EXHIBIT 1.2
INLAND RETAIL REAL ESTATE TRUST, INC.
FORM OF SOLICITING DEALERS AGREEMENT
Ladies and Gentlemen:
We have entered into an agreement (the "Dealer Manager Agreement") which
is a part hereof and attached hereto, with Inland Retail Real Estate Trust,
Inc., a Maryland corporation (the "Company"), under which we have agreed to use
our best efforts to solicit subscriptions for the shares of common stock (the
"Shares") in the Company. The Company is offering to the public an aggregate
maximum of up to 150,000,000 Shares at a price of $10 per Share on a "best
efforts" basis, up to 12,000,000 Shares issued pursuant to the Company's
distribution reinvestment program at a price of $9.50 per Share and 6,000,000
warrants issuable to us and to you (the "Soliciting Dealer Warrants") (and
Shares issuable on exercise of the Soliciting Dealer Warrants) which are
issuable in certain circumstances in connection with the sale of Shares (the
"Offering").
In connection with the performance of our obligations under Section 2 of
the Dealer Manager Agreement, we are authorized to retain the services of
securities dealers who are members of the National Association of Securities
Dealers, Inc. (the "Soliciting Dealers") to solicit subscriptions. You are
hereby invited to become a Soliciting Dealer and, as such, to use your best
efforts to solicit subscribers for Shares, in accordance with the following
terms and conditions:
1. A registration statement (the "Registration Statement") with respect to
the 168,000,000 Shares and the Soliciting Dealer Warrants has been filed with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act"), and has become effective. The 168,000,000
Shares, the Soliciting Dealer Warrants and the Offering are more particularly
described in the enclosed prospectus (the "Prospectus") which is part of the
Registration Statement. Additional copies of the Prospectus will be supplied to
you in reasonable quantities upon request and may be provided to you in
electronic version by us or by the Company. We will also provide you with
reasonable quantities of any supplemental literature prepared by the Company in
connection with the offering of the Shares (the "Offering").
2. Solicitation and other activities by the Soliciting Dealers hereunder
shall be undertaken only in accordance with the Dealer Manager Agreement, this
Agreement, the Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the applicable rules and regulations of the Commission, the
Blue Sky Survey hereinafter referred to and the Rules of the National
Association of Securities Dealers, Inc. (the "NASD"), specifically including,
but not in any way limited to, NASD Rules 2440, 2730, 2740, and 2750. In
offering the sale of Shares to any person, 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 is
or will be in a financial position appropriate to enable such person to realize
to a significant extent the benefits described in the Prospectus and has a net
worth sufficient to sustain the risks inherent in the program, including
loss of investment and lack of liquidity; (ii) the purchase of the Shares is
otherwise suitable for such person, and each Soliciting Dealer shall maintain
records disclosing the basis upon which each Soliciting Dealer determined the
suitability of any persons offered Shares; and (iii) such person has either: (a)
a minimum annual gross income of $45,000 and a minimum net worth (exclusive of
home, home furnishings and automobiles) of $45,000; or (b) a minimum net worth
(determined with the foregoing exclusions) of $150,000.
If the investor is a resident of Massachusetts, Missouri, Oregon or
Tennessee, the investor must have either: (i) a minimum net worth (excluding
home, home furnishings and automobiles) of $225,000; or (ii) a minimum annual
gross income of $60,000 and a minimum net worth (exclusive of home, home
furnishings and automobiles) of $60,000.
If the investor is a resident of Maine, the investor must have either: (i)
a minimum net worth (excluding home, home furnishings and automobiles) of
$200,000; or (ii) a minimum annual gross income of $50,000 and a minimum net
worth (exclusive of home, home furnishings and automobiles) of $50,000.
In addition, if the investor is a resident of Ohio or Pennsylvania, the
investment may not exceed 10% of the investor's liquid net worth.
Each Soliciting Dealer agrees: (i) to deliver to each person who
subscribes for the Shares, a Prospectus, as then supplemented or amended, prior
to the tender of his subscription agreement (the "Subscription Agreement"); (ii)
to comply promptly with the written request of any person for a copy of the
Prospectus during the period between the effective date of the Registration
Statement and the later of the termination of the distribution of the Shares or
the expiration of 40 days after the first date upon which the Shares were
offered to the public; (iii) to deliver in accordance with applicable law or as
prescribed by any state securities administrator to any person a copy of any
prescribed document included within the Registration Statement; and (iv) to
maintain in its files for at least six years, documents disclosing the basis
upon which the determination of suitability was reached as to each purchaser of
Shares. If any such Soliciting Dealer intends to use electronic delivery means
in distributing the Prospectus to any person, such Soliciting Dealer represents
and agrees that it will comply with all appropriate procedures in compliance
with requirements of the Commission.
3. Subject to the terms and conditions set forth herein and in the Dealer
Manager Agreement, the Company shall pay to you a selling commission of 7% of
the price paid per Share for all Shares sold (except for Special Sales) from the
150,000,000 Shares offered on a "best efforts" basis for which you have acted as
Soliciting Dealer pursuant to this Agreement. Soliciting Dealers will also
receive, subject to applicable federal and state securities laws, one Soliciting
Dealer Warrant for each 25 Shares sold by such Soliciting Dealer during the
Offering (the "Warrants"), which Warrants will be reallowed from the Inland
Securities Corporation, as the dealer manager (the "Dealer Manager"), from the
Warrants issued and sold to it by the Company for a purchase price of $.0008 per
Warrant. The Company will not issue more than 6,000,000 of the Warrants in
connection
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with the Offering of the Shares. The Warrants will be issued quarterly
commencing 60 days after the date on which Shares are first sold pursuant to the
Offering. In making a request that the Company or the Dealer Manager transfer
Warrants, you hereby represent that the transfer of such Warrants to you is
permissible and proper under applicable state securities laws for sales of
Shares to residents of the appropriate state(s). All Shares sold by the Company
in the Offering, other than through the distribution reinvestment program will
be included in the computation of the number of Shares sold to determine the
number of Soliciting Dealer Warrants to be issued. The holder of a Warrant will
be entitled to purchase one Share from the Company at a price of $12 (or 120% of
the public offering price per Share, if the then current offering price of
Shares in the Offering is higher than $10 per Share) during the time period
beginning one year from the date of the first issuance of any of the Soliciting
Dealer Warrants and ending five years from the date of such first issuance (the
"Exercise Period"). If a Soliciting Dealer Warrant has not been exercised by the
end of the Exercise Period, it will terminate and the holder thereof will have
no further rights thereunder. Soliciting Dealers should consult their tax
advisors regarding the income tax aspects of receiving and/or exercising the
Soliciting Dealer Warrants.
Subject to certain conditions and exceptions explained below, investors
making an initial cash investment of at least $1,000,000 through the same
Soliciting Dealer may receive, in the form of a volume discount, a reduction of
the customary 7% selling commission payable in connection with the purchase of
those Shares. The volume discount will be in such amount as may be agreed upon
between the subscriber and the participating Soliciting Dealer, subject to the
approval of the Dealer Manager, but may not exceed 6%. The amount of the selling
commissions per Share will be reduced by the same proportionate amount as the
volume discount may be increased, so that the sum of the selling commissions per
Share and the volume discount will always equal 7%. For example, if a volume
discount of 2% or 3% is agreed upon, then the amount of selling commissions per
Share would be reduced to 5% or 4%, respectively.
Any reduction in the amount of the selling commissions in respect of
volume discounts received may be credited to the investor in the following three
ways: (1) as an actual reduction in the amount of selling commissions, (2) in
the form of additional whole Shares or fractional Shares, or (3) any combination
of (1) and (2), as may be agreed upon between the subscriber and the
participating Soliciting Dealer, subject to the approval of the Dealer Manager.
The agreement between the subscriber and the Soliciting Dealer as to the
method of effecting the volume discount and the amount of the volume discount
must be set forth in writing in an instrument satisfactory in form and substance
to the Company and to the Dealer Manager.
Certain purchases may be combined for the purpose of qualifying for a
volume discount and crediting a purchaser or purchasers with additional Shares
for the above described volume discount, and for determining commissions
reallowable to you, so long as all such combined purchases are made through you
and approved by the Company. Purchases by spouses may be combined and purchases
by any investor may be combined with other purchases of Shares to be held as
joint tenants or a tenant in common by such investor with others for purposes of
computing amounts
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invested. Purchases by tax-exempt entities may only be combined with purchases
by other tax-exempt entities for purposes of computing amounts invested only if
investment decisions are made by the same Person, provided that if the
investment decisions are made by an independent investment adviser, that
investment adviser may not have any direct or indirect beneficial interest in
any of the tax-exempt entities whose purchases are sought to be combined. The
investor must xxxx the "Additional Investment" space on the Subscription
Agreement Signature Page in order for purchases to be combined. The Company is
not responsible for failing to combine purchases, where the investor fails to
xxxx the "Additional Investment" space.
If the Subscription Agreements for the purchases to be combined are
submitted at the same time, then the additional Shares to be credited to the
purchasers as a result of such combined purchases will be credited on a pro rata
basis. If the Subscription Agreements for the purchases to be combined are not
submitted at the same time, then any additional Shares to be credited as a
result of such combined purchases will be credited to the last component
purchase, unless the Company is otherwise directed in writing at the time of
such submission; except however, the additional Shares to be credited to any
Tax-Exempt Entities whose purchases are combined for purposes of the volume
discount will be credited only on a pro rata basis based on the amount of the
investment of each Tax-Exempt Entity and their combined purchases.
Notwithstanding the preceding paragraphs, in no event shall any investor
receive a discount greater than 5% on any purchase of Shares if such investor
already owns, or may be deemed to already own, any Shares. This restriction may
limit the amount of the volume discount available to a purchaser after the
purchaser's initial purchase and the amount of additional Shares that may be
credited to a purchaser as a result of the combination of purchases.
In the event the dollar amount of commissions paid for such combined
purchases exceeds the maximum commissions for such combined purchases (taking
the volume discount into effect), you will be obligated to forthwith return to
the Dealer Manager (for credit to the Company) any excess commissions received.
The Dealer Manager may adjust any future commissions due to you for any such
excess commissions that have not been returned.
You (and other Soliciting Dealers) also may receive an amount equal to a
maximum of an additional 1.5% of the price per Share for all Shares sold (except
for certain Special Sales) from the 150,000,000 Shares offered on a "best
efforts" basis for which you have acted as Soliciting Dealer hereunder, as a
sales credit (as described it the following paragraph) (equal to 1%) and due
diligence expense allowance (equal to 0.5%). However, except to the extent set
forth below, such amounts will only be paid to a Soliciting Dealer for actual
marketing and due diligence expenses. Furthermore, you (and other Soliciting
Dealers) will not be paid any portion of the wholesaling fees paid in connection
with the Offering. Such wholesaling fees and the sales credit described in the
following paragraph are included within the maximum Marketing Contribution.
You (and other Soliciting Dealers) who sell more than a predetermined
number of Shares (to be determined by the Dealer Manager annually on a calendar
year basis) shall be entitled to receive a sales credit in the amount of 1% of
the price of all Shares sold by that Soliciting Dealer, which
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amount(s) shall be paid quarterly, in arrears, upon first reaching the
predetermined annual threshold and each quarter thereafter during the calendar
year in which the Soliciting Dealer is credited with additional sales. Certain
marketing and due diligence expenses such as Soliciting Dealer conferences and
due diligence fees may be advanced to a Soliciting Dealer and later deducted
from that Soliciting Dealer's sales credit. Any sales credit shall be deducted
from the maximum Marketing Contribution, which may otherwise be reallowable to
the Soliciting Dealer.
You (and other Soliciting Dealers) may reallow any portion of the above
sales credit to its registered representatives as is permitted under applicable
law and regulations including, without limitation, the federal and any
applicable state securities laws, any rules and/or regulations thereunder and
the rules and regulations of the NASD.
In connection with the performance of services, employees, Directors
and associates of the Company and its Affiliates, the Advisor, Affiliates of the
Advisor, the Dealer Manager and their respective officers and employees and
certain of their affiliates will be permitted to purchase Shares, as Special
Sales, net of selling commissions, the Marketing Contribution and the Due
Diligence Expense Allowance, and you shall not be entitled to receive any
compensation attributable to any such purchase(s).
Certain subscribers to the Company's Shares may agree with their
participating Soliciting Dealer and the Dealer Manager to have selling
commissions due with respect to the purchase of their Shares paid over a period
of up to six years pursuant to a deferred commission option arrangement (the
"Deferred Commission Option"), as more fully explained, and subject to the
conditions set forth, under the section "Plan of Distribution--Deferred
Commission Option" in the Company's Prospectus, which section is incorporated by
reference herein. Stockholders electing the Deferred Commission Option will be
required to pay a total of $9.40 per Share purchased upon subscription, rather
than $10.00 per Share, with respect to which $0.10 per Share will be payable by
the Company to the Dealer Manager as selling commissions due upon subscription,
which may be reallowed to the participating Soliciting Dealer by the Dealer
Manager. For each of the six years following such subscription on a date or
dates to be determined by the Dealer Manager, $0.10 per Share will be paid by
the Company to the Dealer Manager as deferred selling commissions with respect
to Shares sold pursuant to the Deferred Commission Option, which amounts will be
deducted from and paid out of cash distributions otherwise payable to such
stockholders holding such Shares, and may be reallowed to the participating
Soliciting Dealer by the Dealer Manager. The net proceeds to the Company will
not be affected by the election of the Deferred Commission Option. Under this
arrangement and based on a $10.00 per Share deemed value for each Share issued,
a stockholder electing the Deferred Commission Option will pay a 1% selling
commission upon subscription, rather than a 7% selling commission, and an amount
equal to up to a 1% selling commission per year thereafter for up to the next
six years which will be deducted from and paid by the Company out of cash
distributions otherwise payable to such stockholder.
As in any volume discount situation, selling commissions are not paid on
any Shares issued for a volume discount. Therefore, when the deferred commission
option is used, no deductions will be made for deferred commission obligations
from cash distributions payable on the Shares issued
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for a volume discount, because there will not be any deferred commission
obligation as to those particular Shares. The number of Shares issued, if any,
for a volume discount, will be determined as described above in Section 2(d)(i)
of the Agreement.
At such time, if any, that the Company's Shares are listed on a national
securities exchange or included for quotation on a national market system, or
such listing or inclusion is reasonably anticipated to occur at any time prior
to the satisfaction of the remaining deferred commission obligations, the
Company shall accelerate all outstanding payment obligations under the Deferred
Commission Option. The amount of the remaining selling commissions due shall be
deducted and paid by the Company out of cash distributions otherwise payable to
such Stockholders during the time period prior to any such listing of the Shares
for trading on a national securities exchange or inclusion for quotation on a
national market system; provided that, in no event may the Company withhold in
excess of $0.60 per Share in the aggregate during the six-year period following
the subscription. The maximum amount that may be withheld and the maximum number
of years for which selling commissions may be deferred will be lower when the
volume discount provisions are also applicable and less than 6% of the selling
commissions are deferred. To the extent that the cash distributions during such
time period are insufficient to satisfy the remaining deferred selling
commissions due, the obligations of the Company and the Company's Stockholders
to make any further payments of deferred selling commissions under the Deferred
Commission Option shall terminate and the Dealer Manager (and participating
Soliciting Dealers if the deferred selling commissions are reallowed to them by
the Dealer Manager) will not be entitled to receive any further portion of the
unpaid deferred selling commissions following any such listing for trading or
inclusion for quotation of the Shares.
4. We reserve the right to notify you by telegram or by other means of the
number of Shares reserved for sale by you. Such Shares will be reserved for sale
by you until the time specified in our notification to you. Sales of any
reserved Shares after the time specified in the notification to you or any
requests for additional Shares will be subject to rejection in whole or in part.
5. Payments for Shares shall be made by checks payable to "LBNA/Escrow
Agent for IRRET" and forwarded together with a copy of the Subscription
Agreement, which is attached as Appendix C to the Prospectus or such other form
of Subscription Agreement as may be revised by the Company, executed by the
subscriber, to Inland Securities Corporation, 0000 Xxxxxxxxxxx Xxxx, Xxx Xxxxx,
Xxxxxxxx 00000, not later than noon of the next business day after receipt of
such Subscription Agreement and check (when your internal supervisory procedures
are completed at the site at which the Subscription Agreement and check were
received by you) or, when your internal supervisory procedures are performed at
a different location (the "Final Review Office"), you shall transmit the check
and Subscription Agreement to the Final Review Office by the end of the next
business day following your receipt of the Subscription Agreement and check. The
Final Review Office will, by the end of the next business day following its
receipt of the Subscription Agreement and check, forward both the Subscription
Agreement and check to the Dealer Manager as processing broker-dealer. If any
Subscription Agreement solicited by you is rejected by the Company, the
Subscription Agreement and check will be forwarded to the escrow agent for
prompt return to the rejected subscriber.
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6. We will inform you as to the jurisdictions in which we have been
advised by the Company that the Shares have been qualified for sale or are
exempt under the respective securities or "blue sky" laws of such jurisdictions;
but we have not assumed and will not assume any obligation or responsibility as
to your right to act as a broker and/or dealer with respect to the Shares in any
such jurisdiction. You agree that you will not make any offers except in states
in which we may advise you that the Offering has been qualified or is exempt and
further agree to assure that each person to whom you sell Shares (at both the
time of the initial purchase as well as at the time of any subsequent purchases)
meets any special suitability standards which apply to sales in a particular
jurisdiction, as described in the Blue Sky Survey and the Subscription
Agreement. Neither we nor the Company assumes any obligation or responsibility
in respect of the qualification of the Shares covered by the Prospectus under
the laws of any jurisdiction or your qualification to act as a broker and/or
dealer with respect to the Shares in any jurisdiction. The Blue Sky Survey which
has been or will be furnished to you indicates the jurisdictions in which it is
believed that the offer and sale of Shares covered by the Prospectus is exempt
from, or requires action under, the applicable blue sky or securities laws
thereof, and what action, if any, has been taken with respect thereto.
It is understood and agreed that under no circumstances will you, as a
Soliciting Dealer, engage in any activities hereunder in any jurisdiction in
which you may not lawfully so engage or in any activities in any jurisdiction
with respect to the Shares in which you may lawfully so engage unless you have
complied with the provisions hereof.
7. Neither you nor any other person is authorized by the Company or by us
to give any information or make any representations in connection with this
Agreement or the offer of Shares other than those contained in the Prospectus,
as then amended or supplemented, or any sales literature approved by us and the
Company. You agree not to publish, circulate or otherwise use any other
advertisement or solicitation material without our prior written approval. You
are not authorized to act as our agent in any respect, and you agree not to act
as such agent and not to purport to act as such agent.
8. We shall have full authority to take such action as we may deem
advisable with respect to all matters pertaining to the Offering or arising
thereunder. We shall not be under any liability (except for (i) our own lack of
good faith and (ii) for obligations expressly assumed by us hereunder) for or in
respect of the validity or value of or title to, the Shares; the form of, or the
statements contained in, or the validity of, the Registration Statement, the
Prospectus or any amendment or supplement thereto, or any other instrument
executed by Inland Retail Real Estate Advisory Services, Inc., the Company's
advisor (the "Advisor"), the Company or by others; the form or validity of the
Dealer Manager Agreement or this Agreement; the delivery of the Shares; the
performance by the Advisor, the Company or by others of any agreement on its or
their part; the qualification of the Shares for sale under the laws of any
jurisdiction; or any matter in connection with any of the foregoing; provided,
however, that nothing in this paragraph shall be deemed to relieve the Company
or the undersigned from any liability imposed by the Act. No obligations on the
part of the Company or the undersigned shall be implied or inferred herefrom.
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9. Under the Dealer Manager Agreement, the Company has agreed to indemnify
you and us and each person, if any, who controls you or us, in certain instances
and against certain liabilities, including liabilities under the Act in certain
circumstances. You agree to indemnify the Company and each person who controls
it as provided in the Dealer Manager Agreement and to indemnify us to the extent
and in the manner that you agree to indemnify the Company in such Dealer Manager
Agreement.
10. You hereby authorize and ratify the execution and delivery of the
Dealer Manager Agreement by us as Dealer Manager for ourselves and on behalf of
the Soliciting Dealers (including you) and authorize us to agree to any
variation of its terms or provisions and to execute and deliver any amendment,
modification or supplement thereto. Each Soliciting Dealer hereby agrees to be
bound by all provisions of the Dealer Manager Agreement relating to Soliciting
Dealers. You also authorize us to exercise, in our discretion, all the authority
or discretion now or hereafter vested in us by the provisions of the Dealer
Manager Agreement and to take all such actions as we may believe desirable in
order to carry out the provisions of the Dealer Manager Agreement and of this
Agreement.
11. This Agreement, except for the provisions of Sections 8 and 9 hereof,
may be terminated at any time by either party hereto by two days' prior written
notice to the other party and, in all events, this Agreement shall terminate on
the termination date of the Dealer Manager Agreement, except for the provisions
of Sections 8 and 9 hereof.
12. Any communications from you should be in writing addressed to us at
Inland Securities Corporation, 0000 Xxxxxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxx 00000,
Attention: Xx. Xxxxxx X. Xxxxxx, President. Any notice from us to you shall be
deemed to have been duly given if mailed, communicated by telegraph or
telefacsimile or delivered by overnight courier to you at your address shown
below.
13. Nothing herein contained shall constitute the undersigned, you, the
other Soliciting Dealers or any of them as an association, partnership, limited
liability company, unincorporated business or other separate entity.
14. Prior to offering the Shares for sale, you shall have conducted an
inquiry such that you have reasonable grounds to believe, based on information
made available to you by the Company or the Advisor through the Prospectus or
other materials, that all material facts are adequately and accurately disclosed
and provide a basis for evaluating a purchase of Shares. In determining the
adequacy of disclosed facts pursuant to the foregoing, each Soliciting Dealer
may obtain, upon request, information on material facts relating at a minimum to
the following:
(1) items of compensation;
(2) physical properties;
(3) tax aspects;
(4) financial stability and experience of the Company and
the Advisor;
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(5) conflicts and risk factors; and
(6) appraisals and other pertinent reports.
Notwithstanding the foregoing, 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.
Prior to the sale of the Shares, 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.
If the foregoing is in accordance with your understanding and agreement,
please sign and return the attached duplicate of this Agreement. Your indicated
acceptance thereof shall constitute a binding agreement between you and us.
Very truly yours,
INLAND SECURITIES CORPORATION
By:
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Title:
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____________ ___, 2002
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We confirm our agreement to act as a Soliciting Dealer pursuant to all the
terms and conditions of the above Soliciting Dealer Agreement and the attached
Dealer Manager Agreement. We hereby represent that we will comply with the
applicable requirements of the Act and the Exchange Act and the published Rules
and Regulations of the Commission thereunder, and applicable blue sky or other
state securities laws. We confirm that we are a member in good standing of the
NASD. We hereby represent that we will comply with the Rules of the NASD and all
rules and regulations promulgated by the NASD.
Dated: ____________ ___, 2002
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Name of Soliciting Dealer
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Federal Identification Number
By:
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Authorized Signature
Kindly have checks representing commissions forwarded as follows (if different
than above):
(Please type or print)
Name of Firm:
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Address:
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Street
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City
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State and Zip Code
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(Area Code) Telephone No.
Attention:
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