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Exhibit 1.1
Form of Dealer Management Agreement
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INLAND REAL ESTATE CORPORATION
27,625,000
SHARES OF COMMON STOCK
$.01 PAR VALUE
[FORM OF]
DEALER MANAGER AGREEMENT
January __, 0000
Xxxxxx Securities Corporation
0000 Xxxxxxxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxx 00000
Ladies/Gentlemen:
Inland Real Estate Corporation (the "Company"), a Maryland
corporation, is qualified as a real estate investment trust (a "REIT") under
federal income tax laws. The Company was formed on May 12, 1994 and is
governed by the Bylaws, as amended (the "Bylaws") and the Second Articles of
Amendment and Restatement, as amended (the "Articles") in the form included as
Exhibits to the Registration Statement, as described in Section 1(a) hereof
(such Bylaws and Articles being hereinafter referred to as the "Organizational
Documents"). The advisor to the Company is Inland Real Estate Advisory
Services, Inc., an Illinois corporation (the "Advisor"). Unless otherwise
defined, capitalized terms used herein shall have the same meaning as in the
Registration Statement on Form S-11.
The Company is offering on a "best efforts" basis up to 25,000,000
shares of common stock, $.01 par value per share (the "Shares") for a purchase
price of $11.00 per Share with a minimum initial investment of $3,300 ($1,100
in the case of tax-exempt investors, except for residents of the State of Iowa
where Individual Retirement Accounts must have a minimum investment of $3,300,
and for residents of the State of Minnesota where Individual Retirement
Accounts and qualified plan accounts must have a minimum investment of $2,200),
625,000 Soliciting Dealer Warrants and the Shares issuable on exercise of the
Soliciting Dealer Warrants and up to 2,000,000 Shares for a purchase price of
$10.45 per Share for issuance through the Distribution Reinvestment Program,
all upon the other terms and conditions set forth in the Prospectus, as
described in Section 1(a) hereof. The subscribers, each of whom will be
required to enter into a subscription agreement substantially similar to the
form of Subscription Agreement (the "Subscription Agreement") attached as
Exhibit I to the Prospectus, will, upon acceptance of their subscriptions by
and in the discretion of the Company, become stockholders of the Company (the
"Stockholders").
1. Representation and Warranties of the Company. The Company
hereby represents, warrants and agrees with you that:
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(a) Registration Statement and Prospectus. A registration
statement (File No. 333-_____) on Form S-11 with respect to 27,625,000
Shares, including warrants (and shares issuable on exercise of the
warrants) which are issuable in certain circumstances in connection
with sale of the Shares and Shares issuable pursuant to the Company's
Distribution Reinvestment Program has been prepared by the Company
pursuant to the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder and
has been filed with the Commission under the Act; one or more
amendments to such registration statement have been or may be so
prepared and filed. As used in this Agreement, the term "Registration
Statement" means such registration statement in the form in which it
becomes effective, the term "Effective Date" means the date upon which
the Registration Statement is or was first declared effective by the
Commission and the term "Prospectus" means the prospectus in the form
constituting a part of the Registration Statement as well as in the
form first filed with the Commission pursuant to its Rule 424 after
the Registration Statement becomes effective. The Commission has not
issued any stop order suspending the effectiveness of the Registration
Statement and no proceedings for that purpose have been instituted or
are pending before or threatened by the Commission under the Act.
(b) Compliance with the Act. From the time the Registration
Statement becomes effective and at all times subsequent thereto up to
and including the Termination Date (as defined in Section 2(c)
hereof):
(i) the Registration Statement, the Prospectus
and any amendments or supplements thereto will contain all
statements which are required to be stated therein by the Act
and the Rules and Regulations and will comply in all material
respects with the Act and the Rules and Regulations; and
(ii) neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto will at any
such time 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.
(c) No Subsequent Material Events. Subsequent to the
respective dates as of which information is given in the Registration
Statement and Prospectus and prior to the Termination Date, except as
contemplated in the Prospectus or as disclosed in a supplement or
amendment thereto or in the periodic financial statements of the
Company, the Company has not and will not have:
(i) incurred any material liabilities or
obligations, direct or contingent; or
(ii) entered into any material transaction, not in
the ordinary course of business and, except as so disclosed,
there has not been and will not be any material adverse change
in the financial position or results of operations of the
Company.
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(d) Corporation Status. The Company is a corporation
duly formed and validly existing under the Maryland General
Corporation Law (the "MGCL").
(e) Authorization of Agreement. This Agreement has been
duly and validly authorized, executed and delivered by or on behalf of
the Company and constitutes the valid and binding agreement of the
Company enforceable in accordance with its terms (except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws of the United States,
any state or any political subdivision thereof which affect creditors'
rights generally or by equitable principles relating to the
availability of remedies); the performance of this Agreement and the
Organizational Documents and the consummation of the transactions
contemplated herein and therein, respectively, and the fulfillment of
the terms hereof and thereof, respectively, do not and will not result
in a breach of any of the terms and provisions of, or constitute a
default under, any statute, indenture, mortgage, deed of trust, voting
trust agreement, note, lease or other agreement or instrument to which
the Company is a party or by which the Company or its property is
bound, or under any rule or regulation or order of any court or other
governmental agency or body with jurisdiction over the Company or any
of its properties; and no consent, approval, authorization or order of
any court or governmental agency or body has been or is required for
the performance of this Agreement or by the Organizational Documents,
or for the consummation of the transactions contemplated hereby and
thereby, respectively (except as have been obtained under the Act,
from the National Association of Securities Dealers, Inc. (the "NASD")
or as may be required under state securities or blue sky laws in
connection with the offer and sale of the Shares or under the laws of
states in which the Company may own real properties in connection with
its qualification to transact business in such states or as may be
required by subsequent events which may occur).
(f) Pending Actions. There is no material action, suit
or proceeding pending or, to the knowledge of the Company, threatened,
to which the Company is a party, before or by any court or
governmental agency or body which adversely affects the offering of
the Shares.
(g) Required Filings. There are no contracts or other
documents required to be filed by the Act or the Rules and Regulations
of the Commission thereunder as exhibits to the Registration Statement
which have not been so filed.
(h) Federal Income Tax Laws. The Corporation has
obtained an opinion of Xxxxxxx & Xxxxxxxx Ltd. stating that, under
existing federal income tax laws and regulations, assuming the Company
acts as described in the "Federal Income Tax Considerations" section
of the Prospectus and timely files the requisite elections, counsel is
of the opinion that the Company has been organized in conformity with
the requirements for qualification as a REIT beginning with its
taxable year ending December
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31, 1995 and that its prior, current and anticipated methods of
operation (as described in the Prospectus and represented by
management) has enabled and should enable it to satisfy the REIT
Requirements (as defined in the Prospectus).
(i) Independent Public Accountants. To the best of the
Company's knowledge, the accountants who have certified certain
financial statements appearing in the Prospectus are independent
public accountants within the meaning of the Act and the Rules and
Regulations.
(j) Escrow Agreement. The Company has entered into an
escrow agreement (the "Escrow Agreement") with Inland Securities
Corporation, Oak Brook, Illinois (the "Dealer Manager"), and LaSalle
National Bank, N.A., Chicago, Illinois (the "Escrow Agent"), in the
form included as an exhibit to the Registration Statement, which
provides for the establishment of an escrow account (the "Escrow
Account"). During the period commencing with the Effective Date and
ending on the Termination Date, the Company will deposit subscribers
funds in the Escrow Account as described in Section 2 below.
(k) Sales Literature. In addition to and apart from the
Prospectus, the Company may use certain supplemental sales material in
connection with the offering of the Shares. This material, prepared
by the Advisor, would consist of a brochure describing the Advisor and
its Affiliates and the objectives of the Company and may also contain
pictures and summary descriptions of properties similar to those to be
acquired by the Company that Affiliates of the Company have previously
acquired. This material may also include pictures and summary
descriptions of properties similar to those to be acquired by the
Company, as well as a brochure, audio-visual materials and tape
presentations highlighting and explaining various features of the
Offering, properties of prior real estate programs and real estate
investments in general; and articles and publications concerning real
estate. Business reply cards, introductory letters and seminar
invitation forms may be sent to Soliciting Dealers (as hereinafter
defined) and prospective investors. These materials shall be
hereinafter referred to collectively as the "sales literature." No
person has been authorized to prepared for, or furnish to, a
prospective investor any sales literature other than: (i) that
described herein; and (ii) newspaper advertisements or solicitations
of interested limited to identifying the Offering and the location of
sources of further information. Use of any sales literature is
conditioned upon filing with and, if required, clearance by
appropriate regulatory agencies. Such clearance (if provided),
however, does not indicate that the regulatory agency allowing the use
of the materials has passed on the merits of the Offering or the
adequacy or accuracy of the sales materials. Except as described
herein, the Company has not authorized the use of other supplemental
literature or sales material in connection with this Offering.
Although it is believed that the information contained in the sales
literature will not conflict with any of the information set forth in
the Prospectus, the sales literature will not purport to be complete,
and should not be considered as a part of the Prospectus, or as
incorporated in the Prospectus by reference, or as forming the basis
of the Offering.
(l) Authorization of the Shares. The Company has an
authorized and outstanding capitalization as set forth in the
Registration Statement and Prospectus. The sale of the Shares has
been duly and validly authorized by the Company, and when
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subscriptions for the Shares have been accepted by the Company as
contemplated in the Prospectus and the Shares have been issued to the
respective subscribers, the Shares will represent ownership in the
Company and will conform to the description thereof contained in the
Prospectus. Stockholders have no preemptive rights to purchase or
subscribe for securities of the Company, and the Shares are not
convertible or subject to redemption at the option of the Company.
The Shares are entitled to one vote per Share and do not have
cumulative voting rights. Subject to the rights of the holders of any
class of capital stock of the Company having any preference or
priority over the Shares, the Stockholders are entitled to
distributions in such amounts as may be declared by the Board of
Directors from time to time out of funds legally available for such
payments and, in the event of liquidation, to share ratably in any
assets of the Company remaining after payment in full of all creditors
and provisions for any liquidation preferences on any outstanding
preferred stock ranking prior to the Shares.
2. Offering and Sale of the Shares. On the basis of the
representations, warranties and agreements herein contained, and subject to the
terms and conditions herein set forth, the Company hereby appoints you as its
exclusive Dealer Manager to solicit and to cause other dealers (as described in
subparagraph (a) below) to solicit subscriptions for the Shares at the
subscription price and upon the other terms and conditions set forth in the
Prospectus and in the Subscription Agreement, and you agree to use your best
efforts as such Dealer Manager to procure subscribers for the Shares, during
the period commencing with the Effective Date and ending on the Termination
Date (the "Offering Period"). The number of Shares, if any, to be reserved for
sale by each Soliciting Dealer may be decided by the mutual agreement, from
time to time, of you and the Company. In the absence of such mutual agreement,
the Company shall, subject to the provisions of Section 2(b) hereof, accept
Subscription Agreements based upon a first-come, first accepted reservation or
other similar method.
(a) Soliciting Dealers. The Shares offered and sold
through you under this Agreement shall be offered and sold only by you
and, at your sole option, any other securities dealers (collectively
the "Soliciting Dealers"), each of whom are members of the NASD,
executing agreements with you substantially in the form of the
Soliciting Dealers Agreement attached hereto as Exhibit A.
(b) Subscription Agreements and Subscribers' Funds. Each
person desiring to purchase Shares through you or any other Soliciting
Dealer will be required to complete and execute the Subscription
Agreement and to deliver such document to you or such Soliciting
Dealer, together with a check payable to the order of "LNB, Escrow
Agent for IREC" in the amount of $11 per Share.
Each Soliciting Dealer shall forward any such Subscription
Agreement and check to you not later than noon of the next business
day after receipt of such Subscription Agreement, if the Soliciting
Dealer conducts its internal supervisory procedures at the location
where the Subscription Agreement and check were initially received.
When such internal supervisory procedures are performed at a different
location (the "Final Review Office"), the Subscription Agreement and
check must be transmitted to the Final Review Office by the end of the
next business day following receipt of the Subscription Agreement and
check by the Soliciting Dealer. The Final Review Office will, by the
next
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business day following receipt of the Subscription Agreement and
check, forward both to you as processing broker-dealer in order that
you may complete your review of the documentation and process the
Subscription Agreement and check. The Company will have
representatives available to review the Subscription Agreement at your
location in order to determine whether it wishes to accept the
proposed purchaser as a Stockholder, it being understood that the
Company reserves the unconditional right to reject the tender of any
Subscription Agreement and to reject all tenders after the Shares have
been sold (exclusive of the Company's distribution reinvestment
program). Any check received by you directly or as processing
broker-dealer from the Soliciting Dealers will, in all cases, be
forwarded to the Escrow Agent as soon as practicable, but in any event
by the end of the second business day following receipt by you of the
Subscription Agreement and check. The Company will promptly notify
you or the Soliciting Dealer of any rejection, and you shall send the
check and the Subscription Agreement to the Escrow Agent with
directions to promptly return both to the rejected subscriber. All
subscription funds may be deposited directly with the Company.
Nothing contained in this Section 2 shall be construed to
impose upon the Company the responsibility of assuring that
prospective purchasers meet the suitability standards contained in the
Prospectus or to relieve you or any of the Soliciting Dealers of the
responsibility of complying with the Conduct Rules of the NASD.
(c) Termination of the Offering. The Offering Period
will terminate on a date on or before one year from the date of the
Prospectus (subject to requalification in certain states, the Company
may extend the Offering Period from time to time, but no event for
longer than two years from the date of the original Prospectus),
subject in any event to the Company's right to terminate the Offering
at any time (the "Termination Date") and the proceeds will be applied
as set forth in the Prospectus.
(d) Dealer-Manager Compensation.
(i) The Company agrees to pay to you a sales
commission of up to 7% of the sales price (or up to $.77) for
each Share sold, as set forth in the Prospectus under the
caption "Plan of Distribution," subject to the limitation
described below, as well as one Soliciting Dealer Warrant for
every 40 Shares sold, of which such compensation may be
retained or reallowed, subject to federal and state securities
laws, to the Soliciting Dealer who sold the Shares as
described more fully in the Soliciting Dealers Agreement;
provided, however, that Soliciting Dealer Warrants will not be
issued and you will not transfer these warrants to Soliciting
Dealers in connection with the sale of Shares to residents of
the States of Minnesota, Nebraska, South Carolina and Texas
and provided further that the Company will not issue more than
625,000 warrants in connection with the Offering of the
Shares. You will also receive a marketing contribution and
due diligence expense allowance fee equal to 2.5% of the sale
price, some portion of which may be reallowed to the
Soliciting Dealers.
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Investors purchasing at least $220,000 worth of
Shares (20,000 Shares) will be entitled to a reduction in
selling commissions in accordance with the following schedule:
Maximum
Commission
Amount of Purchaser's Investment Per Share
----------------------------------------------------- ------------------------
From To
---- --
$ 220,000 $499,999 5.5%
500,000 999,999 4.0
1,000,000 and over 2.5
Any reduction from the amount otherwise payable to
you and reallowable to a Soliciting Dealer in respect of a
purchaser's subscription will be credited to the purchaser in
the form of additional whole or fractional Shares purchased
net of commissions.
Subscriptions may be combined for the purpose of
crediting a purchaser with additional Shares and determining
commissions payable to you and reallowable to Soliciting
Dealers so long as all such purchases are made through the
same Soliciting Dealer and approved by the Company.
Tax-exempt entities may be combined in computing amounts
invested only if they each have the same person who exercises
investment discretion. The Subscription Agreement Signature
Page must indicate that subscriptions are to be combined. The
Company cannot be held responsible for failing to properly
combine subscriptions.
Notwithstanding the foregoing, it is understood and
agreed that no commission shall be payable with respect to
particular Shares if the Company rejects a proposed
subscriber's Subscription Agreement.
(ii) All sales commissions payable to you will be
paid on a monthly basis, substantially concurrently with the
acceptance of a subscriber as a Stockholder by the Company, in
an amount equal to the sales commissions payable with respect
to such Shares.
3. Covenants of the Company. The Company covenants and agrees
with you as follows:
(a) Registration Statement. The Company will use its
best efforts to cause the Registration Statement and any subsequent
amendments thereto to become effective as promptly as possible and
will not, at any time after the Effective Date of the Registration
Statement, file any amendment to the Registration Statement or
supplement to the Prospectus of which you shall not previously have
been advised and furnished a copy at a reasonable time prior to the
proposed filing or to which you shall have reasonably
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objected or which is not, to the best of the Company's knowledge, in
compliance with the Act and the Rules and Regulations; the Company
will prepare and file with the Commission and will use its best
efforts to cause to become effective as promptly as possible:
(i) any amendments to the Registration Statement
or supplements to the Prospectus which may be required
pursuant to the undertakings in the Registration Statement;
and
(ii) upon your reasonable request, any amendments
to the Registration Statement or supplements to the Prospectus
which, in the opinion of you or your counsel, may be necessary
or advisable in view of the requirements of the Act and the
Rules and Regulations in connection with the offer and sale of
the Shares during the Offering Period.
(b) SEC Orders. As soon as the Company is advised or
obtains knowledge thereof, it will advise you of any request made by
the Commission for amending the Registration Statement, supplementing
the Prospectus or for additional information, or of the issuance by
the Commission of any stop statement or of any order preventing or
suspending the use of the Prospectus or the institution of any
proceedings for that purpose, and will use its best efforts to prevent
the issuance of any such order and, if any such order is issued, to
obtain the removal thereof as promptly as possible.
(c) Blue Sky Qualifications. The Company will use its
best efforts to qualify the Shares for offering and sale under the
securities or blue sky laws of such jurisdictions as you may
reasonably request and to make such applications, file such documents
and furnish such information as may be reasonably required for that
purpose. The Company will, at your request, furnish you copies of all
material documents and correspondence sent to or received from such
jurisdictions (including, but not limited to, summaries of telephone
calls and copies of telegrams) and will promptly advise you as soon as
the Company obtains knowledge thereof when the Shares are qualified
for offering and sale in each such jurisdiction. The Company will
promptly advise you of any request made by the securities
administrators of each such jurisdiction for revising the Registration
Statement or the Prospectus or for additional information or of the
issuance by such securities administrators of any stop order
preventing or suspending the use of the Prospectus or of the
institution of any proceedings for that purpose, and will use its best
efforts to prevent the issuance of any such order and if any such
order is issued, to obtain the removal thereof as promptly as
possible. The Company will furnish you with a Blue Sky Survey dated as
of the Effective Date, which will be supplemented to reflect changes
or additions to the information disclosed in such survey.
(d) Amendments and Supplements. If at any time when a
Prospectus relating to the Shares is required to be delivered under
the Act, any event shall have occurred to the knowledge of the Company
as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact, or omit to
state a material fact necessary to make the statements therein not
misleading in light of the circumstances existing at the time it is so
required to be delivered to a subscriber, or if
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it is necessary at any time to amend the Registration Statement or
supplement the Prospectus relating to the Shares to comply with the
Act, the Company will promptly notify you thereof and will prepare and
file with the Commission an amendment or supplement which will correct
such statement or effect such compliance.
(e) Copies of Registration Statement. The Company will
furnish you copies of the Registration Statement (only one of which
need be signed and need include all exhibits), the Prospectus and all
amendments and supplements thereto, including any amendment or
supplement prepared after the Effective Date, and such other
information with respect to the Company as you may from time to time
reasonably request, in each case as soon as available and in such
quantities as you may reasonably request.
(f) Qualification to Transact Business. The Company will
take all steps necessary to ensure that at all times the Company will
be validly existing as a corporation and will be qualified to do
business in all jurisdictions in which the conduct of its business
requires such qualification and where such qualification is required
under local law.
(g) Authority to Perform Agreements. The Company
undertakes to obtain all consents, approvals, authorizations or orders
of any court or governmental agency or body which are required for the
performance of this Agreement and under the Organizational Documents
or the consummation of the transactions contemplated hereby and
thereby, respectively, or the conducting by the Company of the
business described in the Prospectus.
(h) Copies of Reports. The Company will use its best
efforts to furnish to you as promptly as shall be practicable the
following:
(i) a copy of each report or general
communication (whether financial or otherwise) sent to the
Stockholders;
(ii) a copy of each report (whether financial or
otherwise) filed with the Commission; and
(iii) such other information as you may from time
to time reasonably request regarding the financial condition
and operations of the Company including, but not limited to,
copies of operating statements of properties acquired by the
Company.
(i) Use of Proceeds. The Company will apply the proceeds
from the sale of the Shares as stated in the Prospectus or, if for any
reason whatsoever all or a portion of the proceeds of the Offering are
not applied or committed for use as stated within 12 months of the
Termination Date, the Company shall promptly return those proceeds
from the sale of the Shares not so applied or committed as stated in
the Prospectus to the subscribers, each subscriber sharing in the
return in the ratio that the number of the Shares owned by such
subscriber bears to the total number of the Shares owned by all
subscribers.
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(j) Organization and Offering Expenses. In no event
shall the total of the organizational expenses and expenses of the
Offering to be paid directly by the Company exceed 15% of the gross
proceeds of the Offering.
4. Covenants of the Dealer Manager. You covenant and agree with
the Company on your behalf and on behalf of the Soliciting Dealers as follows:
(a) Compliance with Laws. With respect to your
participation and the participation by each Soliciting Dealer in the
offer and sale of the Shares (including, without limitation, any
resales and transfers of Shares), you agree, and each Soliciting
Dealer agrees, to comply and shall comply with any applicable
requirements of the Act, the Securities Exchange Act of 1934, as
amended, and the published rules and regulations of the Commission
thereunder, and the applicable state securities or blue sky laws, the
Conduct Rules of the NASD, specifically including, but not in any way
limited to, Rules 2440, 2730, 2740, and 2750 therein. In particular,
you agree not to deliver the sales literature to any person prior to
the Effective Date and, after the Effective Date, not to deliver the
sales literature to any person unless the sales literature is
accompanied or preceded by the Prospectus. In addition, you shall, in
accordance with applicable law or any state securities administrator,
provide or cause Soliciting Dealers to provide to any prospective
investor copies of any document which is part of the Registration
Statement; including, without limitation, the Articles and Bylaws to
investors resident in the States of Mississippi or Ohio.
With respect to your and each Soliciting Dealer's
participation in any resales or transfers of the Shares, you agree,
and each Soliciting Dealer agrees, to comply and shall comply with any
applicable requirements, as set forth above. In addition, you and
each Soliciting Dealer agree that should you or they assist with the
resale or transfer of the Shares, you and each Soliciting Dealer will
fulfill the obligations pursuant to Sections 3(b) and 4(d) of Rule
2810 of the Conduct Rules of the NASD.
(b) No Additional Information. In offering the Shares
for sale, you and each Soliciting Dealer shall not give or provide any
information or make any representation other than those contained in
the Prospectus, the sales literature or any other document provided to
you for such purpose by the Company.
(c) Sales of Shares. You and each Soliciting Dealer
shall solicit purchases of the Shares only in the jurisdictions in
which you and such Soliciting Dealer are legally qualified to so act
and in which you and each Soliciting Dealer have been advised by the
Company that such solicitations can be made.
(d) Subscription Agreement. Subscriptions will be
submitted by you and each Soliciting Dealer to the Company only on the
form which is included in Exhibit I to the Prospectus. You and each
Soliciting Dealer understand and acknowledge that the Subscription
Agreement must be executed and initialed by the subscriber.
(e) Suitability. In offering the Shares to any person,
you and each Soliciting Dealer shall have reasonable grounds to
believe (based on such information as the
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investment objectives, other investments, financial situation and
needs of the person or any other information known by you after due
inquiry) that: (i) such person has the capability of understanding
the fundamental aspects of the Company, which capacity may be
evidenced by the following: (A) the nature of employment experience;
(B) educational level achieved; (C) access to advice from qualified
sources, such as attorneys, accountants and tax advisors; and (D)
prior experience with investments of a similar nature; (ii) such
person has apparent understanding of: (A) the fundamental risks and
possible financial hazards of this type of investment; (B) the lack of
liquidity of this investment; (C) the Advisor's role in directing or
managing the investment; and (D) the tax consequences of the
investment; and (iii) such person has the financial capability to
invest in the Company and you or each Soliciting Dealer (as the case
may be) shall maintain records disclosing the basis upon which you and
each Soliciting Dealer determined the suitability of any persons
offered Shares. Notwithstanding the foregoing, you and each
Soliciting Dealer shall have reasonable grounds to believe that such
person has either: (a) a minimum annual gross income of $45,000 and a
net worth (exclusive of home, home furnishing and automobiles) of
$45,000; or (b) a net worth (determined with the foregoing exclusions)
of $150,000. Suitability standards may be higher in certain states as
set forth in the Subscription Agreement. You and/or the Soliciting
Dealers shall maintain, for at least six years, a record of the
information obtained to determine that an investor meets the
suitability standards imposed on the offer and sale of the Shares
(both at the time of the initial subscription and at the time of any
additional subscriptions) and a representation of the investor that
the investor is investing for the investor's own account or, in lieu
of such representation, information indicating that the investor for
whose account the investment was made met the suitability standards.
(f) Due Diligence. Prior to offering the Shares for
sale, you and each Soliciting Dealer shall have conducted an inquiry
such that you have reasonable grounds to believe, based on information
made available to you by the Company through the Prospectus or other
materials, that all material facts are adequately and accurately
disclosed and provide a basis for evaluating the purchase of the
Shares. In determining the adequacy of disclosed facts pursuant to
the foregoing, you and each Soliciting Dealer may obtain, upon
request, information on material facts relating at a minimum to the
following:
(1) items of compensation;
(2) Company properties;
(3) tax aspects;
(4) conflicts and risk factors; and
(5) appraisals and other pertinent reports.
Notwithstanding the foregoing, you and each Soliciting Dealer may rely upon the
results of an inquiry conducted by another Soliciting Dealer, provided that:
(i) such Soliciting Dealer has reasonable grounds to
believe that such inquiry was conducted with due care;
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(ii) the results of the inquiry were provided to you with
the consent of the Soliciting Dealer conducting or directing
the inquiry; and
(iii) no Soliciting Dealer that participated in the inquiry
is an affiliate of the Company or the Advisor.
Prior to the sale of the Shares, you and each Soliciting Dealer shall inform
the prospective purchaser of all pertinent facts relating to the liquidity and
marketability of the Shares during the term of the investment.
5. Expenses. The Company agrees with you that, whether or not
the transactions contemplated in this Agreement are consummated, the Company
will pay all fees and expenses incident to the performance of its obligations
under this Agreement, including, but not limited to:
(a) the Commission's registration fee;
(b) expenses of printing the Registration Statement, the
Prospectus and any amendment or supplement thereto and the expense of
furnishing to you copies of the Registration Statement, the Prospectus
and any amendment or supplement thereto as herein provided;
(c) fees and expenses of its and your accountants and
counsel in connection with the Offering contemplated by this
Agreement;
(d) fees and expenses incurred in connection with any
required filing with the NASD;
(e) all of your expenses in connection with the Offering
subject to the limitations contained in the Prospectus, including, but
not limited to, the salaries, fringe benefits, travel expenses and
similar expenses of your employees and personnel incurred in
connection with the Offering; and
(f) expenses of qualifying the Shares for offering and
sale under state blue sky and securities laws, and expenses in
connection with the preparation and printing of the Blue Sky Survey.
In no event, however, will the total of: (a) the selling commissions
paid to the Soliciting Dealers; (b) the marketing contribution and due
diligence expense allowance fee paid to the Soliciting Dealers; and (c)
reimbursement of certain expenses to be paid to Soliciting Dealers for special
incentive marketing programs as described in the Prospectus, exceed 10.5% of
the gross proceeds of the Offering.
6. Conditions of Obligations. Your obligations hereunder shall
be subject to the accuracy of the representations and warranties on the part of
the Company contained in Section 1 hereof, the accuracy of the statements of
the Company made pursuant to the provisions hereof,
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to the performance by the Company of its covenants, agreements and obligations
contained in Sections 3 and 5 hereof, and to the following additional
conditions:
(a) Effectiveness of Registration Statement. The
Registration Statement shall have become effective not later than 5:00
p.m., Chicago, Illinois time, on the day following the date of this
Agreement, or such later time and date as you and the Company shall
have agreed; no stop order suspending the effectiveness of the
Registration Statement shall have been issued and, to the best
knowledge of the Company or you, no proceedings for that purpose shall
have been instituted, threatened or contemplated by the Commission;
and any request by the Commission for additional information (to be
included in the Registration Statement or Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of you or
your counsel.
(b) Accuracy of Registration Statement. You shall not
have advised the Company that the Registration Statement or the
Prospectus, or any amendment or any supplement thereto, in the
reasonable opinion of you or your counsel, contains any untrue
statement of fact which is material, or omits to state a fact which is
material and is required to be stated therein or is necessary to make
the statements therein not misleading.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless
you, each Soliciting Dealer and each person, if any, who controls you
or any Soliciting Dealer within the meaning of the Act (collectively,
the "Indemnified Parties"), against any and all loss, liability,
claim, damage and expense whatsoever caused by any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus or any amendment or supplement
thereto, or the omission or alleged omission therefrom 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. Such indemnification shall be subject to the provisions
of Sections 7(b) and (c) of this Agreement.
The Company shall not provide indemnification for any
liability or loss suffered by you, nor shall it provide that you be
held harmless for any loss or liability suffered by the Company unless
all of the following conditions are met: (i) the party seeking
indemnification has determined, in good faith, that its course of
conduct, if such course of conduct caused the loss or liability, was
in the best interest of the Company; (ii) the other person seeking
indemnification was acting on behalf of or performing services on the
part of the Company; (iii) such liability or loss was not the result
of negligence or misconduct on the part of the indemnified party; and
(iv) such indemnification or agreement to be held harmless is
recoverable only out of the assets of the Company and not from the
Stockholders.
In no case shall the Company be liable under this indemnity
agreement with respect to any claim made against any of the
Indemnified Parties unless the Company shall be notified in writing
(as provided in Section 10) of the nature of the claim within
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a reasonable time after the assertion thereof, but failure to so
notify the Company shall not relieve the Company from any liability
which the Company may have incurred otherwise than on account of this
indemnity agreement. The Company shall be entitled to participate, at
its own expense, in the defense of, or if it so elects within a
reasonable time after receipt of such notice, to assume the defense of
any claim or suit for which the Indemnified Parties seek
indemnification hereunder. If the Company elects to assume the
defense, such defense shall be conducted by counsel chosen by it and
reasonably satisfactory to the Indemnified Parties. In the event that
the Company elects to assume the defense of any such suit and retain
such counsel, the Company shall not be liable to the Indemnified
Parties in the suit under this Section 7 for any legal or other
expenses subsequently incurred by the Indemnified Parties, and the
Indemnified Parties shall bear the fees and expenses of any additional
counsel thereafter retained by the Indemnified Parties unless: (A) the
employment of counsel by the Indemnified Party has been authorized by
the Company; or (B) the Company shall not in fact have employed
counsel to assume the defense of such action, in any of which events
such fees and expenses shall be borne by the Company.
The Company may advance amounts to the Indemnified Parties for
legal and other expenses and costs incurred as a result of any legal
action for which indemnification is being sought only if all of the
following conditions are satisfied: (i) the legal action relates to
acts or omissions with respect to the performance of duties or
services by the indemnified party for or on behalf of the Company;
(ii) the legal action is initiated by a third party who is not a
Stockholder and a court of competent jurisdiction specifically
approves such advancement; and (iii) the Indemnified Parties receiving
such advances undertake to repay the advanced funds to the Company,
together with the applicable legal rate of interest thereon, in cases
in which such Indemnified Parties are found not to be entitled to
indemnification.
Notwithstanding the foregoing provisions of this Section 7,
the Company will not be liable in any such case to the extent that any
loss, liability, claim, damage or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of you or any
Soliciting Dealer specifically for use with reference to you or such
Soliciting Dealer in the preparation of the Registration Statement (or
any amendment thereof) or the Prospectus (or any supplement thereto).
The foregoing indemnity agreement is subject to the condition that,
insofar as it relates to any untrue statement, alleged untrue
statement, omission or alleged omission made in the Prospectus but
eliminated or remedied in any amendment or supplement thereto, such
indemnity agreement shall not inure to your benefit or any Soliciting
Dealer from whom the person asserting any loss, liability, claim,
damage or expense purchased the Shares which are the subject thereof
(or to the benefit of any person who controls you or any Soliciting
Dealer), if a copy of the Prospectus as so amended or supplemented was
not sent or given to such person at or prior to the time the
subscription of such person was accepted by the Company but only if a
copy of the Prospectus (as so amended or supplemented) has been
supplied by the Company to you or any Soliciting Dealer prior to such
acceptance. This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
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(b) The Company agrees to indemnify and hold harmless you
and the Soliciting Dealers in the manner and to the extent provided in
subparagraph (a) of this Section 7; provided, however, that no such
indemnification by the Company of you or a Soliciting Dealer shall be
permitted under this Agreement from or out of an alleged violation of
federal or state securities laws unless one or more of the following
conditions are met: (i) there has been a successful adjudication on
the merits of each count involving alleged securities law violations
by you or any Soliciting Dealer and a court of competent jurisdiction
has approved indemnification of the litigation costs; (ii) such claims
against you or any Soliciting Dealer have been dismissed with
prejudice on the merits by a court of competent jurisdiction as to the
particular indemnitee and the court has approved indemnification of
the litigation costs; or (iii) a court of competent jurisdiction
approves a settlement of the claims against you or any Soliciting
Dealer and finds that indemnification of the settlement and related
costs should be made and the court considering the request has been
advised of the position of the Commission and of the published
positions of the Tennessee Securities Division and any other state
securities regulatory authority in which securities of the Company
were offered and sold as to indemnification for securities law
violations.
(c) You and each Soliciting Dealer agree to indemnify and
hold harmless the Company, and each person, if any, who controls the
Company within the meaning of the Act and any controlling person of
the Company: (i) to the same extent as in the foregoing indemnity
from the Company to you and each Soliciting Dealer but only with
reference to statements or omissions based upon the information
relating to you or any Soliciting Dealer furnished in writing by you
or such Soliciting Dealer or on your or their behalf expressly for use
in the Registration Statement or the Prospectus, or any amendment or
supplement thereto; and (ii) for any violation by you or any
Soliciting Dealer, in the sale of the Shares, of any applicable state
or federal law or any rule, regulation or instruction thereunder,
provided that such violation is not in reliance on any violation by
the Company of such law, rule, regulation or instruction.
You and each Soliciting Dealer further agree to indemnify and
hold harmless the Company and any controlling person of the Company
against any losses, liabilities, claims, damages or expenses to which
the Company or any such controlling person may become subject under
the securities or blue sky laws of any jurisdiction insofar as such
losses, liabilities, claims, damages or expenses (or actions,
proceedings or investigations in respect thereof) arise by reason of a
sale of the Shares through the efforts of you (with respect to sales
effected without the assistance of a Soliciting Dealer) or a
Soliciting Dealer (with respect to sales effected by such Soliciting
Dealer) which is effected other than in accordance with the Blue Sky
Survey supplied to you by the Company (a "Non-Permitted Sale"),
whether such Non-Permitted Sale is caused by a sale in a jurisdiction
other than those specified in the Blue Sky Survey, by a sale in a
jurisdiction in which you or the Soliciting Dealer is not registered
to sell the Shares or which results in a sale in a jurisdiction in
excess of the number of Shares permitted to be sold in such
jurisdiction, and will reimburse the Company or any such controlling
person for any legal fees, monetary penalties or other expenses
reasonably incurred by any of them in connection with investigating,
curing or defending against any such losses, liabilities, claims,
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damages, actions, proceedings or investigations. This indemnity
agreement will be in addition to any liability which you or any
Soliciting Dealer may otherwise have.
(d) The notice provisions contained in Section 7(a)
hereof, relating to notice to the Company, shall be equally applicable
to you and each Soliciting Dealer if the Company or any controlling
person of the Company seeks indemnification pursuant to Section 7(c)
hereof. In addition, you and each Soliciting Dealer may participate
in the defense, or assure the defense, of any such suit so brought
under Section 7(c) hereof and have the same rights and privileges as
the Company enjoys with respect to such suits under Section 7(a)
hereof.
8. Termination of this Agreement. This Agreement may be
terminated by you in the event that the Company shall have materially failed to
comply with any of the material provisions of this Agreement on its part to be
performed at or prior to the Effective Date or if any of the representations,
warranties, covenants or agreements of the Company herein contained shall not
have been materially complied with or satisfied within the times specified.
In any case, this Agreement shall terminate at the close of business
on the Termination Date. Termination of this Agreement pursuant to this
Section 8 shall be without liability of any party to any other party other than
as provided in Sections 5 and 7 hereof which shall survive such termination.
9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or contained in certificates of the Company submitted pursuant hereto
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of you or any person who controls you, or by
or on behalf of the Company and shall survive the Termination Date.
10. Notices. All communications hereunder shall be in writing
and, if sent to you, shall be mailed by registered mail or delivered or
telegraphed and confirmed in writing to Inland Securities Corporation, 0000
Xxxxxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxx 00000, (Attention: Xx. Xxxxxx Xxxxxx)
and, if sent to the Company, shall be mailed by registered mail or delivered or
telegraphed and confirmed in writing to Inland Real Estate Corporation, 0000
Xxxxxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxx 00000 (Attention: Xx. Xxxxxxx X. Xxxxxx).
11. Reference to Inland Securities Corporation. All references
herein to Inland Securities Corporation or the Dealer Manager hereunder shall
be deemed to include all successors and assigns of Inland Securities
Corporation.
12. Parties. This Agreement shall inure to the benefit of and be
binding upon you, the Company and its successors and assigns. This Agreement
and the conditions and provisions hereof, are intended to be and shall be for
the sole and exclusive benefit of the parties hereto and their respective
successors and controlling persons, and for the benefit of no other person,
firm or corporation, and the term "successors and assigns," as used herein,
shall not include any purchaser of Shares as such.
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13. Applicable Law. This Agreement and any disputes relative
thereto shall be governed by and construed under the internal laws, as opposed
to the conflicts of laws provisions, of the State of Illinois.
14. Effectiveness of Agreement. This Agreement shall become
effective at 5:00 p.m., Chicago, Illinois time, on the Effective Date, or at
such earlier time as you and the Company agree.
15. Not a Separate Entity. Nothing contained herein shall
constitute you and/or the Soliciting Dealers or any of them an association,
partnership, limited liability company, unincorporated business or other
separate entity.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return it to us, whereupon this instrument will
become a binding agreement between you and the Company in accordance with its
terms.
Inland Real Estate Corporation, Inc.,
a Maryland corporation
By:
---------------------------------
Title:
--------------------------
Accepted as of the date
first above written:
Inland Securities Corporation
By:
---------------------------------
Title:
--------------------------
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