EXHIBIT 1.2
NNN CAPITAL CORP.
a California corporation,
Santa Ana, California
PARTICIPATING BROKER-DEALER AGREEMENT
For Shares of Common Stock Offered By
G REIT, INC.
__________________, 2002
Ladies and Gentlemen:
The undersigned, NNN Capital Corp., a California corporation (the
"Dealer Manager"), has entered into an agreement of even date herewith (the
"Selling Agreement") with G REIT, Inc., a Virginia corporation (the "Company"),
with respect to the offer and sale of up to 20,000,000 shares of common stock of
the Company (the "Shares"). The terms of the offering (the "Offering") are set
forth in the Company's Prospectus dated __________________, 2002 (with all
exhibits, appendices, addenda and supplements thereto, collectively the
"Prospectus").
The Offering will terminate on the first to occur of (i) the sale of an
aggregate of 20,000,000 Shares (excluding any Shares sold pursuant to the
Company's Dividend Reinvestment Plan) and (ii) _____________, 2004 ("Offering
Termination Date"). If subscriptions for at least 100,000 Shares (the "Minimum
Offering") have not been received and accepted by the Company prior to
__________________, 2003, none of the Shares will be sold and all funds tendered
for the purchase of Shares will be refunded in full to each subscriber (plus
interest and without deduction for escrow expenses) in accordance with the
Prospectus.
You are invited to become one of the broker-dealers permitted to
solicit subscriptions for the Shares ("Soliciting Dealers"). By your
confirmation hereof, you agree to act in such capacity and to use your best
efforts, in accordance with the following terms and conditions, to sell the
Shares.
1. You hereby confirm that you are (i) a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD"), (ii) qualified and
duly registered to act as a broker-dealer within all states in which you will
sell the Shares, (iii) a broker-dealer duly registered with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and (iv) hereby required and will maintain all such
registrations
and qualifications in good standing for the duration of your involvement in the
Offering. Further, you confirm that all persons who undertake to offer and sell
the Shares on your behalf are, and at all applicable times during the Offering
will be, properly registered and/or licensed with the NASD and all applicable
state securities regulators.
2. (a) You hereby agree to solicit, as an independent contractor and
not as the agent of the Dealer Manager or of the Company (or their affiliates),
persons acceptable to the Company to purchase the Shares pursuant to the
subscription agreement in the form attached to the Prospectus (the "Subscription
Agreement") and in accordance with the terms of the Prospectus. You hereby agree
to diligently make inquiries as required by this Agreement, as set forth in the
Prospectus, and as required by all applicable laws of all prospective investors
in order to ascertain whether a purchase of the Shares is suitable for each such
investor. Further, all funds received by you with respect to any Subscription
Agreement shall be transmitted to the Dealer Manager by the end of the next
business day following receipt thereof. The Dealer Manager will be responsible
for the prompt deposit of funds for purchase of Shares with PriVest Bank, as
escrow agent with such funds held in escrow (the "Escrow Account") pursuant to
an escrow agreement between the Company and PriVest Bank. No Subscription
Agreement shall be effective unless and until accepted by the Company in its
sole discretion.
(b) You understand that the offering of Shares is made on a
"minimum-maximum" basis, as described in the Prospectus. You further understand
and agree that payment of compensation to you for the sale of Shares is
conditioned upon sale of at least the Minimum Offering (and in connection with
compensation payable with respect to sales made to residents of Pennsylvania
("Pennsylvania Investors") and residents of Oregon ("Oregon Investors"), at
least 2,000,000 shares have been sold in the Offering to non-Pennsylvania
Investors and non-Oregon Investors, respectively) and acceptance of said sales
by the Company in its sole discretion. The failure to sell at least the Minimum
Offering shall relieve the Dealer Manager of any obligation to pay you for any
services rendered by you in connection with the sale of Shares under this
Agreement or otherwise.
(c) You agree that prior to participating in the Offering you will
have reasonable grounds to believe, based on information made available to you
by the Dealer Manager and/or the Company through the Prospectus, that all
material facts are adequately and accurately disclosed in the Prospectus and
provide a basis for evaluating an investment in the Company and the Shares.
(d) You agree not to rely upon the efforts of the Dealer Manager,
which is affiliated with the Company, in determining whether the Company has
adequately and accurately disclosed all material facts upon which to provide a
basis for evaluating the Company to the extent required by federal or state laws
or the
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NASD. You further agree to conduct your own investigation to make that
determination independent of the efforts of the Dealer Manager.
(e) You agree not to execute any sale of the Shares in an account
over which you have discretionary authority to make investments without prior
written approval of the transaction by the owner of the account.
(f) You agree to retain in your records and make available to the
Dealer Manager and to the Company for a period of at least six (6) years
following the Offering Termination Date, information establishing that each
investor who purchases the Shares pursuant to a Subscription Agreement solicited
by you is within the permitted class of investors under the requirements of the
jurisdiction in which such purchaser is a resident and the suitability standards
set forth in the Prospectus and the Subscription Agreement.
(g) All subscriptions solicited by you will be strictly subject to
confirmation by the Dealer Manager and acceptance thereof by the Company in its
sole discretion. The Dealer Manager and the Company reserve the right in their
sole and absolute discretion to reject any such subscription and to accept or
reject subscriptions in the order of their receipt by the Company or otherwise.
Neither you nor any other person is authorized to give any information or make
any representation other than those contained in the Prospectus or in any
supplemental sales literature furnished by the Dealer Manager or the Company for
use in making solicitations in connection with the offer and sale of the Shares.
(h) Upon release by the Dealer Manager, you may offer the Shares at
the offering prices set forth in the Prospectus, subject to the terms and
conditions thereof.
(i) The Dealer Manager will provide you with such number of copies
of the Prospectus, and such number of copies of amendments and supplements
thereto as you may reasonably request. The Dealer Manager may provide you with
certain supplemental sales material to be used by you in connection with the
solicitation of purchasers of the Shares. In the event you elect to use such
supplemental sales material, you agree that such material shall not be used in
connection with the solicitation of purchasers of the Shares unless accompanied
or preceded by the Prospectus, as it may be amended or supplemented in the
future.
(j) The Dealer Manager shall have full authority to take such action
as it may deem advisable with respect to all matters pertaining to the Offering.
The Dealer Manager shall be under no liability to you except for lack of good
faith and for obligations expressly assumed by it in this Participating
Broker-Dealer Agreement. Nothing contained in this Section is intended to
operate as, and
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the provisions of this Section shall not constitute, a waiver by you of
compliance with any provision of the Securities Act of 1933, as amended (the
"Securities Act"), the Exchange Act, other applicable federal securities laws,
applicable state securities laws, the rules and regulations promulgated
thereunder and the rules of the NASD.
(k) Except as provided in the "Plan of Distribution" section of the
Prospectus, and in consideration of your services hereunder, the Dealer Manager
will pay you compensation (collectively, "Compensation") as follows: (i) up to
7.5% of the gross proceeds from the sale of Shares sold by you, and (ii) up to
2.0% of the gross proceeds from the sale of Shares sold by you for expenses
actually incurred by you for wholesaling fees, expense reimbursements, bonuses
and incentive compensation, volume discounts and marketing and due diligence
related activities. No Compensation of any kind shall be paid with respect to
Shares issued pursuant to the Company's Dividend Reinvestment Plan, Independent
Director Stock Option Plan, or Officer and Employee Stock Option Plan, as
described in the Prospectus. Payment of the Compensation shall be subject to the
following conditions:
(i) No Compensation will be payable with respect to any
subscriptions for Shares which are rejected by the Company or the
Dealer Manager, or in the event the Company terminates the Offering for
any reason whatsoever prior to the Offering Termination Date.
(ii) No Compensation will be payable unless or until the
Minimum Offering (and in connection with Compensation payable with
respect to sales made to Pennsylvania Investors and Oregon Investors
until at least 2,000,000 Shares to non-Pennsylvania Investors and
non-Oregon Investors, respectively) have been sold by the Dealer
Manager and the Soliciting Dealers.
(iii) No Compensation will be payable to you with respect to any
sale of the Shares by you unless and until such time as the Company has
received (A) the total proceeds of any such sale from the Escrow
Account and the Dealer Manager has received from the Company the
aggregate amount of Compensation to which it is entitled and (B) a
completed and executed Subscription Agreement from the investor who
satisfies the suitability standards and minimum purchase requirements
set forth in the Prospectus.
Except as otherwise provided herein, all expenses incurred by you in
the performance of your obligations hereunder, including but not limited to
expenses related to the Offering and any attorneys' fees, shall be at your sole
cost and expense, and the foregoing shall apply notwithstanding the fact that
the Offering is not consummated for any reason.
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Once Compensation becomes payable, it will be paid on the first and
fifteenth day of each month.
(l) For the sale of Shares, you will instruct all prospective
investors to make their checks payable to "PriVest Bank as Escrow Agent for G
REIT, Inc." You agree to be bound by the terms of the Escrow Agreement dated as
of _________________, 2002 between the Company and PriVest Bank.
(m) You agree that in recommending to a prospective investor the
purchase of the Shares, you shall:
(i) Have reasonable grounds to believe, on the basis of
information obtained from the prospective investor concerning his
investment objectives, other investments, financial situation and
needs, and any other information known by you, that:
(A) The prospective investor meets the investor suitability
standards set forth in the Prospectus;
(B) The prospective investor is or will be in a financial
position appropriate to enable him to realize to a significant extent
the benefits described in the Prospectus;
(C) The prospective investor has a fair market net worth
sufficient to sustain the risks inherent in the investment, including
loss of investment and lack of liquidity; and
(D) The investment is otherwise suitable for the prospective
investor, and
(ii) Maintain in your files for six (6) years following the
Offering Termination Date information describing the basis upon which
the determination of suitability was reached as to each investor.
(n) You agree that, prior to accepting a subscription for the
Shares, you will inform the prospective investor of all pertinent facts relating
to the illiquidity and lack of marketability of the Shares, as appropriate,
during the term of the investment.
(o) You hereby undertake and agree to comply with all obligations
applicable to you under all applicable laws, rules and regulations, including
those set forth by the NASD.
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3. This Agreement may be terminated by the Dealer Manager at any time
upon written notice to you.
4. In soliciting persons to acquire the Shares, you agree to comply
with any applicable requirements of the Securities Act, the Exchange Act, other
applicable federal securities laws, applicable state securities laws, the rules
and regulations promulgated thereunder and the rules of the NASD and, in
particular, you agree that you will not give any information or make any
representations other than those contained in the Prospectus and in any
supplemental sales literature furnished to you by the Dealer Manager for use in
making such solicitations.
5. It is understood and agreed that under no circumstances will you
engage in any activities hereunder in any state other than those for which
permission has been granted by the Dealer Manager to you, as evidenced by
written acknowledgment by the Dealer Manager that such state has been cleared
for offer and sale activity.
6. Nothing contained herein shall constitute the Soliciting Dealers, or
any of them, as an association, partnership, unincorporated business, or other
separate entity. The Dealer Manager shall be under no liability to make any
payment to you except out of the funds received by it from the Company as
hereinabove provided, and the Dealer Manager shall not be under any liability
for, or in respect of the value or validity of the Subscription Agreements, the
Shares, or the performance by any one of any agreement on its part, or for, or
in respect of any matter connected with, this Agreement, except for lack of good
faith by the Dealer Manager, and for obligations expressly assumed by the Dealer
Manager herein. You agree that the Company shall have no liability or obligation
to you for Compensation hereunder and you shall look solely to the Dealer
Manager for Compensation.
7. Under the Selling Agreement, a copy of which you acknowledge
receiving, the Company has agreed to indemnify the Dealer Manager, the
Soliciting Dealers, and each person, if any, who controls the Dealer Manager or
Soliciting Dealers (within the meaning of the Securities Act and the Exchange
Act) against certain liabilities under the Securities Act, the Exchange Act,
other applicable federal securities laws, applicable state securities laws and
the rules and regulations promulgated thereunder. Each Soliciting Dealer agrees
to indemnify the Dealer Manager, the Company, its officers, directors and
certain other persons to the same extent and in the same manner as the Dealer
Manager has agreed to indemnify the Company, its officers, directors and certain
other persons as provided in Section 10 of the Selling Agreement and to
indemnify each other Soliciting Dealer to the same extent and in the same manner
as such Soliciting Dealer agrees to indemnify the Dealer Manager, the Company,
its officers, directors and certain other persons. In the execution of the
Selling Agreement, the Dealer Manager shall be deemed to have acted as a
representative for each of the Soliciting Dealers, and
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the Soliciting Dealers shall be deemed to be in privity of contract with the
Company for purposes of this Section 7.
8. All representations, warranties, covenants and agreements of the
Dealer Manager and each Soliciting Dealer contained herein shall survive the
delivery, execution and closing thereof.
9. This Agreement shall be governed by, subject to and construed in
accordance with the laws of the State of California. This Agreement constitutes
the entire understanding between the parties hereto and supersedes any prior
understandings or written or oral agreements between them respecting the subject
matter hereof.
10. Any notice from the Dealer Manager to you as Soliciting Dealer
shall be deemed to have been fully given if mailed or sent to you by facsimile
at your address set forth below.
Please confirm this Agreement to solicit persons to acquire the Shares
on the foregoing terms and conditions by signing and returning the form enclosed
herewith.
Very truly yours,
NNN CAPITAL CORP.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
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NNN CAPITAL CORP.
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
Re: G REIT Inc. - Offering of Shares of Common Stock
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Gentlemen:
The undersigned confirms its agreement to act as a Soliciting Dealer as
referred to in the foregoing Participating Broker-Dealer Agreement subject to
the terms and conditions of such agreement. The undersigned confirms that it is
a member in good standing of the National Association of Securities Dealers,
Inc., and is qualified under federal law and the laws of the states in which
sales are to be made by the undersigned to act as a broker-dealer.
Dated:________________, 2002
________________________________________
(Print Name of Firm)
By:____________________________________
(Authorized Representative)
Address: ____________________________
____________________________
____________________________
Phone: ____________________________
Facsimile: ____________________________
