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EXHIBIT 1.1
DEALER MANAGER AGREEMENT
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INLAND REAL ESTATE CORPORATION
21,875,000
SHARES OF COMMON STOCK
$.01 PAR VALUE
DEALER MANAGER AGREEMENT
July 14, 1997
Inland 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 20,000,000 shares
of common stock, $.01 par value per share (the "Shares") for a purchase price
of $10.00 per Share with a minimum initial investment of $3,000 ($1,000 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 $3,000, and
for residents of the State of Minnesota where Individual Retirement Accounts
and qualified plan accounts must have a minimum investment of $2,000), 875,000
Soliciting Dealer Warrants and the Shares issuable on exercise of the
Soliciting Dealer Warrants and up to 1,000,000 Shares for a purchase price of
$9.50 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:
(a) Registration Statement and Prospectus. A registration
statement (File No. 333-26701) on Form S-11 with respect to 21,875,000
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 Regula-
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tions") 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.
(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
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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 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
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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 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
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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 $10 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 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 $.70) 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 875,000 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 $250,000 worth of Shares (25,000
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
$250,000 $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 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
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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 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
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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.
(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
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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 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
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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;
(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;
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(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, 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
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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 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
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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.
(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
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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, 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.
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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.
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: /s/ Xxxxxxx X. Xxxxxx
---------------------
Title: Vice President
Accepted as of the date
first above written:
Inland Securities Corporation
By:/s/ Xxxxxx Xxxx Xxxxxx
----------------------
Title: President
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