of each annual and interim financial or other report provided to stockholders, excluding individual account statements sent to security holders of the Company in the ordinary course;
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(ii) as soon as practicable, a copy of every press release issued by the Company and every material news item and article in respect of the Company or its affairs released by the Company; and
(iii) additional documents and information with respect to the Company and its affairs as Ameriprise may from time to time reasonably request.
Documents (other than final Prospectuses or supplements or amendments thereto for distribution to investors and the documents incorporated by reference therein ) required to be delivered pursuant to this Agreement (to the extent any such documents are included in materials otherwise filed with the Securities and Exchange Commission) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Company posts such documents, or provides a link thereto on the Company’s website on the Internet; or (ii) on which such documents are posted on the Company’s behalf on the website of the Securities and Exchange Commission or any other Internet or intranet website, if any, to which Ameriprise has access; provided that the Company shall notify Ameriprise of the posting of any such documents.
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(o) Title to Property. The Company (or any partnership or joint venture holding title to a particular Property) will acquire good and marketable title to each Property to be owned by it, as described in the Prospectus and future supplements to the Prospectus, it being understood that the Company may incur debt with respect to Properties and other assets in accordance with the Prospectus; and except as stated in the Prospectus, the Company (or any such partnership or joint venture) will possess all licenses, permits, zoning exceptions and approvals, consents and orders of governmental, municipal or regulatory authorities required for the ownership of the Properties, and prior to the commencement of construction for the development of any vacant land included therein as contemplated by the Prospectus, except where the failure to possess any such license, permit, zoning exception or approval, consent or order would not cause a Material Adverse Effect.
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5. Covenants of Ameriprise. Ameriprise covenants and agrees with the Company as follows:
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6(d), and as mutually agreed upon, Ameriprise’s costs of technology associated with the offering, other costs and expenses related to such technology costs, and the facilitation of the marketing of the Shares and the ownership of such Shares by Ameriprise’s customers, including fees to attend conferences; and (x) any other expenses of issuance and distribution of the Shares.
(b) Ad Hoc Requests. From time to time, the Issuer Entities may make requests that can reasonably be regarded as being related to but separate from the services contemplated by this Agreement (the “Services”) or that otherwise fall outside the ordinary course of business relationships such as the one contemplated under this Agreement (“Ad Hoc Requests”). Examples of Ad Hoc Requests include, but are not limited to, requests that would require Ameriprise to implement information technology modifications, participate in or respond to audits, inspections or compliance reviews, or respond to or comply with document requests. To the extent that Ameriprise’s compliance with an Ad Hoc Request would cause Ameriprise to incur material expenses, the Company and Ameriprise will mutually agree as to the payment of such expenses between the parties. Ameriprise reserves the right to refuse to comply with an Ad Hoc Request if the parties are unable to reach an agreement on payment of reasonable expenses provided that consent to an agreement has not been unreasonably withheld; it being understood that consent shall not be deemed to be unreasonably withheld if the payment for such Ad Hoc Requests, individually or when aggregated with other amounts to be paid to Ameriprise pursuant to this Agreement, would violate FINRA rules. Payment for Ad Hoc Requests will be separate from and above the payments for the Services but shall be included, as applicable, when calculating total compensation paid to Ameriprise for purposes of the limitations described in Section 6(d) hereof.
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(ii) Opinion of Counsel. Ameriprise Financial shall receive the opinion of Lowndes, Drosdick, Doster, Xxxxxx & Xxxx, P.A., as counsel for the Advisor and Dealer Manager, dated as of the date hereof or as of each Documented Closing Date, as applicable, addressed to Ameriprise Financial substantially in the forms attached hereto as Exhibit B1 and Exhibit B2, respectively.
(iv) Accountant’s Letter. On the date hereof, Ameriprise shall have received from PricewaterhouseCoopers LLP a comfort letter, in form and substance reasonably satisfactory to Ameriprise in all material respects.
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(d) “Blue Sky” Memorandum”. On or before the date hereof, and on each Documented Closing Date, Ameriprise shall have received the Blue Sky Memorandum described in Section 4(d) above.
(f) Confirmation. As of the date hereof and at each Documented Closing Date, as the case may be:
(i) the representations and warranties of each of the Issuer Entities in the Agreement shall be true and correct with the same effect as if made on the date hereof or the Documented Closing Date, as the case may be, and each of the Issuer Entities have performed all covenants or conditions on their part to be performed or satisfied at or prior to the date hereof or respective Documented Closing Date;
(ii) the Registration Statement (and any amendments or supplements thereto and any documents incorporated by reference therein) does not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and the Prospectus (and any amendments or supplements thereto and any documents incorporated by reference therein) does not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
(iii) except as set forth in the Prospectus, there shall have been no material adverse change in the business, Properties, prospects or condition (financial or otherwise) of the Company subsequent to the date of the latest balance sheets provided in the Registration Statement and the Prospectus; and
(iv) since the date hereof, no event has occurred which should have been set forth in an amendment or supplement to the Prospectus in order to cause such Prospectus not to contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, but which has not been so set forth.
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Ameriprise shall receive a certificate from the Issuer Entities dated the date hereof and each Documented Closing Date, as the case may be, confirming the above.
If any of the conditions specified in this Agreement shall not have been fulfilled when and as required by this Agreement, all Ameriprise’s obligations hereunder and thereunder may be canceled by Ameriprise by notifying the Company of such cancellation in writing or by telecopy at any time, and any such cancellation or termination shall be without liability of any party to any other party except as otherwise provided in Sections 3(d), 6, 8, 9 and 10 of this Agreement. All certificates, letters and other documents referred to in this Agreement will be in compliance with the provisions hereof only if they are reasonably satisfactory in form and substance to Ameriprise and Ameriprise’s counsel. The Company will furnish Ameriprise with conformed copies of such certificates, letters and other documents as Ameriprise shall reasonably request.
(i) any untrue or alleged untrue statement of a material fact contained: (i) in the Registration Statement (or any amendment thereto) or in the Prospectus (as from time to time amended or supplemented) or any related preliminary prospectus; (ii) in any application or other document (in this Section 8 collectively called “application”) executed by an Issuer Entity or based upon information furnished by an Issuer Entity and filed in any jurisdiction in order to qualify the Shares under the securities laws thereof, or in any amendment or supplement thereto; or (iii) in the Company’s periodic reports such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and current reports on Form 8-K; provided however that no Issuer Entity shall be liable in any such case to the extent any such statement or omission was made in reliance upon and in conformity with written information furnished to an Issuer Entity by Ameriprise expressly for use in the Registration Statement or related preliminary prospectus or Prospectus or any amendment or supplement thereof or in any of such applications or in any such sales as the case may be;
(ii) the omission or alleged omission from (i) the Registration Statement (or any amendment thereto) or in the Prospectus (as from time to time amended or supplemented); (ii) any applications; or (iii) the Company’s periodic reports such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and current reports on Form 8-K, of a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances under which they were made not misleading; provided however that no Issuer Entity shall be liable in any such case to the extent any such statement or omission was made in reliance upon and in conformity with written information furnished to the Company by Ameriprise expressly for use in the Registration Statement or related preliminary prospectus or Prospectus or any amendment or supplement thereof or in any of such applications or in any such sales as the case may be;
(iii) any untrue statement of a material fact or alleged untrue statement of a material fact contained in any supplemental sales material (whether designated for broker-dealer use or otherwise) approved by the Company for use by Ameriprise or any omission or alleged omission to state therein a material fact required to be stated or necessary in order to make the statements therein, in light of the circumstances under which they were made and when read in conjunction with the Prospectus delivered therewith not misleading;
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(iv) any communication regarding the valuation of the Shares provided by or on behalf of the Company; and
(v) the breach by any Issuer Entity or any employee or agent acting on their behalf, of any of the representations, warranties, covenants, terms and conditions of this Agreement.
Notwithstanding the foregoing, no indemnification by an Issuer Entity of Ameriprise , or each person, if any, who controls Ameriprise within the meaning of Section 15 of the Securities Act, and any of their respective officers, directors, employees and agents or its officers, directors or control persons, pursuant to Section 8(a) shall be permitted under this Agreement for, or arising out of, an alleged violation of federal or state securities laws, unless one or more of the following conditions are met: (1) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to the particular indemnitee; (2) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular indemnitee; or (3) a court of competent jurisdiction approves a settlement of the claims against the indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Commission and of the published position of any state securities regulatory authority in which the securities were offered or sold as to indemnification for violations of securities laws.
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connection with such action. In no event shall the indemnifying parties be liable for the reasonable fees and expenses of more than one counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances.
The indemnity agreements contained in this Section 8 and the warranties and representations contained in this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party and shall survive any termination of this Agreement. An indemnifying party shall not be liable to an indemnified party on account of any settlement, compromise or consent to the entry of judgment of any claim or action effected without the consent of such indemnifying party. The Company agrees promptly to notify Ameriprise of the commencement of any litigation or proceedings against the Company in connection with the issue and sale of the Shares or in connection with the Registration Statement or Prospectus.
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proceeds of the Offering. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act or Section 10(b) of the Exchange Act, as amended) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, any person that controls Ameriprise within the meaning of Section 15 of the Securities Act shall have the same right to contribution as Ameriprise, and each person who controls the Company within the meaning of Section 15 of the Securities Act shall have the same right to contribution as the Company.
10. Effective Date, Term and Termination of this Agreement.
(a) This Agreement shall become effective as of the date it is executed by all parties hereto. After this Agreement becomes effective, any party may terminate it at any time for any reason by giving two days’ prior written notice to the other parties. Ameriprise will suspend or terminate the offer and sale of Shares as soon as practicable after being requested to do so by the Company or the Dealer Manager at any time.
(b) Additionally, Ameriprise shall have the right to terminate this Agreement at any time during the Effective Term without liability of any party to any other party except as provided in Section 10(c) hereof if: (i) any representations or warranties of any Issuer Entity hereunder shall be found to have been incorrect; or (ii) any Issuer Entity shall fail, refuse or be unable to perform any condition of its obligations hereunder, or (iii) the Prospectus shall have been amended or supplemented despite Ameriprise’s objection to such amendment or supplement, or (iv) the United States shall have become involved in a war or major hostilities or a material escalation of hostilities or acts of terrorism involving the United States or other national or international calamity or crisis (other than hostilities including Iraq and Afghanistan); or (v) a banking moratorium shall have been declared by a state or federal authority or person; or (vi) the Company shall have sustained a material or substantial loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether or not said loss shall have been insured, will in Ameriprise’s good faith opinion make it inadvisable to proceed with the offering and sale of the Shares; or (vii) there shall have been, subsequent to the dates information is given in the Registration Statement and the Prospectus, such change in the business, properties, affairs, condition (financial or otherwise) or prospects of the Company whether or not in the ordinary course of business or in the condition of securities markets generally as in Ameriprise’s good faith judgment would make it inadvisable to proceed with the offering and sale of the Shares, or which would materially adversely affect the operations of the Company.
(c) In the event this Agreement is terminated by any party pursuant to Sections 10(a) or 10(b) hereof, the Company shall pay all expenses of the Offering as required by Section 6 hereof and no party will have any additional liability to any other party except for any liability which may exist under Sections 3(d) and 8 hereof. Following the termination of the Offering, in no event will the Company be liable to reimburse Ameriprise for expenses other than as set forth in the previous sentence, and Ameriprise’s actual and reasonable out-of-pocket expenses incurred following the termination of the Offering, including, without limitation, the cost of data transmissions and other related client transmissions.
(d) If Ameriprise elects to terminate this Agreement as provided in this Section 10, Ameriprise shall notify the Company promptly by telephone or facsimile with confirmation by letter. If the Company elects to terminate this Agreement as provided in this Section 10, the Company shall notify Ameriprise promptly by telephone or facsimile with confirmation by letter.
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(a) All communications hereunder, except as herein otherwise specifically provided, shall be in writing and if sent to an Issuer Entity shall be mailed, or personally delivered, to 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 Attention: Corporate Counsel and Chief Compliance Officer, and if sent to Ameriprise shall be mailed, or personally delivered, to 000 Xxxxxxxxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, XX 00000, Attention: General Counsel.
(b) Notice shall be deemed to be given by any respective party to any other respective party when it is mailed or personally delivered as provided in subsection (a) of this Section 11.
13. Choice of Law and Arbitration.
(a) Regardless of the place of its physical execution or performance, the provisions of this Agreement will in all respects be construed according to, and the rights and liabilities of the parties hereto will in all respects be governed by, the substantive laws of New York without regard to and exclusive of New York’s conflict of laws rules.
(b) Any dispute between the parties concerning this Agreement not resolved between the parties will be arbitrated in accordance with the rules and regulations of FINRA. In the event of any dispute between Ameriprise and any Issuer Entity, Ameriprise and such Issuer Entity will continue to perform its respective obligations under this Agreement in good faith during the resolution of such dispute unless and until this Agreement is terminated in accordance with the provisions hereof.
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Ameriprise Confidential Information.
(a) “Ameriprise Confidential Information” includes, but is not limited to, all proprietary and confidential information of Ameriprise and its subsidiaries, affiliates, and licensees , including without limitation all information regarding its customers and the customers of its subsidiaries, affiliates, or licensees (together “Ameriprise Customers”); or the accounts, account numbers, names, addresses, social security numbers or any other personal identifier of such Ameriprise Customers; or any information derived therefrom. Ameriprise Confidential Information will not include information which is (i) in or becomes part of the public domain, except when such information is in the public domain due to disclosure by an Issuer Entity , in violation of this Agreement, (ii) demonstrably known to an Issuer Entity prior to execution of this Agreement, (iii) independently developed by an Issuer Entity in the ordinary course of business outside of this Agreement, or (iv) rightfully and lawfully obtained by an Issuer Entity from any third party other than Ameriprise.
(b) No Issuer Entity may use or disclose Ameriprise Confidential Information for any purpose other than to carry out the purpose for which Ameriprise Confidential Information was provided to the Issuer Entities as set forth in the Agreement, and agrees to cause all the Issuer Entities’ employees, agents, representatives, or any other party to whom the Issuer Entities may provide access to or disclose Ameriprise Confidential Information to limit the use and disclosure of Ameriprise Confidential Information to that purpose.
(c) The Issuer Entities agree to implement reasonable measures designed (i) to assure the security and confidentiality of Ameriprise Confidential Information; (ii) to protect such information against any anticipated threats or hazards to the security or integrity of such information; (iii) to protect against unauthorized access to, or use of, Ameriprise Confidential Information that could result in substantial harm or inconvenience to any Ameriprise Customer; (iv) to protect against unauthorized disclosure of non-public personal information to unaffiliated third parties; and (v) to otherwise ensure compliance with all applicable domestic, foreign and local laws and regulations (including, but not limited to, SEC Regulations S-P and Massachusetts 201 C.M.R. sections 17.00-17.04 as applicable ) and any other legal, regulatory or SRO requirements. The Issuer Entities further agree to cause all of their respective agents, representatives, subcontractors, or any other party to whom the Issuer Entities may provide access to or disclose Ameriprise Confidential to implement appropriate measures designed to meet the objectives set forth in this paragraph.
(d) Upon Ameriprise’s request, the Issuer Entities shall promptly return Ameriprise Confidential Information (and any copies, extracts, and summaries thereof) to Ameriprise , or, with Ameriprise’s written consent, shall promptly destroy, in a manner satisfactory to Ameriprise, such materials (and any copies, extracts, and summaries thereof) and shall further provide Ameriprise with written confirmation of same.
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signature page to follow
18
CNL HEALTHCARE PROPERTIES, INC. | ||
By: | /s/ Xxxxxxx X. Xxxxxxx | |
Name: Xxxxxxx X. Xxxxxxx | ||
Title: President & CEO |
CNL SECURITIES CORP. | ||
By: | /s/ Xxxxxxx X. Xxxxxx | |
Name: Xxxxxxx X. Xxxxxx | ||
Title: President |
CNL HEALTHCARE CORP. | ||
By: | /s/ Xxxxxxx X. Xxxxxxx | |
Name: Xxxxxxx X. Xxxxxxx | ||
Title: President & COO |
CNL FINANCIAL GROUP, LLC | ||
By: | /s/ Xxxxx X. Xxxxxxx | |
Name: Xxxxx X. Xxxxxxx | ||
Title: Chief Financial Officer |
Accepted as of the date first above
written:
AMERIPRISE FINANCIAL SERVICES, INC.
By: | /s/ Xxxxx XxXxxxxx | |
Name: Xxxxx XxXxxxxx | ||
Title: Senior Vice President and General Manager |
EXHIBIT A
OPINION OF XXXXXX & XXXXXX LLP
COUNSEL FOR THE COMPANY
[Intentionally Omitted]
EXHIBIT B1
OPINION OF LOWNDES, DROSDICK, DOSTER, XXXXXX & XXXX, P.A. ,
COUNSEL FOR THE ADVISOR
[Intentionally Omitted]
EXHIBIT B2
OPINION OF LOWNDES, DROSDICK, DOSTER, XXXXXX & XXXX, P.A. ,
COUNSEL FOR THE DEALER MANAGER
[Intentionally Omitted]
EXHIBIT C
OPINION OF XXXXXXX LLP,
MARYLAND COUNSEL FOR THE COMPANY
[Intentionally Omitted]
EXHIBIT D
[Intentionally Omitted]
EXHIBIT E
ACCESS AND CONFIDENTIALITY AGREEMENT
[Intentionally Omitted]