EXHIBIT 1.1
XXXX CREDIT PROPERTY TRUST II, INC.
Up to 50,000,000 Shares of Common Stock
FORM OF DEALER MANAGER AGREEMENT
______________, 2005
Xxxx Capital Corporation
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 50,000,000 shares of
its common stock, $0.01 par value per share (the "Offering"), of which amount
2,546,103 shares are to be offered at $9.75 per share, 42,435,897 shares are to
be offered to the public for $10.00 per share (collectively the "Shares" or the
"Stock") and 5,000,000 shares are to be offered pursuant to the Company's
dividend reinvestment plan at $9.15 per share until the earliest of (i) all of
the share reserved for issuance under the plan are issued, (ii) all public
offerings terminate and the Company deregisters with the Securities and Exchange
Commission any unsold plan shares, or (iii) there is more than a de minimis
amount of trading in the shares, at which time any registered plan shares then
available will be sold at 91.5% of the fair market value per share as determined
by the Company's Board of Directors by reference to the most recent trades
occurring on or prior to the relevant distribution date. 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-___________) 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.)
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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.
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
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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).
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
45,000,000 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. The Dealer Manager agrees to be bound by the terms of the Escrow
Agreement executed as of _______________ ____, 2005, among ______________, as
escrow agent, the Dealer Manager and the Company, a copy of which is enclosed
(the "Escrow Agreement").
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.
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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 1.5% 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 dividend reinvestment plan.
Notwithstanding the foregoing, no commissions, payments or amount whatsoever
will be paid to the Dealer Manager under this Section 3.3 unless or until the
gross proceeds of the Shares sold are disbursed to the Company pursuant to
paragraph 3 of the Escrow Agreement. Until the Required Capital or the
Pennsylvania Required Capital (as applicable and as defined in the Escrow
Agreement) is obtained, investments will be held in escrow and, if the Required
Capital or the Pennsylvania Required Capital (as applicable and as defined in
the Escrow Agreement) is not obtained, investments will be returned to the
investors in accordance with the Prospectus. The Company will not be liable or
responsible to any Dealer for direct payment of commissions to such Dealer, it
being the sole and exclusive responsibility of the Dealer Manager for payment of
commissions to Dealers. Notwithstanding the above, at its discretion, the
Company may act as agent of the Dealer Manager by making direct payment of
commissions to such Dealers without incurring any liability therefore.
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.
3.7 The Dealer Manager represents and warrants to the Company that it will
not represent or imply that the escrow agent, as identified in the Prospectus,
has investigated the desirability or advisability of investment in the Company,
or has approved, endorsed or passed upon the merits of the Shares or the
Company, nor will it use the name of said escrow agent in any manner whatsoever
in connection with the offer or sale of the Shares other than by acknowledgment
that it has agreed to serve as escrow agent.
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
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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 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
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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.
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.
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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 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
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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.
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
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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 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.
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
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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. Transmittal of received
investor funds will be made in accordance with the following procedures. The
Dealer Manager may authorize certain Dealers which 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 escrow agent.
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 the end of the second business day following 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 escrow agent
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, and 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 escrow agent.
13. Selected Investment Advisor Agreement
With respect to any provision of information concerning the Offering by a
selected investment advisor (the "Investment Advisor") presently registered
under the Investment Advisers Act of 1940, as amended, and presently and
appropriately registered in each state in which the Investment Advisor has
clients, the Company and the Investment Advisor shall enter into a Selected
Investment Advisor Agreement in substantially the form attached hereto as
Exhibit B.
14. 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
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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: _____________________________________
Xxxxxxxxxxx X. Xxxx, President
Accepted and agreed as of the date first above written.
XXXX CAPITAL CORPORATION
By: ___________________________________
Xxxxx X. Xxxxxxx, President
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EXHIBIT A
XXXX CREDIT PROPERTY TRUST II, INC.
Up to 45,000,000 Shares of Common Stock
SELECTED DEALER AGREEMENT
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 _______________ ___, 2005, 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 which
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 escrow agent 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 escrow agent 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, 2,564,103 Shares shall be offered to
the public at the offering price of $9.75 per Share, and 42,435,897 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 Shares shall be offered pursuant to
the Company's dividend reinvestment plan at $9.15 per share until the earliest
of there is more than a de minimis amount of trading in the shares, at which
time any registered plan shares then available will be sold at 91.5% of the fair
market value, as determined by our board of directors by reference to the most
recent trades occurring on or prior to the relevant distribution date. 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 25 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 dividend 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
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reimbursement of up to 1.5% of the gross proceeds of Shares sold by Dealers
participating in the offering of Shares, 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.
Dealer acknowledges and agrees that no commissions, payments or amount
whatsoever will be paid to the Dealer unless or until the gross proceeds of the
Shares sold are disbursed to the Company pursuant to paragraph 3(a) of the
Escrow Agreement. Until the Required Capital or the Pennsylvania Required
Capital, as applicable and as defined in the Escrow Agreement, is obtained,
investments will be held in escrow and, if the Required Capital or the
Pennsylvania Required Capital, as applicable, is not obtained, investments will
be returned to the investors in accordance with the Prospectus.
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
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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 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.
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XI. Termination
Dealer will suspend or terminate its offer and sale of Shares upon the
request of the Company or the Dealer Manager at any time and will resume its
offer and sale of Shares hereunder upon subsequent request of the Company or the
Dealer Manager. Any party may terminate this Agreement by written notice. Such
termination shall be effective 48 hours after the mailing of such notice. This
Agreement 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.
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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: _____________________________________
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: ________________________________________________________________
(corporation, partnership, proprietorship, etc.)
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:
_______________________________________________________________________
(Dealer's Firm Name)
By: ___________________________________________________________________
Signature
Name: _________________________________________________________________
Title: ________________________________________________________________
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EXHIBIT B
SELECTED INVESTMENT ADVISOR AGREEMENT
XXXX CREDIT PROPERTY TRUST II, INC.
THIS SELECTED INVESTMENT ADVISOR AGREEMENT (the "Agreement") is made and
entered into as of the day indicated on Exhibit A attached hereto and by this
reference incorporated herein, between Xxxx Credit Property Trust II, Inc., a
Maryland corporation (the "Company"), and the selected investment advisor (the
"Investment Advisor") identified in Exhibit A hereto.
WHEREAS, the Company is offering up to 50,000,000 shares of its common
stock (the "Shares") to the general public, pursuant to a public offering (the
"Offering") of the Shares pursuant to a prospectus (the "Prospectus") filed with
the Securities and Exchange Commission (the "SEC"), 5,000,000 of which Shares
are being offered pursuant to the Company's dividend reinvestment plan (the
"DRIP"); and
WHEREAS, the Investment Advisor is an entity, as designated in Exhibit A
hereto, organized and presently in good standing in the state or states
designated in Exhibit A hereto, presently registered as an investment advisor
under the Investment Advisers Act of 1940, as amended, and presently registered
or licensed as an investment advisor by the appropriate regulatory agency of
each state in which the Investment Advisor has clients, or exempt from such
registration requirements; and
WHEREAS, the Company has a currently effective registration statement on
Form S-11, including a final prospectus, for the registration of the Shares
under the Securities Act of 1933, as amended (such registration statement, as it
may be amended, and the prospectus and exhibits on file with the SEC, as well as
any post-effective amendments or supplements to such registration statement or
prospectus after the effective date of registration, being herein respectively
referred to as the "Registration Statement" and the "Prospectus"); and
WHEREAS, the offer and sale of the Shares shall be made pursuant to the
terms and conditions of the Registration Statement and the Prospectus and,
further, pursuant to the terms and conditions of all applicable federal
securities laws and the applicable securities laws of all states in which the
Shares are offered and sold; and
WHEREAS, the Company desires to give the clients of the Investment Advisor
the opportunity to purchase the Shares, and the Investment Advisor is willing
and desires to provide its clients with information concerning the Shares and
the procedures for subscribing for the Shares upon the following terms and
conditions;
NOW, THEREFORE, in consideration of the premises and terms and conditions
thereof, it is agreed between the Company and the Investment Advisor as follows.
1. Purchase of Shares
(a) Subject to the terms and conditions herein set forth, the Company
hereby makes available for purchase by the clients of the Investment
Advisor a portion of the Shares described in the Registration
Statement. The Investment Advisor hereby covenants, warrants and
agrees that, in regard to any purchase of the Shares by its clients,
it will comply with all of the terms and conditions of the
Registration Statement and the Prospectus, all applicable state and
federal laws, including the Securities Act of 1933, as amended (the
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"Securities Act"), the Investment Advisers Act of 1940, as amended,
and any and all regulations and rules pertaining thereto, heretofore
or hereafter issued by the Securities and Exchange Commission
("SEC"). Neither the Investment Advisor nor any other person shall
have any authority to give any information or make any
representations in connection with the Shares other than as
contained in the Registration Statement and the Prospectus, as
amended and supplemented, and as is otherwise expressly authorized
in writing by the Company.
(b) Clients of the Investment Advisor may, following receipt of written
notice by the Investment Advisor from the Company of the effective
date of the Registration Statement, purchase the Shares according to
all such terms as are contained in the Registration Statement and
the Prospectus. The Investment Advisor shall comply with all
requirements set forth in the Registration Statement and the
Prospectus. The Investment Advisor shall use and distribute, in
connection with the Shares, only the Prospectus and, if necessary,
any separate prospectus relating solely to the DRIP, and such sales
literature and advertising materials that shall conform in all
respects to any restrictions of local law and the applicable
requirements of the Securities Act of 1933, as amended, and that
have been approved in writing by the Company. The Company reserves
the right to establish such additional procedures as it may deem
necessary to ensure compliance with the requirements of the
Registration Statement, and the Investment Advisor shall comply with
all such additional procedures to the extent that it has received
written notice thereof.
(c) All monies received for purchase of any of the Shares shall be
forwarded by the Investment Advisor to Xxxx Capital Corporation for
delivery to _______________________ (the "Escrow Agent"), where such
monies will be deposited in an escrow account established by the
Company solely for such subscriptions, except that, until such time
(if any) that such monies are deliverable to the Company pursuant to
the Escrow Agreement between the Company and the Escrow Agent, the
Investment Advisor shall return any check not made payable to "_____
________________./Xxxx Credit Property Trust II, Inc." directly to
the subscriber who submitted the check. Subscriptions will be
accepted as described in the Prospectus. Each Investment Advisor
receiving a subscriber's check will deliver such check to the Escrow
Agent no later than the close of business of the first business day
after receipt of the subscription documents by the Investment
Advisor.
(d) During the full term of this Agreement, the Company shall have full
authority to take such action as it may deem advisable in respect to
all matters pertaining to the performance of the Investment Advisor
under this Agreement.
(e) The Shares may be purchased by clients of the Investment Advisor
only where the Shares may be legally offered and sold, only by such
persons who shall be legally qualified to purchase the Shares, and
only by such persons in such states in which the Investment Advisor
is registered as an investment advisor or exempt from any applicable
registration requirements.
(f) The Investment Advisor shall have no obligation under this Agreement
to advise its clients to purchase any of the Shares.
(g) The Investment Advisor will use every reasonable effort to assure
that Shares are purchased only by investors who:
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(1) meet the "investor suitability" standards, including the
minimum income and net worth standards established by the
Company and set forth in the Prospectus, and minimum purchase
requirements set forth in the Registration Statement;
(2) can reasonably benefit from an investment in the Company based
on each prospective investor's overall investment objectives
and portfolio structure;
(3) are able to bear the economic risk of the investment based on
each prospective investor's overall financial situation; and
(4) have apparent understanding of: (a) the fundamental risks of
the investment; (b) the risk that the prospective investor may
lose the entire investment; (c) the lack of liquidity of the
Shares; (d) the restrictions on transferability of the Shares;
(e) the background and qualifications of the employees and
agents of Xxxx REIT Advisors II, LLC, the advisor to the
Company; and (f) the tax consequences of an investment in the
Shares.
(5) The Investment Advisor will make the determinations required
to be made by it pursuant to this subparagraph (g) based on
information it has obtained from each prospective investor,
including, at a minimum, but not limited to, the prospective
investor's age, investment objectives, investment experience,
income, net worth, financial situation and other investments
of the prospective investor, as well as any other pertinent
factors deemed by the Investment Advisor to be relevant.
(h) In addition to complying with the provisions of subparagraph (g)
above, and not in limitation of any other obligations of the
Investment Advisor to determine suitability imposed by state or
federal law, the Investment Advisor agrees that it will comply fully
with the following provisions:
(1) The Investment Advisor shall have reasonable grounds to
believe, based upon information provided by the investor
concerning his or her investment objectives, other
investments, financial situation and needs, and upon any other
information known by the Investment Advisor, that (A) each
client of the Investment Advisor that purchases Shares is or
will be in a financial position appropriate to enable him or
her to realize to a significant extent the benefits (including
tax benefits) of an investment in the Shares, (B) each client
of the Investment Advisor that purchases Shares has a fair
market net worth sufficient to sustain the risks inherent in
an investment in the Shares (including potential loss and lack
of liquidity), and (C) the Shares otherwise are or will be a
suitable investment for each client of the Investment Advisor
that purchases Shares, and the Investment Advisor shall
maintain files disclosing the basis upon which the
determination of suitability was made;
(2) The Investment Advisor shall not execute any transaction
involving the purchase of Shares in a discretionary account
without prior written approval of the transactions by the
investor;
(3) The Investment Advisor shall have reasonable grounds to
believe, based upon the information made available to it, that
all material facts are adequately and accurately disclosed in
the Registration Statement and provide a basis for evaluating
the Shares;
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(4) In making the determination set forth in subparagraph (3)
above, the Investment Advisor shall evaluate items of
compensation, physical properties, tax aspects, financial
stability and experience of the sponsor, conflicts of interest
and risk factors, appraisals, as well as any other information
deemed pertinent by it;
(5) The Investment Advisor shall inform each prospective investor
of all pertinent facts relating to the lack of liquidity or
marketability of the Shares.
(i) The Investment Advisor agrees to retain in its files, for a period
of at least six years, information that will establish that each
purchaser of Shares falls within the permitted class of investors.
(j) The Investment Advisor either (i) shall not purchase shares for its
own account or (ii) shall hold for investment any Shares purchased
for its own account.
(k) The Investment Advisor hereby confirms that it is familiar with
Securities Act Release No. 4968 and Rule 15c2-8 under the Securities
Exchange Act of 1934, as amended, relating to the distribution of
preliminary and final prospectuses, and confirms that it has
complied and will comply therewith.
(l) A sale of Shares shall be deemed to be completed only after the
Company receives a properly completed subscription agreement for
Shares from the Investment Advisor evidencing the fact that the
investor had received a final Prospectus at least five full business
days prior to the completion date, together with payment of the full
purchase price of each purchased Share, from a buyer who satisfies
each of the terms and conditions of the Registration Statement and
the Prospectus, and only after such subscription agreement has been
accepted in writing by the Company.
(m) Clients of an Investment Advisor who have been advised by such
Investment Advisor on an ongoing basis regarding investments other
than in the Company, and who are not being charged by such
Investment Advisor, through the payment of commissions or otherwise,
direct transaction based fees in connection with the purchase of the
Shares, may reduce the amount of selling commissions payable with
respect to the purchase of their shares down to zero.
2. Compensation to Investment Advisor
The Company shall pay no fees, commissions or other compensation to the
Investment Advisor.
3. Association of the Company with Other Advisors and Dealers
It is expressly understood between the Company and the Investment Advisor
that the Company may cooperate with broker-dealers who are registered as
broker-dealers with the National Association of Securities Dealers, Inc. (the
"NASD") or with other investment advisors registered under the Investment
Advisers Act of 1940, as amended. Such broker-dealers and investment advisors
may enter into agreements with the Company on terms and conditions identical or
similar to this Agreement and shall receive such rates of commission or other
fees as are agreed to between the Company and the respective broker-dealers and
investment advisors and as are in accordance with the terms of the Prospectus.
-4-
4. Conditions of the Investment Advisor's Obligations
The Investment Advisor's obligations hereunder are subject, during the
full term of this Agreement and the Offering to (a) the performance by the
Company of its obligations hereunder and compliance by the Company with the
covenants set forth in Section 7 hereof and (b) the conditions that: (i) the
Registration Statement shall become and remain effective; and (ii) no stop order
shall have been issued suspending the effectiveness of the Offering.
5. Conditions to the Company's Obligations
The obligations of the Company hereunder are subject, during the full term
of this Agreement and the Offering, to the conditions that (a) at the effective
date of the Registration Statement and thereafter during the term of this
Agreement while any Shares remain unsold, the Registration Statement shall
remain in full force and effect authorizing the offer and sale of the Shares;
(b) no stop order suspending the effectiveness of the Offering or other order
restraining the offer or sale of the Shares shall have been issued nor
proceedings therefor initiated or threatened by any state regulatory agency or
the SEC; and (c) the Investment Advisor shall have satisfactorily performed all
of its obligations hereunder and complied with the covenants set forth in
Section 6 hereof.
6. Covenants of the Investment Advisor
The Investment Advisor covenants, warrants and represents, during the full
term of this Agreement, that:
(a) The Investment Advisor is registered as an investment advisor under
the Investment Advisers Act of 1940, as amended, and registered or
licensed as an investment advisor by the appropriate regulatory
agency of each state in which the advisor has clients, or exempt
from such registration requirements.
(b) Neither the Investment Advisor nor any person associated with the
Investment Advisor is registered as a broker-dealer or registered
representative with the NASD.
(c) The Investment Advisor shall comply with all applicable federal and
state securities laws, including, without limitation, the disclosure
requirements of the Investment Advisers Act of 1940, as amended, and
the provisions thereof requiring disclosure of the existence of this
Agreement and the compensation to be paid to the Investment Advisor
hereunder.
(d) The Investment Advisor shall maintain the records required by
Section 204 of the Investment Advisers Act of 1940, as amended, and
Rule 204-2 thereunder in the form and for the periods required
thereby.
7. Covenants of the Company
The Company covenants, warrants and represents, during the full term of
this Agreement, that:
(a) It shall use its best efforts to maintain the effectiveness of the
Registration Statement and to file such applications or amendments
to the Registration Statement as may be reasonably necessary for
that purpose.
(b) It shall promptly inform the Investment Advisor whenever and as soon
as it receives or learns of any order issued by the SEC, any state
regulatory agency or any other regulatory
-5-
agency which suspends the effectiveness of the Registration
Statement or prevents the use of the Prospectus or which otherwise
prevents or suspends the offering or sale of the Shares, or receives
notice of any proceedings regarding any such order.
(c) It shall use its best efforts to prevent the issuance of any order
described herein at subparagraph (b) hereof and to obtain the
lifting of any such order if issued.
(d) It shall give the Investment Advisor written notice when the
Registration Statement becomes effective and shall deliver to the
Investment Advisor such number of copies of the Prospectus, and any
supplements and amendments thereto, which are finally approved by
the SEC, as the Investment Advisor may reasonably request for sale
of the Shares.
(e) It shall promptly notify the Investment Advisor of any
post-effective amendments or supplements to the Registration
Statement or Prospectus, and shall furnish the Investment Advisor
with copies of any revised Prospectus and/or supplements and
amendments to the Prospectus and/or any prospectus relating solely
to the DRIP.
(f) It shall keep the Investment Advisor fully informed of any material
development to which the Company is a party or which concerns the
business and condition of the Company.
(g) It shall use its best efforts to cause, at or prior to the time the
Registration Statement becomes effective, the qualification of the
Shares for offering and sale under the securities laws of such
states as the Company shall elect.
8. Payment of Costs and Expenses
The Investment Advisor shall pay all costs and expenses incident to the
performance of its obligations under this Agreement.
9. Indemnification
(a) The Investment Advisor agrees to indemnify, defend and hold harmless
the Company, its affiliates and their or its officers, directors,
trustees, employees and agents, against all losses, claims, demands,
liabilities and expenses, joint or several, including reasonable
legal and other expenses incurred in defending such claims or
liabilities, whether or not resulting in any liability to the
Company, its affiliates and their or its officers, directors,
trustees, employees or agents, which they or any of them may incur
arising out of (i) the offer or sale (as such term is defined in the
Securities Act) by the Investment Advisor, or any person acting on
its behalf, of any Shares pursuant to this Agreement, if such loss,
claim, demand, liability, or expense arises out of or is based upon
an untrue statement or alleged untrue statement of a material fact,
or any omission or alleged omission of a material fact, other than a
statement, omission, or alleged omission by the Investment Advisor
which is also, as the case may be, contained in or omitted from the
Prospectus or the Registration Statement and which statement or
omission was not based on information supplied to the Company by
such Investment Advisor; (ii) the breach by the Investment Advisor,
or any person acting on its behalf, of any of the terms and
conditions of this Agreement; or (iii) the negligence, malpractice
or malfeasance of the Investment Advisor. This indemnity provision
shall survive the termination of this Agreement.
-6-
(b) The Company agrees to indemnify, defend and hold harmless the
Investment Advisor, its officers, directors, employees and agents,
against all losses, claims, demands, liabilities and expenses,
including reasonable legal and other expenses incurred in defending
such claims or liabilities, which they or any of them may incur,
including, but not limited to, alleged violations of the Securities
Act, but only to the extent that such losses, claims, demands,
liabilities and expenses shall arise out of or be based upon (i) any
untrue statement of a material fact contained in the Prospectus or
the Registration Statement, as filed and in effect with the SEC or
in any amendment or supplement thereto, or in any application
prepared or approved in writing by counsel to the Company and filed
with any state regulatory agency in order to register or qualify the
Shares under the securities laws thereof (the "Blue Sky
Applications"), or (ii) any omission or alleged omission to state
therein a material fact required to be stated in the Prospectus or
the Registration Statement or the Blue Sky Applications, or
necessary to make such statements, and any part thereof, not
misleading; provided, further, that any such untrue statement,
omission or alleged omission is not based on information included in
any such document which was supplied to the Company, or any officer
of the Company by such Investment Advisor; provided in each case
that such claims or liabilities did not arise from Investment
Advisor's own negligence, malpractice or malfeasance. This indemnity
provision shall survive the termination of this Agreement.
(c) No indemnifying party shall be liable under the indemnity provisions
contained in subparagraphs (a) and (b) above unless the party to be
indemnified shall have notified such indemnifying party in writing
promptly after the summons or other first legal process giving
information of the nature of the claim served upon the party to be
indemnified, but failure to notify an indemnifying party of any such
claim shall not relieve it from any liabilities that it may have to
the indemnified party against whom action is brought other than on
account of its indemnity agreement contained in subparagraphs (a)
and (b) above. In the case of any such claim, if the party to be
indemnified notified the indemnifying party of the commencement
thereof as aforesaid, the indemnifying party shall be entitled to
participate at its own expense in the defense of such claim. If it
so elects, in accordance with arrangements satisfactory to any other
indemnifying party or parties similarly notified, the indemnifying
party has the option to assume the entire defense of the claim, with
counsel who shall be satisfactory to such indemnified party and all
other indemnified parties who are defendants in such action; and
after notice from the indemnifying party of its election so to
assume the defense thereof and the retaining of such counsel by the
indemnifying party, the indemnifying party shall not be liable to
such indemnified party under subparagraphs (a) and (b) above for any
legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof, other than for the
reasonable costs of investigation.
10. Term of Agreement
This Agreement shall become effective on the date on which this Agreement
is executed by the Company and the Investment Advisor. The Investment Advisor
and the Company may each prevent this Agreement from becoming effective, without
liability to the other, by written notice before the time this Agreement
otherwise would become effective. After this Agreement becomes effective, either
party may terminate it at any time for any reason by giving thirty (30) days'
written notice to the other party; provided, however, that this Agreement shall
in any event automatically terminate at the first occurrence of any of the
following events: (a) the Registration Statement for offer and sale of the
Shares shall cease to be effective; (b) the Offering shall be terminated; or (c)
the Investment Advisor's license or registration to act as an investment advisor
shall be revoked or suspended by any federal, self-regulatory or state
-7-
agency and such revocation or suspension is not cured within ten (10) days from
the date of such occurrence. In any event, this Agreement shall be deemed
suspended during any period for which such license is revoked or suspended.
11. Notices
All notices and communications hereunder shall be in writing and shall be
deemed to have been given and delivered when deposited in the United States
mail, postage prepaid, registered or certified mail, to the applicable address
set forth below.
If sent to the Company:
XXXX CREDIT PROPERTY TRUST II, INC.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: President
If sent to the Investment Advisor: to the person whose name and address are
identified in Exhibit A hereto.
12. Successors
This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and shall not be assigned or transferred by the Investment
Advisor by operation of law or otherwise.
13. Miscellaneous
(a) This Agreement shall be construed in accordance with the applicable
laws of the State of Arizona.
(b) Nothing in this Agreement shall constitute the Investment Advisor as
in association with or in partnership with the Company.
(c) This Agreement, including Exhibit A hereto, embodies the entire
understanding, between the parties to the Agreement, and no
variation, modification or amendment to this Agreement shall be
deemed valid or effective unless it is in writing and signed by both
parties hereto.
(d) If any provision of this Agreement shall be deemed void, invalid or
ineffective for any reason, the remainder of the Agreement shall
remain in full force and effect.
(e) This Agreement may be executed in counterpart copies, each of which
shall be deemed an original but all of which together shall
constitute one and the same instrument comprising this Agreement.
[SIGNATURES ON FOLLOWING PAGES]
-8-
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year indicated on Exhibit A hereto.
SELECTED INVESTMENT ADVISOR COMPANY
_____________________________________ XXXX CREDIT PROPERTY TRUST II, INC.
(Name of Investment Advisor)
By: _________________________________ By: _____________________________________
Print Name: _____________________ Print Name: _________________________
Title: __________________________ Title: ______________________________
_____________________________________ _________________________________________
Witness Witness
-9-
EXHIBIT A
TO
SELECTED INVESTMENT ADVISOR AGREEMENT
OF
XXXX CREDIT PROPERTY TRUST II, INC.
This Exhibit A is attached to and made a part of that certain Selected
Investment Advisor Agreement, dated as of the ___ day of ____________________,
200_, by and between Xxxx Credit Property Trust II, Inc., (the "Company") and
____________________________ (the "Advisor").
1. DATE OF AGREEMENT: ____________________, 200__
2. IDENTITY OF ADVISOR:
Name: ____________________________________________________________________
Type of Entity: __________________________________________________________
State Organized in: ______________________________________________________
Qualified to Do Business and in Good Standing in: ________________________
Registered as an Investment Advisor in the Following States: _____________
3. NAME AND ADDRESS FOR NOTICE PURPOSES:
Name: ____________________________________________________________________
Title: ___________________________________________________________________
Company: _________________________________________________________________
Address: _________________________________________________________________
City, State and Zip Code: ________________________________________________
Telephone Number (including area code): __________________________________
4. PLEASE COMPLETE THE FOLLOWING FOR OUR RECORDS:
(a) How many registered investment advisors are with your firm? __________
(i) (Please enclose a current list.)
-10-
(b) Does your firm publish a newsletter?[ ] Yes [ ] No
What is/are the frequency of the publication(s)? [ ] Weekly [ ]
Monthly [ ] Quarterly
[ ] Bi-weekly [ ] Bi-monthly [ ] Other (please specify) ____________
PLEASE PLACE XXXX CREDIT PROPERTY TRUST II, INC. ON YOUR MAILING LIST AND
PROVIDE A SAMPLE OF THE PUBLICATION IF AVAILABLE.
(a) Does your firm have regular internal mailings, or bulk package
mailings to its registered investment advisors? [ ] Yes [ ] No
PLEASE PLACE XXXX CREDIT PROPERTY TRUST II, INC. ON YOUR MAILING LIST
AND PROVIDE A SAMPLE OF THE PUBLICATION IF AVAILABLE.
(b) Does your firm have a computerized electronic mail (E-Mail) system
for your registered investment advisors? [ ] Yes [ ] No
If so, please provide e-mail address: ______________________________
(c) Website address: ___________________________________________________
Person responsible: ________________________________________________
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