COLE CREDIT PROPERTY TRUST II, INC. Up to 150,000,000 Shares of Common Stock FORM OF DEALER MANAGER AGREEMENT
EXHIBIT 1.1
XXXX CREDIT PROPERTY TRUST II, INC.
Up to 150,000,000 Shares of Common Stock
FORM OF DEALER MANAGER AGREEMENT
________ __, 2007
Xxxx Capital Corporation
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
Xxxx Credit Property Trust II, Inc., a Maryland corporation (the “Company”), is registering
for a public sale a maximum of 150,000,000 shares of its common stock, $0.01 par value per share
(the “Offering”), of which amount 125,000,000 shares are to be offered to the public for $10.00 per
share (collectively the “Shares” or the “Stock”) and 25,000,000 shares are to be offered pursuant
to the Company’s distribution reinvestment plan at the higher of 95% of the estimated value of a
share of our common stock, as estimated by our board of directors, or $9.50 per share. There shall
be a minimum purchase by any one person of 250 Shares (except as otherwise indicated in the
Prospectus or in any letter or memorandum for the Company to Xxxx Capital Corporation (the “Dealer
Manager”)). Terms not defined herein shall have the same meaning as in the Prospectus. In
connection therewith, the Company hereby agrees with you, the Dealer Manager, as follows:
| 1. | Representations and Warranties of the Company |
The Company represents and warrants to the Dealer Manager that:
1.1 A registration statement (File 333-138444) on Form S-11 with respect to the Company has
been prepared by the Company in accordance with applicable requirements of the Securities Act of
1933, as amended (the “Securities Act”), and the applicable rules and regulations (the “Rules and
Regulations”) of the Securities and Exchange Commission (the “SEC”) promulgated thereunder,
covering the Shares. Copies of such registration statement and each amendment thereto have been or
will be delivered to the Dealer Manager. (The registration statement and prospectus contained
therein, as finally amended at the effective date of the registration statement, are respectively
hereinafter referred to as the “Registration Statement” and the “Prospectus,” except that if the
Company files a Prospectus or a prospectus supplement pursuant to Rule 424(b) under the Securities
Act, or if the Company files a post-effective amendment to the Registration Statement, the term
“Prospectus” includes the prospectus filed pursuant to Rule 424(b) or the prospectus included in
such post-effective amendment.)
1.2 The Company has been duly and validly organized and formed as a corporation under the laws
of the state of Maryland, with the power and authority to conduct its business as described in the
Prospectus.
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1.3 The Registration Statement and the Prospectus comply with the Securities Act and the Rules
and Regulations and do not contain any untrue statements of material fact or omit to state any
material fact required to be stated therein or necessary in order to make the statements therein
not misleading; provided, however, that the foregoing provisions of this Section 1.3 will not
extend to such statements contained in or omitted from the Registration Statement or Prospectus as
(i) are primarily within the knowledge of the Dealer Manager or any of the Dealers and (ii) for
statements contained in the Registration Statement or Prospectus, are based upon information
furnished by the Dealer Manager in writing to the Company specifically for inclusion therein.
1.4 The Company intends to use the funds received from the sale of the Shares as set forth in
the Prospectus.
1.5 No consent, approval, authorization or other order of any governmental authority is
required in connection with the execution or delivery by the Company of this Agreement or the
issuance and sale by the Company of the Shares, except such as may be required under the Securities
Act or applicable state securities laws.
1.6 There are no actions, suits or proceedings pending or to the knowledge of the Company,
threatened against the Company at law or in equity or before or by any federal or state commission,
regulatory body or administrative agency or other governmental body, domestic or foreign, which
will have a material adverse effect on the business or property of the Company.
1.7 The execution and delivery of this Agreement, the consummation of the transactions herein
contemplated and compliance with the terms of this Agreement by the Company will not conflict with
or constitute a default under any charter, bylaw, indenture, mortgage, deed of trust, lease, rule,
regulation, writ, injunction or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company, except to the extent that the
enforceability of the indemnity and/or contribution provisions contained in Section 4 of this
Agreement may be limited under applicable securities laws.
1.8 The Company has full legal right, power and authority to enter into this Agreement and to
perform the transactions contemplated hereby, except to the extent that the enforceability of the
indemnity and/or contribution provisions contained in Section 4 of this Agreement may be limited
under applicable securities laws.
1.9 At the time of the issuance of the Shares, the Shares will have been duly authorized and
validly issued, and upon payment therefor, will be fully paid and nonassessable and will conform to
the description thereof contained in the Prospectus.
| 2. | Covenants of the Company |
The Company covenants and agrees with the Dealer Manager that:
2.1 It will, at no expense to the Dealer Manager, furnish the Dealer Manager with such number
of printed copies of the Registration Statement, including all supplements, amendments and exhibits
thereto, as the Dealer Manager may reasonably request. It will similarly furnish to the Dealer
Manager and others designated by the Dealer Manager as many copies as the Dealer Manager may
reasonably request in connection with the offering of the Shares of: (a) the Prospectus in
preliminary and final form and every form of supplemental or amended prospectus; (b) this
Agreement; and (c) any other printed sales literature or other materials (provided that the use of
said sales literature and other materials has been first approved for use by the Company and all
appropriate regulatory agencies).
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2.2 It will furnish such proper information and execute and file such documents as may be
necessary for the Company to qualify the Shares for offer and sale under the securities laws of
such jurisdictions as the Dealer Manager may reasonably designate and will file and make in each
year such statements and reports as may be required. The Company will furnish to the Dealer
Manager a copy of such papers filed by the Company in connection with any such qualification.
2.3 It will: (a) use its best efforts to cause the Registration Statement to become effective;
(b) furnish copies of any proposed amendment or supplement to the Registration Statement or
Prospectus to the Dealer Manager; (c) file every amendment or supplement to the Registration
Statement or the Prospectus that may be required by the SEC; and (d) use its best efforts to obtain
the lifting of any stop order suspending the effectiveness of the Registration Statement that may
be issued by the SEC at the earliest possible time. If at any time when a Prospectus is required
to be delivered under the Securities Act any event occurs as a result of which, in the opinion of
either the Company or the Dealer Manager, the Prospectus or any other prospectus then in effect
would include an untrue statement of a material fact or, in view of the circumstances under which
they were made, omit to state any material fact necessary to make the statements therein not
misleading, the Company will promptly notify the Dealer Manager thereof (unless the information
shall have been received from the Dealer Manager) and will effect the preparation of an amended or
supplemental prospectus which will correct such statement or omission. The Company will then
promptly prepare such amended or supplemental prospectus or prospectuses as may be necessary to
comply with the requirements of Section 10 of the Securities Act.
| 3. | Obligations and Compensation of Dealer Manager |
3.1 The Company hereby appoints the Dealer Manager as its agent and principal distributor for
the purpose of selling for cash up to a maximum of 125,000,000 Shares through Dealers, all of whom
shall be members of the National Association of Securities Dealers, Inc. (NASD). The Dealer
Manager may also sell Shares for cash directly to its own clients and customers at the public
offering price and subject to the terms and conditions stated in the Prospectus. The Dealer
Manager hereby accepts such agency and distributorship and agrees to use its best efforts to sell
the Shares on said terms and conditions. The Dealer Manager represents to the Company that (i) it
is a member of the NASD; (ii) it and its employees and representatives have all required licenses
and registrations to act under this Agreement; and (iii) it has established and implemented
anti-money laundering compliance programs in accordance with applicable law, including applicable
NASD rules, SEC rules, and the USA PATRIOT Act of 2001, reasonably expected to detect and cause the
reporting of suspicious transactions in connection with the sale of Shares of the Company.
3.2 Promptly after the effective date of the Registration Statement, the Dealer Manager and
the Dealers shall commence the offering of the Shares for cash to the public in jurisdictions in
which the Shares are registered or qualified for sale or in which such offering is otherwise
permitted. The Dealer Manager and the Dealers will suspend or terminate offering of the Shares
upon request of the Company at any time and will resume offering the Shares upon subsequent request
of the Company.
3.3 Except as provided in the “Plan of Distribution” section of the Prospectus, as
compensation for the services rendered by the Dealer Manager, the Company agrees that it will pay
to the Dealer Manager selling commissions in the amount of 7.0% of the gross proceeds of the Shares
sold plus a dealer manager fee in the amount of up to 2.0% of the gross proceeds of the Shares
sold; provided, however, that there shall be no selling commissions and no dealer manager fees paid
for sales of Shares under the Company’s distribution reinvestment plan. The Company will not be
liable or responsible to any Dealer for direct payment of commissions to such Dealer, it being the
sole and exclusive responsibility of the Dealer Manager for payment of commissions to Dealers.
Notwithstanding the above,
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at its discretion, the Company may act as agent of the Dealer Manager by making direct payment
of commissions to such Dealers without incurring any liability therefore.
3.4 The Dealer Manager represents and warrants to the Company and each person and firm that
signs the Registration Statement that the information under the caption “Plan of Distribution” in
the Prospectus and all other information furnished to the Company by the Dealer Manager in writing
expressly for use in the Registration Statement, any preliminary prospectus, the Prospectus, or any
amendment or supplement thereto does not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the statements therein
not misleading.
3.5 The Dealer Manager shall use and distribute in conjunction with the offer and sale of any
Shares only the Prospectus and such sales literature and advertising as shall have been previously
approved in writing by the Company.
3.6 The Dealer Manager and the Dealers shall cause Shares to be offered and sold only in those
jurisdictions specified in writing by the Company for whose account Shares are then offered for
sale, and such list of jurisdictions shall be updated by the Company as additional states are
added. The Company shall specify only such jurisdictions in which the offering and sale of its
Shares has been authorized by appropriate state regulatory authorities. No Shares shall be offered
or sold for the account of the Company in any other states.
| 4. | Indemnification |
4.1 The Company will indemnify and hold harmless the Dealers and the Dealer Manager, their
officers and directors and each person, if any, who controls such Dealer or Dealer Manager within
the meaning of Section 15 of the Securities Act from and against any losses, claims, damages or
liabilities (“Losses”), joint or several, to which such Dealers or Dealer Manager, their officers
and directors, or such controlling person may become subject, under the Securities Act or
otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based upon
(a) any untrue statement or alleged untrue statement of a material fact contained (i) in any
Registration Statement (including the Prospectus as a part thereof) or any post-effective amendment
thereto or in the Prospectus or any amendment or supplement to the Prospectus or (ii) in any blue
sky application or other document executed by the Company or on its behalf specifically for the
purpose of qualifying any or all of the Shares for sale under the securities laws of any
jurisdiction or based upon written information furnished by the Company under the securities laws
thereof (any such application, document or information being hereinafter called a “Blue Sky
Application”), or (b) the omission or alleged omission to state in the Registration Statement
(including the Prospectus as a part thereof) or any post-effective amendment thereof or in any Blue
Sky Application a material fact required to be stated therein or necessary to make the statements
therein not misleading, or (c) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, if used prior to the effective date of the Registration
Statement, or in the Prospectus or any amendment or supplement to the Prospectus of the omission or
alleged omission to state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they were made, not
misleading, and will reimburse each Dealer or Dealer Manager, its officers and each such
controlling person for any legal or other expenses reasonably incurred by such Dealer or Dealer
Manager, its officers and directors, or such controlling person in connection with investigating or
defending such loss, claim, damage, liability or action; provided that the Company will not be
liable in any such case to the extent that any such Loss 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 or Dealer Manager by or on behalf of
any Dealer or Dealer Manager specifically for use with reference to such Dealer or Dealer Manager
in the preparation of the Registration Statement or any such post-effective amendment thereof, any
such Blue
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Sky Application or any such preliminary prospectus or the Prospectus or any such amendment
thereof or supplement thereto; and further provided that the Company will not be liable in any such
case if it is determined that such Dealer or Dealer Manager was at fault in connection with the
Loss. Notwithstanding the foregoing, the Company may not indemnify or hold harmless the Dealer
Manager, any Dealer or any of their affiliates in any manner that would be inconsistent with the
provisions of Section II.G. of the Statement of Policy Regarding Real Estate Investment Trusts of
the North American Securities Administrators Association, Inc. effective September 29, 1993, as
amended (the “NASAA Guidelines”). In particular, but without limitation, the Company may not
indemnify or hold harmless the Dealer Manager, any Dealer or any of their affiliates for
liabilities arising from or out of a violation of state or federal securities laws, unless one or
more of the following conditions are met:
| (a) | there has been a successful adjudication on the merits of each count involving alleged securities law violations; | ||
| (b) | such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction; or | ||
| (c) | 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 SEC and of the published position of any state securities regulatory authority in which the securities were offered as to indemnification for violations of securities laws. |
4.2 The Dealer Manager will indemnify and hold harmless the Company and each person or firm
which has signed the Registration Statement and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, from and against any Losses to which any of
the aforesaid parties may become subject, under the Securities Act or otherwise, insofar as such
Losses (or actions in respect thereof) arise out of or are based upon (a) any untrue statement of a
material fact contained (i) in the Registration Statement (including the Prospectus as a part
thereof) or any post-effective amendment thereof or (ii) any Blue Sky Application, or (b) the
omission to state in the Registration Statement (including the Prospectus as a part thereof) or any
post-effective amendment thereof or in any Blue Sky Application a material fact required to be
stated therein or necessary to make the statements therein not misleading, or (c) any untrue
statement or alleged untrue statement of a material fact contained in any preliminary prospectus,
if used prior to the effective date of the Registration Statement, or in the Prospectus, or in any
amendment or supplement to the Prospectus or the omission to state therein a material fact required
to be stated therein or necessary in order to make the statements therein in the light of the
circumstances under which they were made not misleading in each case to the extent, but only to the
extent, that such untrue statement or omission was made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Dealer Manager specifically for
use with reference to the Dealer Manager in the preparation of the Registration Statement or any
such post-effective amendments hereof or any such Blue Sky Application or any such preliminary
prospectus or the Prospectus or any such amendment thereof or supplement thereto, or (d) any
unauthorized use of sales materials or use of unauthorized verbal representations concerning the
Shares by the Dealer Manager, or (e) any failure to comply with applicable laws governing money
laundry abatement and anti-terrorist financing efforts, including applicable NASD rules, SEC rules
and the USA PATRIOT Act of 2001, and will reimburse the aforesaid parties, in connection with
investigation or defending such Loss or action. This indemnity agreement will be in addition to
any liability which the Dealer Manager may otherwise have.
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4.3 Each Dealer severally will indemnify and hold harmless the Company, Dealer Manager and
each of their directors (including any person named in the Registration Statement with his consent
as about to become a director), each of their officers who has signed the Registration Statement
and each person, if any, who controls the Company and the Dealer Manager within the meaning of
Section 15 of the Securities Act from and against any Losses to which the Company, the Dealer
Manager, any such director or officer, or controlling person may become subject, under the
Securities Act or otherwise, insofar as such Losses or liabilities (or actions in respect thereof)
arise out of or are based upon (a) any untrue statement or alleged untrue statement of a material
fact contained (i) in the Registration Statement (including the Prospectus as a part thereof) or
any post-effective amendment thereof or (ii) in any Blue Sky Application, or (b) the omission or
alleged omission to state in the Registration Statement (including the Prospectus as a part
thereof) or any post-effective amendment thereof or in any Blue Sky Application a material fact
required to be stated therein or necessary to make the statements therein not misleading, or (c)
any untrue statement or alleged untrue statement of a material fact contained in any preliminary
prospectus, if used prior to the effective date of the Registration Statement, or in the
Prospectus, or in any amendment or supplement to the Prospectus or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading in
each case to the extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company or the Dealer Manager by or on behalf of such Dealer
specifically for use with reference to such Dealer in the preparation of the Registration Statement
or any such post-effective amendments thereof or any such Blue Sky Application or any such
preliminary prospectus or the Prospectus or any such amendment thereof or supplement thereto, or
(d) any unauthorized use of sales materials or use of unauthorized verbal representations
concerning the Shares by such Dealer or Dealer’s representatives or agents in violation of Section
VII of the Selected Dealer Agreement or otherwise, or (e) any failure to comply with applicable
laws governing money laundry abatement and anti-terrorist financing efforts, including applicable
NASD rules, SEC rules and the USA PATRIOT Act of 2001, and will reimburse the Company and the
Dealer Manager and any such directors or officers, or controlling person, in connection with
investigating or defending any such Loss or action. This indemnity agreement will be in addition
to any liability which such Dealer may otherwise have.
4.4 Promptly after receipt by an indemnified party under this Section 4 of notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 4, notify in writing the indemnifying party
of the commencement thereof and the omission so to notify the indemnifying party will relieve such
indemnifying party from any liability under this Section 4 as to the particular item for which
indemnification is then being sought, but not from any other liability which it may have to any
indemnified party. In case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the indemnifying party will be
entitled, to the extent it may wish, jointly with any other indemnifying party similarly notified,
to participate in the defense thereof, with separate counsel. Such participation shall not relieve
such indemnifying party of the obligation to reimburse the indemnified party for reasonable legal
and other expenses (subject to Section 4.5) incurred by such indemnified party in defending itself,
except for such expenses incurred after the indemnifying party has deposited funds sufficient to
effect the settlement, with prejudice, of the claim in respect of which indemnity is sought. Any
such indemnifying party shall not be liable to any such indemnified party on account of any
settlement of any claim or action effected without the consent of such indemnifying party.
4.5 The indemnifying party shall pay all legal fees and expenses of the indemnified party in
the defense of such claims or actions; provided, however, that the indemnifying party shall not be
obligated to pay legal expenses and fees to more than one law firm in connection with the defense
of
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similar claims arising out of the same alleged acts or omissions giving rise to such claims
notwithstanding that such actions or claims are alleged or brought by one or more parties against
more than one indemnified party. If such claims or actions are alleged or brought against more
than one indemnified party, then the indemnifying party shall only be obliged to reimburse the
expenses and fees of the one law firm that has been selected by a majority of the indemnified
parties against which such action is finally brought; and in the event a majority of such
indemnified parties is unable to agree on which law firm for which expenses or fees will be
reimbursable by the indemnifying party, then payment shall be made to the first law firm of record
representing an indemnified party against the action or claim. Such law firm shall be paid only to
the extent of services performed by such law firm and no reimbursement shall be payable to such law
firm on account of legal services performed by another law firm.
4.6 If the indemnity agreements contained in this Section 4 are for any reason unavailable to
or insufficient to hold harmless an indemnified party in respect of any Losses or expenses referred
to therein, then each indemnifying party shall contribute to the aggregate amount of such Losses
and expenses incurred by such indemnified party, as incurred, (a) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one hand and the Dealer
Manager or Dealer on the other hand from the offering of the Shares in question or (b) if the
allocation provided by clause (a) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (a) but also the
relative fault of the Company on the one hand and of the Dealer Manager or Dealer on the other hand
in connection with the statements or omissions which resulted in such Losses or expenses, as well
as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the Dealer Manager or Dealer
on the other hand in connection with the Offering shall be deemed to be in the same respective
proportions as the total net proceeds from the Offering (before deducting expenses) received by the
Company and the total selling commission and any dealer manager fee actually received by the Dealer
Manager or Dealer, in each case as set forth on the cover of the Prospectus, bear to the aggregate
public offering price of the Shares as set forth on such cover. The relative fault of the Company
on the one hand and the Dealer Manager or Dealer on the other hand shall be determined by reference
to, among other things, whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information supplied by the
Company or by the Dealer Manager or Dealer and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. It is understood that
it would not be just and equitable if contribution pursuant to this Section 4 were determined by
pro rata allocation or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 4. The aggregate amount of Losses and
expenses incurred by an indemnified party and referred to above in this Section 4 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 4, the Dealer Manager or Dealer shall not be
required to contribute any amount in excess of the amount by which the total price at which the
Shares sold by it exceeds the amount of any damages that such Dealer Manager or Dealer has
otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission
or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
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For purposes of this Section 4, each director of the Company, each other person who signed the
Registration Statement, and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act shall have the same rights to contribution as the Company, and
each person, if any, who controls the Dealer Manager or any Dealer within the meaning of Section 15
of the Securities Act shall have the same rights to contribution as such Dealer Manager or Dealer.
| 5. | Survival of Provisions |
The respective agreements, representations and warranties of the Company and the Dealer
Manager set forth in this Agreement shall remain operative and in full force and effect regardless
of (a) any investigation made by or on behalf of the Dealer Manager or any Dealer or any person
controlling the Dealer Manager or any Dealer or by or on behalf of the Company or any person
controlling the Company, and (b) the acceptance of any payment for the Shares.
| 6. | Applicable Law; Venue |
This Agreement was executed and delivered in, and its validity, interpretation and
construction shall be governed by the laws of, the State of Arizona; provided however, that causes
of action for violations of federal or state securities laws shall not be governed by this Section.
Venue for any action brought hereunder shall lie exclusively in Phoenix, Arizona.
| 7. | Counterparts |
This Agreement may be executed in any number of counterparts. Each counterpart, when executed
and delivered, shall be an original contract, but all counterparts, when taken together, shall
constitute one and the same Agreement.
| 8. | Successors and Amendment |
8.1 This Agreement shall inure to the benefit of and be binding upon the Dealer Manager and
the Company and their respective successors. Nothing in this Agreement is intended or shall be
construed to give to any other person any right, remedy or claim, except as otherwise specifically
provided herein. This Agreement shall inure to the benefit of the Dealers to the extent set forth
in Sections 1 and 4 hereof.
8.2 This Agreement may be amended by the written agreement of the Dealer Manager and the
Company.
| 9. | Term |
This Agreement may be terminated by either party (i) immediately upon notice to the other
party in the event that the other party shall have materially failed to comply with any of the
material provisions of this Agreement on its part to be performed during the term of this Agreement
or if any of the representations, warranties, covenants or agreements of such party contained
herein shall not have been materially complied with or satisfied within the times specified or (ii)
by either party on 60 days’ written notice.
In any case, this Agreement shall expire at the close of business on the effective date that
the Offering is terminated. The provisions of Section 4 hereof shall survive such termination. In
addition, the Dealer Manager, upon the expiration or termination of this Agreement, shall (i)
promptly deposit any and all funds in its possession which were received from investors for the
sale of Shares into the appropriate escrow account or, if the minimum number of Shares have been
sold and accepted by the Company, into
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such other account as the Company may designate; and (ii) promptly deliver to the Company all
records and documents in its possession which relate to the Offering and are not designated as
dealer copies. The Dealer Manager, at its sole expense, may make and retain copies of all such
records and documents, but shall keep all such information confidential. The Dealer Manager shall
use its best efforts to cooperate with the Company to accomplish an orderly transfer of management
of the Offering to a party designated by the Company. Upon expiration or termination of this
Agreement, the Company shall pay to the Dealer Manager all commissions to which the Dealer Manager
is or becomes entitled under Section 3 at such time as such commissions become payable. In such
event, participating broker-dealers shall only be entitled to actual earned commissions to date.
| 10. | Confirmation |
The Company hereby agrees and assumes the duty to confirm on its behalf and on behalf of
dealers or brokers who sell the Shares all orders for purchase of Shares accepted by the Company.
Such confirmations will comply with applicable rules of the SEC and the NASD, and will comply with
applicable laws of such other jurisdictions to the extent the Company is advised of such laws in
writing by the Dealer Manager.
| 11. | Suitability of Investors |
The Dealer Manager will offer Shares, and in its agreements with Dealers will require that the
Dealers offer Shares, only to persons who meet the financial qualifications set forth in the
Prospectus or in any suitability letter or memorandum sent to it by the Company and will only make
offers to persons in the states in which it is advised in writing that the Shares are qualified for
sale or that such qualification is not required. In offering Shares, the Dealer Manager will, and
in its agreements with Dealers, the Dealer Manager will require that the Dealers will, comply with
the provisions of all applicable rules and regulations relating to suitability of investors,
including without limitation, the provisions of Article III.C. of the NASAA Guidelines. In making
the determinations as to suitability required by the NASAA Guidelines, the Dealer Manager may rely
on representations from (i) investment advisers who are not affiliated with a Dealer or (ii) banks
acting as trustees or fiduciaries. With respect to the maintenance of records required by the NASAA
Guidelines, the Company agrees that the Dealer Manager can satisfy its obligations by contractually
requiring such information to be maintained by the investment advisers or banks discussed in the
preceding sentence.
| 12. | Submission of Subscriptions |
12.1 Those persons who purchase Shares will be instructed by the Dealer Manager or the Dealer
to make their checks payable to “Xxxx Credit Property Trust II, Inc.” The Dealer Manager and any
Dealer receiving a check not conforming to the foregoing instructions shall return such check
directly to such subscriber not later than the end of the next business day following its receipt.
Checks received by the Dealer Manager or Dealer which conform to the foregoing instructions shall
be transmitted for deposit pursuant to one of the methods described in this Section 12 and in
accordance with the requirements set forth in Rule 15c2-4 promulgated under the Securities Exchange
Act of 1934, as amended. Transmittal of received investor funds will be made in accordance with
the following procedures. The Dealer Manager may authorize certain Dealers that are “$250,000
broker-dealers” to instruct their customers to make their checks for Shares subscribed for payable
directly to the Dealer. In such case, the Dealer will collect the proceeds of the subscribers’
checks and issue a check for the aggregate amount of the subscription proceeds made payable to the
order of the Company.
12.2 If a Dealer conducts its internal supervisory procedures at the location where
subscription documents and checks are initially received, the Dealer shall, by noon of the business
day following
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receipt by the Dealer of the subscription documents and the check, forward (i) the
subscription documents to the Dealer Manager and (ii) the checks to the Company.
12.3 If a Dealer’s internal supervisory procedures are to be performed at a different location
(the “Final Review Office”), the subscription documents and check must be transmitted to the Final
Review Office by noon of the next business day following receipt of the subscription documents and
check-by the Dealer. The Final Review Office will, by the end of the second business day following
receipt by the Dealer of the subscription documents and check, forward (i) the subscription
documents to the Dealer Manager and (ii) the checks to the Company.
| 13. | Notices |
Any notice, approval, request, authorization, direction or other communication under this
Agreement shall be given in writing and shall be deemed to be delivered when delivered in person or
deposited in the United States mail, properly addressed and stamped with the required postage,
registered or certified mail, return receipt requested, to the intended recipient as set forth
below:
If to the Company;
|
Xxxx Credit Property Trust II, Inc. | |
| 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000 | ||
| Xxxxxxx, Xxxxxxx 00000 | ||
| Attention: President | ||
If to the Dealer Manager:
|
Xxxx Capital Corporation | |
| 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000 | ||
| Xxxxxxx, Xxxxxxx 00000 | ||
| Attention: President |
Any party may change its address specified above by giving the other party notice of such
change in accordance with this Section 14.
If the foregoing correctly sets forth our understanding, please indicate your acceptance
thereof in the space provided below for that purpose, whereupon this letter and your acceptance
shall constitute a binding agreement between us as of the date first above written.
| Very truly yours, XXXX CREDIT PROPERTY TRUST II, INC. |
||||
| By: | /s/ | |||
| Xxxxxxxxxxx X. Xxxx, President | ||||
Accepted and agreed as of the date first above written.
| XXXX CAPITAL CORPORATION |
||||
| By: | /s/ | |||
| Xxxxx X. Xxxxxxx, President | ||||
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EXHIBIT A
XXXX CREDIT PROPERTY TRUST II, INC.
Up to 125,000,000 Shares of Common Stock
Ladies and Gentlemen:
Xxxx Capital Corporation, as the dealer manager (“Dealer Manager”) for Xxxx Credit Property
Trust II, Inc. (the “Company”), a Maryland corporation, invites you (the “Dealer”) to participate
in the distribution of shares of common stock (“Shares”) of the Company subject to the following
terms:
| I. | Dealer Manager Agreement |
The Dealer Manager has entered into an agreement with the Company called the Dealer Manager
Agreement dated [June ___, 2007], in the form attached hereto as Exhibit A (the “Dealer
Manager Agreement”). The terms of the Dealer Manager Agreement relating to the Dealer are
incorporated herein by reference as if set forth verbatim and capitalized terms not otherwise
defined herein shall have the meanings given them in the Dealer Manager Agreement. By your
acceptance of this Agreement, you will become one of the Dealers referred to in the Dealer Manager
Agreement and will be entitled and subject to the indemnification provisions contained in the
Dealer Manager Agreement, including the provisions of the Dealer Manager Agreement wherein the
Dealers severally agree to indemnify and hold harmless the Company, the Dealer Manager and each
officer and director thereof, and each person, if any, who controls the Company and the Dealer
Manager within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).
Except as otherwise specifically stated herein, all terms used in this Agreement have the meanings
provided in the Dealer Manager Agreement. The Shares are offered solely through broker-dealers who
are members of the National Association of Securities Dealers, Inc. (“NASD”).
Dealer hereby agrees to use its best efforts to sell the Shares for cash on the terms and
conditions stated in the Prospectus. Nothing in this Agreement shall be deemed or construed to
make Dealer an employee, agent, representative or partner of the Dealer Manager or of the Company,
and Dealer is not authorized to act for the Dealer Manager or the Company or to make any
representations on their behalf except as set forth in the Prospectus and such other printed
information furnished to Dealer by the Dealer Manager or the Company to supplement the Prospectus
(“supplemental information”).
| II. | Submission of Orders |
Those persons who purchase Shares will be instructed by the Dealer to make their checks
payable to Xxxx Credit Property Trust II, Inc.” Any Dealer receiving a check not conforming to the
foregoing instructions shall return such check directly to such subscriber not later than the end
of the next business day following its receipt. Checks received by the Dealer that conform to the
foregoing instructions shall be transmitted for deposit pursuant to one of the methods in this
Article II. The Dealer Manager may authorize Dealer if Dealer is a “$250,000 broker-dealer” to
instruct its customers to make its checks for Shares subscribed for payable directly to the Dealer,
in which case the Dealer will collect the proceeds of the subscriber’s checks and issue a check
made payable to the order of the Company for the aggregate amount of the subscription proceeds.
Transmittal of received investor funds will be made in accordance with the following procedures:
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| (a) | If the Dealer conducts its internal supervisory procedures at the location where subscription documents and checks are initially received, the Dealer shall forward (i) the subscription documents to the Dealer Manager and (ii) the checks to the Company by the end of the next business day following receipt of the subscription documents and the check. | ||
| (b) | If the internal supervisory procedures are to be performed at a different location (the “Final Review Office”), the subscription documents and check must be transmitted to the Final Review Office by the end of the next business day following receipt by the Dealer of the subscription documents and check. The Final Review Office will, by the end of the next business day following receipt by the Final Review Office of the subscription documents and check, forward both the subscription documents and check to the Dealer Manager as processing broker-dealer in order that the Dealer Manager may complete its review of the documentation and process the subscription documents and check. |
If requested by the Company or the Dealer Manager, the Dealer shall obtain from subscribers
for the Shares, other documentation reasonably deemed by the Company or the Dealer Manager to be
required under applicable law or as may be necessary to reflect the policies of the Company or the
Dealer Manager. Such documentation may include, without limitation, subscribers’ written
acknowledgement and agreement to the privacy policies of the Company or the Dealer Manager.
| III. | Pricing |
Except for discounts described in or as otherwise provided in the “Plan of Distribution”
section of the Prospectus, 125,000,000 Shares shall be offered to the public at the offering price
of $10.00 per Share, payable in cash pursuant to the primary offering and up to 25,000,000 Shares
shall be offered pursuant to the Company’s distribution reinvestment plan at the higher of 95% of
the estimated value of a share of our common stock, as estimated by our board of directors, or
$9.50 per Share. Except as otherwise indicated in the Prospectus or in any letter or memorandum
sent to the Dealer by the Company or Dealer Manager, a minimum initial purchase of 250 Shares is
required. Except as otherwise indicated in the Prospectus, additional investments may be made in
cash in minimal increments of at least 100 Shares. The Shares are nonassessable. The Dealer
hereby agrees to place any order for the full purchase price.
| IV. | Dealers’ Commissions |
Except for discounts described in or as otherwise provided in the “Plan of Distribution”
section of the Prospectus, the Dealer’s selling commission applicable to the total public offering
price of Shares sold by Dealer which it is authorized to sell hereunder is 7.0% of the gross
proceeds of Shares sold by it and accepted and confirmed by the Company (no selling commissions for
Shares sold pursuant to the Company’s distribution reinvestment plan), which commission will be
paid by the Dealer Manager. For these purposes, a “sale of Shares” shall occur if and only if a
transaction has closed with a securities purchaser pursuant to all applicable offering and
subscription documents and the Company has thereafter distributed the commission to the Dealer
Manager in connection with such transaction. The Dealer 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. The Dealer affirms that the Dealer Manager’s liability for
commissions payable is limited solely to the proceeds of commissions receivable associated
therewith. In addition, as set forth in the Prospectus, the Dealer Manager may, in its sole
discretion, reallow out of its dealer manager fee a marketing fee and due diligence expense
reimbursement a portion the dealer manager fee, based on such factors as the number of Shares sold
by such participating Dealer, the assistance of such participating Dealer in marketing the offering
of Shares, and bona fide conference fees incurred.
-2-
Dealer acknowledges and agrees that no commissions, payments or amount whatsoever will be paid
to the Dealer unless or until (i) the subscription for such Shares has been accepted and (ii) the
gross proceeds of the Shares sold have cleared normal banking channels and are in the form of cash
or cash equivalent, and for the Company.
The parties hereby agree that the foregoing commission is not in excess of the usual and
customary distributors’ or sellers’ commission received in the sale of securities similar to the
Shares, that Dealer’s interest in the offering is limited to such commission from the Dealer
Manager and Dealer’s indemnity referred to in Section 4 of the Dealer Manager Agreement, that the
Company is not liable or responsible for the direct payment of such commission to the Dealer.
| V. | Payment |
Payments of selling commissions will be made by the Dealer Manager (or by the Company as
provided in the Dealer Manager Agreement) to Dealer within 30 days of the receipt by the Dealer
Manager of the gross commission payments from the Company. Dealer acknowledges that if the Company
pays selling commissions to the Dealer Manager, the Company is relieved of any obligation for
selling commissions to the Dealer. The Company may rely on and use the preceding acknowledgement
as a defense against any claim by Dealer for selling commissions Company pays to Dealer Manager but
that Dealer Manager fails to remit to Dealer.
| VI. | Right to Reject Orders or Cancel Sales |
All orders, whether initial or additional, are subject to acceptance by and shall only become
effective upon confirmation by the Company, which reserves the right to reject any order for any or
no reason. Orders not accompanied by a Subscription Agreement/Signature Page and the required
check in payment for the Shares may be rejected. Issuance and delivery of the Shares will be made
only after actual receipt of payment therefor. If any check is not paid upon presentment, or if
the Company is not in actual receipt of clearinghouse funds or cash, certified or cashier’s check
or the equivalent in payment for the Shares within 15 days of sale, the Company reserves the right
to cancel the sale without notice. In the event an order is rejected, canceled or rescinded for
any reason, the Dealer agrees to return to the Dealer Manager any commission theretofore paid with
respect to such order.
| VII. | Prospectus and Supplemental Information |
Dealer is not authorized or permitted to give and will not give, any information or make any
representation concerning the Shares except as set forth in the Prospectus and supplemental
information. The Dealer Manager will supply Dealer with reasonable quantities of the Prospectus,
any amendments or supplements thereto, as well as any supplemental information, for delivery to
investors, and Dealer will deliver a copy of the Prospectus and all supplements thereto and any
amended Prospectus to each investor to whom an offer is made prior to or simultaneously with the
first solicitation of an offer to sell the Shares to an investor. The Dealer agrees that it will
not send or give any supplemental information to an investor unless it has previously sent or given
a Prospectus to that investor or has simultaneously sent or given a Prospectus with such
supplemental information. Dealer agrees that it will not show or give to any investor or
prospective investor or reproduce any material or writing which is supplied to it by the Dealer
Manager and marked “dealer only” or otherwise bearing a legend denoting that it is not to be used
in connection with the sale of Shares to any prospective investor or members of the public. Dealer
agrees that it will not use in connection with the offer or sale of Shares any material or writing
which relates to another company supplied to it by the Company or the Dealer Manager bearing a
legend which states that such material may not be used in connection with the offer or sale of any
securities other than the company to which it relates. Dealer further agrees that it will not use
in connection with the offer or sale
-3-
of Shares any materials or writings which have not been previously approved by the Dealer
Manager. Each Dealer agrees, if the Dealer Manager so requests, to furnish a copy of any revised
preliminary Prospectus to each person to whom it has furnished a copy of any previous preliminary
Prospectus, and further agrees that it will itself mail or otherwise deliver all preliminary and
final Prospectuses required for compliance with the provisions of Rule 15c2-8 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Regardless of the termination of this
Agreement, Dealer will deliver a Prospectus in transactions in the Shares for a period of 90 days
from the effective date of the Registration Statement or such longer period as may be required by
the Exchange Act or the rules and regulations thereunder. On becoming a Dealer, and in offering
and selling Shares, Dealer agrees to comply with all the applicable requirements under the
Securities Act and the Exchange Act. Notwithstanding the termination of this Agreement or the
payment of any amount to Dealer, Dealer agrees to pay Dealer’s proportionate share of any claim,
demand or liability asserted against Dealer and the other Dealers on the basis that Dealers or any
of them constitute an association, unincorporated business or other separate entity, including in
each case Dealer’s proportionate share of any expenses incurred in defending against any such
claim, demand or liability.
| VIII. | License and Association Membership |
Dealer’s acceptance of this Agreement constitutes a representation to the Company and the
Dealer Manager that Dealer is a properly registered or licensed broker-dealer, duly authorized to
sell Shares under federal and state securities laws and regulations and in all states where it
offers or sells Shares, and that it is a member in good standing of the NASD. This Agreement shall
automatically terminate if the Dealer ceases to be a member in good standing of such association,
or in the case of a foreign dealer, so to conform. Dealer agrees to notify the Dealer Manager
immediately if Dealer ceases to be a member in good standing, or in the case of a foreign dealer,
so to conform. The Dealer Manager also hereby agrees to comply with the Conduct Rules of the NASD,
including but not limited to Rules 2730, 2740, 2420 and 2750.
| IX. | Anti-Money Laundering Compliance Programs |
Dealer represents to the Company and the Dealer Manager that Dealer has established and
implemented anti-money laundering compliance programs in accordance with applicable law, including
applicable NASD rules, SEC rules and the USA PATRIOT Act of 2001, reasonably expected to detect and
cause the reporting of suspicious transactions in connection with the sale of Shares of the
Company.
| X. | Limitation of Offer |
Dealer will offer Shares only to persons who meet the qualifications set forth in the
Prospectus or in any suitability letter or memorandum sent to it by the Company or the Dealer
Manager and will only make offers to persons in the states in which it is advised in writing that
the Shares are qualified for sale or that such qualification is not required. In offering Shares,
Dealer will comply with the provisions of the NASD Conduct Rules set forth in the NASD Manual, as
well as all other applicable rules and regulations relating to suitability of investors, including
without limitation, the provisions of Article III.C. of the Statement of Policy Regarding Real
Estate Investment Trusts of the North American Securities Administrators Association, Inc.
| XI. | Termination |
Dealer will suspend or terminate its offer and sale of Shares upon the request of the Company
or the Dealer Manager at any time and will resume its offer and sale of Shares hereunder upon
subsequent request of the Company or the Dealer Manager. Any party may terminate this Agreement by
written
-4-
notice. Such termination shall be effective 48 hours after the mailing of such notice. This
Agreement is the entire agreement of the parties and supersedes all prior agreements, if any,
between the parties hereto.
This Agreement may be amended at any time by the Dealer Manager by written notice to the
Dealer, and any such amendment shall be deemed accepted by Dealer upon placing an order for sale of
Shares after he has received such notice.
| XII. | Privacy Laws |
The Dealer Manager and Dealer (each referred to individually in this section as “party”) agree
as follows:
| (a) | Each party agrees to abide by and comply with (i) the privacy standards and requirements of the Xxxxx-Xxxxx-Xxxxxx Act of 1999 (“GLB Act”), (ii) the privacy standards and requirements of any other applicable Federal or state law, and (iii) its own internal privacy policies and procedures, each as may be amended from time to time. | ||
| (b) | Each party agrees to refrain from the use or disclosure of nonpublic personal information (as defined under the GLB Act) of all customers who have opted out of such disclosures except as necessary to service the customers or as otherwise necessary or required by applicable law; and | ||
| (c) | Each party shall be responsible for determining which customers have opted out of the disclosure of nonpublic personal information by periodically reviewing and, if necessary, retrieving a list of such customers (the “List”) as provided by each to identify customers that have exercised their opt-out rights. In the event either party uses or discloses nonpublic personal information of any customer for purposes other than servicing the customer, or as otherwise required by applicable law, that party will consult the List to determine whether the affected customer has exercised his or her opt-out rights. Each party understands that each is prohibited from using or disclosing any nonpublic personal information of any customer that is identified on the List as having opted out of such disclosures. | ||
| XIII. | Notice |
All notices will be in writing and will be duly given to the Dealer Manager when mailed to
0000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, and to Dealer when mailed to the address
specified by Dealer herein.
| XIV. | Attorneys’ Fees, Applicable Law and Venue |
In any action to enforce the provisions of this Agreement or to secure damages for its breach,
the prevailing party shall recover its costs and reasonable attorney’s fees. This Agreement shall
be construed under the laws of the State of Arizona and shall take effect when signed by Dealer and
countersigned by the Dealer Manager. Venue for any action (including arbitration) brought
hereunder shall lie exclusively in Phoenix, Arizona.
-5-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on its behalf
by its duly authorized agent.
| THE DEALER MANAGER: XXXX CAPITAL CORPORATION |
||||
| By: | /s/ | |||
| Xxxxx X. Xxxxxxx, President | ||||
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We have read the foregoing Agreement and we hereby accept and agree to the terms and conditions
therein set forth. We hereby represent that the list below of jurisdictions in which we are
registered or licensed as a broker or dealer and are fully authorized to sell securities is true
and correct, and we agree to advise you of any change in such list during the term of this
Agreement.
| 1. | Identity of Dealer: |
| Name: |
| Type of entity: |
| Organized in the State of: |
| Licensed as broker-dealer in the following States: |
| Tax I.D. #: |
| 2. | Person to receive notice pursuant to Section XIII: |
| Name: |
| Company: |
| Address: |
| City, State and Zip Code: |
| Telephone No.: |
| Facsimile No.: |
| Email Address: |
AGREED TO AND ACCEPTED BY THE DEALER:
| By: |
| Name: |
| Title: |
-7-
