Exhibit 1.1
FORM OF
ORION MULTIFAMILY INVESTMENT FUND INC.
20,000,000 SHARES
OF COMMON STOCK
$.01 PAR VALUE PER SHARE
DEALER MANAGER AGREEMENT
July __, 2003
Related Equities Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies/Gentlemen:
Orion Multifamily Investment Fund, Inc. (the "Company"), a Maryland
corporation, intends to qualify as a real estate investment trust (a "REIT")
under federal income tax laws. The Company was formed on June 24, 2003, and is
governed by the By-Laws (the "By-Laws") and the Articles of Incorporation, (the
"Articles") in the form included as Exhibits to the Registration Statement, as
described in Section 1(a) hereof (such By-Laws and Articles being hereinafter
referred to as the "Organizational Documents"). The advisor to the Company is
Orion Multifamily LLC, a Delaware limited liability company (the "Advisor").
Unless otherwise defined, capitalized terms used herein shall have the same
meaning as in the Registration Statement on Form S-11.
The Company is offering (i) on a "best efforts" basis up to 20,000,000
shares of common stock, $.0l par value per share (the "Shares") for a purchase
price of $10.00 per Share with a minimum initial investment of $1000, (ii) up to
4,000,000 Shares for a purchase price of $9.50 per Share for issuance through
the Company's Distribution Reinvestment Program, (iii) 600,000 warrants, which
may be issued to you or to Soliciting Dealers (as defined below) (the
"Warrants") and the 600,000 Shares issuable on exercise of the Warrants, and
(iv) at the Company's sole discretion up to an additional 10,000,000 Shares on a
"best efforts" basis for a purchase price of $10.00 per Share if there are
subscriptions for more than the 20,000,000 Shares set forth in (i) all upon the
other terms and conditions set forth in the Prospectus, as described in Section
1(a) hereof. The subscribers, each of whom will be required to enter into a
subscription agreement substantially similar to the form of Subscription
Agreement (the "Subscription Agreement") attached as Appendix C to the
Prospectus, will, upon acceptance of their
subscriptions by and in the discretion of the Company, become stockholders of
the Company (the "Stockholders").
1. REPRESENTATION AND WARRANTIES OF THE COMPANY. The Company hereby
represents, warrants and agrees with you that:
(a) REGISTRATION STATEMENT AND PROSPECTUS. A registration
statement (File No. ___________) on Form S-11 with respect to an
aggregate of 34,600,000 Shares, and such 34,600,000 Shares include
4,000,000 Shares issuable pursuant to the Company's Distribution
Reinvestment Program, 600,000 Shares issuable on exercise of the
Warrants, the 600,000 Warrants and 10,000,000 Shares issuable at the
Company's sole discretion if the Company receives subscriptions for more
than 20,000,000 Shares, has been prepared by the Company pursuant to the
Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder and has been filed with the
Commission under the Act; one or more amendments to such registration
statement have been or may be so prepared and filed. As used in this
Agreement, the term "Registration Statement" means such registration
statement in the form in which it becomes effective, the term "Effective
Date" means the date upon which the Registration Statement is or was
first declared effective by the Commission and the term "Prospectus"
means the prospectus in the form constituting a part of the Registration
Statement as well as in the form first filed with the Commission
pursuant to its Rule 424 after the Registration Statement becomes
effective. The Commission has not issued any stop order suspending the
effectiveness of the Registration Statement and no proceedings for that
purpose have been instituted or are pending before or threatened by the
Commission under the Act.
(b) COMPLIANCE WITH THE ACT. From the time the Registration
Statement becomes effective and at all times subsequent thereto up to
and including the Termination Date (as defined in Section 2(c) hereof):
(i) the Registration Statement, the Prospectus and
any amendments or supplements thereto will contain all
statements which are required to be stated therein by the Act
and the Rules and Regulations and will comply in all material
respects with the Act and the Rules and Regulations; and
(ii) neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto will at any
such time include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) NO SUBSEQUENT MATERIAL EVENTS. Subsequent to the
respective dates as of which information is given in the Registration
Statement and Prospectus and prior to the Termination Date, except as
contemplated in the Prospectus or as disclosed in a supplement or
amendment thereto or in the periodic financial statements of the
Company, the Company has not and will not have:
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(i) incurred any material liabilities or
obligations, direct or contingent; or
(ii) entered into any material transaction, not in
the ordinary course of business and, except as so disclosed,
there has not been and will not be any material adverse change
in the financial position or results of operations of the
Company.
(d) CORPORATION STATUS. The Company is a corporation duly
formed and validly existing under the General Corporation Law of
Maryland.
(e) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
and validly authorized, executed and delivered by or on behalf of the
Company and constitutes the valid and binding agreement of the Company
enforceable in accordance with its terms (except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws of the United States, any state or any political
subdivision thereof which affect creditors' rights generally or by
equitable principles relating to the availability of remedies). The
performance of this Agreement, the consummation of the transactions
contemplated herein and the fulfillment of the terms hereof, do not and
will not result in a breach of any of the terms and provisions of, or
constitute a default under, any statute, indenture, mortgage, deed of
trust, voting trust agreement, note, lease or other agreement or
instrument to which the Company is a party or by which the Company or
its property is bound, or under any rule or regulation or order of any
court or other governmental agency or body with jurisdiction over the
Company or any of its properties; and no consent, approval,
authorization or order of any court or governmental agency or body has
been or is required for the performance of this Agreement or for the
consummation of the transactions contemplated hereby (except as have
been obtained under the Act, from the National Association of Securities
Dealers, Inc. (the "NASD") or as may be required under state securities
or blue sky laws in connection with the offer and sale of the Shares or
under the laws of states in which the Company may own real properties in
connection with its qualification to transact business in such states or
as may be required by subsequent events which may occur).
(f) PENDING ACTIONS. There is no material action, suit or
proceeding pending or, to the knowledge of the Company, threatened, to
which the Company is a party, before or by any court or governmental
agency or body which adversely affects the offering of the Shares.
(g) REQUIRED FILINGS. There are no contracts or other
documents required to be filed by the Act or the Rules and Regulations
of the Commission thereunder as exhibits to the Registration Statement
which have not been so filed.
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(h) FEDERAL INCOME TAX LAWS. The Corporation has obtained an
opinion of Proskauer Rose LLP stating that, under existing federal
income tax laws and regulations, assuming the Company acts as described
in the "Federal Income Tax Considerations" section of the Prospectus and
timely files the requisite elections, counsel is of the opinion that the
Company has been organized in conformity with the requirements for
qualification as a REIT beginning with its taxable year ending December
31, 2004, and that its prior, current and anticipated methods of
operation (as described in the Prospectus and represented by management)
has enabled and should enable it to satisfy the REIT Requirements (as
defined in the Prospectus).
(i) INDEPENDENT PUBLIC ACCOUNTANTS. To the best of the
Company's knowledge, the accountants who have certified certain
financial statements appearing in the Prospectus are independent public
accountants within the meaning of the Act and the Rules and Regulations.
(j) ESCROW AGREEMENT. The Company has entered into an escrow
agreement (the "Escrow Agreement") with Related Equities Corporation
(the "Dealer Manager"), and [_____] (the "Escrow Agent"), in the form
included as an exhibit to the Registration Statement, which provides for
the establishment of an escrow account (the "Escrow Account"). During
the period commencing with the Effective Date and ending on the
Termination Date, the Company will deposit subscribers' funds in the
Escrow Account as described in Section 2 below.
(k) SALES LITERATURE. In addition to and apart from the
Prospectus, the Company may use certain supplemental sales material in
connection with the offering of the Shares. This material, prepared by
the Advisor, would consist of a brochure describing the Advisor and its
Affiliates and the objectives of the Company and may also contain
pictures and summary descriptions of properties similar to those to be
acquired by the Company that Affiliates of the Company have previously
acquired. This material may also include pictures and summary
descriptions of properties similar to those to be acquired by the
Company, as well as a brochure, audio-visual materials and tape
presentations highlighting and explaining various features of the
Offering, properties of prior real estate programs and real estate
investments in general; and articles and publications concerning real
estate. Business reply cards, introductory letters and seminar
invitation forms may be sent to Soliciting Dealers (as hereinafter
defined) and prospective investors. These materials shall be hereinafter
referred to collectively as the "sales literature." No person has been
authorized to prepare for, or furnish to, a prospective investor, any
sales literature other than: (i) that described herein; and (ii)
so-called "tombstone" newspaper advertisements/solicitations of
interest, limited to identifying the Offering and the location of
sources of further information. Use of any sales literature is
conditioned upon filing with and, if required, clearance by appropriate
regulatory agencies (including, without limitation, the NASD and any
state securities regulator or commissioner). Such clearance (if
provided), however, does not indicate that the regulatory agency
allowing the use of the materials has passed on the merits of the
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Offering or the adequacy or accuracy of the sales materials. Except as
described herein, the Company has not authorized the use of other
supplemental literature or sales material in connection with this
Offering.
Although it is believed that the information contained in the sales
literature or sales material will not conflict with any of the
information set forth in the Prospectus, the sales literature will not
purport to be complete, and should not be considered as a part of the
Prospectus, or as incorporated in the Prospectus by reference, or as
forming the basis of the Offering.
(l) AUTHORIZATION OF THE SHARES. The Company has an
authorized and outstanding capitalization as set forth in the
Registration Statement and Prospectus. The sale of the Shares has been
duly and validly authorized by the Company, and when subscriptions for
the Shares have been accepted by the Company as contemplated in the
Prospectus and the Shares have been issued to the respective
subscribers, the Shares will represent ownership in the Company and will
conform to the description thereof contained in the Prospectus.
Stockholders have no preemptive rights to purchase or subscribe for
securities of the Company, and the Shares are not convertible or subject
to redemption at the option of the Company. The Shares are entitled to
one vote per Share and do not have cumulative voting rights. Subject to
the rights of the holders of any class of capital stock of the Company
having any preference or priority over the Shares, the Stockholders are
entitled to distributions in such amounts as may be declared by the
Board of Directors from time to time out of funds legally available for
such payments and, in the event of liquidation, to share ratably in any
assets of the Company remaining after payment in full of all creditors
and provisions for any liquidation preferences on any outstanding
preferred stock ranking prior to the Shares.
2. OFFERING AND SALE OF THE SHARES. On the basis of the
representations, warranties and agreements herein contained, and subject to the
terms and conditions herein set forth, the Company hereby appoints you as its
exclusive Dealer Manager to solicit and to cause other dealers (as described in
Section 2 (a) hereof) to solicit subscriptions for the Shares at the
subscription price to be paid and otherwise upon the other terms and conditions
set forth in the Prospectus and in the Subscription Agreement, and you agree to
use your best efforts as such Dealer Manager to procure subscribers for the
Shares, during the period commencing with the Effective Date and ending on the
Termination Date (the "Offering Period"). The number of Shares, if any, to be
reserved for sale by each Soliciting Dealer may be decided by the mutual
agreement, from time to time, of you and the Company. In the absence of such
mutual agreement, the Company shall, subject to the provisions of Section 2(b)
hereof accept Subscription Agreements based upon a first-come, first accepted
reservation or other similar method.
(a) SOLICITING DEALERS. The Shares offered and sold through
you under this Agreement shall be offered and sold only by you and, at
your sole option, any other securities dealers whom you may retain
(collectively the "Soliciting Dealers"), each of
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whom are members of the NASD, executing agreements with you
substantially in the form of the Soliciting Dealers Agreement attached
hereto as Exhibit A.
(b) SUBSCRIPTION AGREEMENTS AND SUBSCRIBERS' FUNDS. Each
person desiring to purchase Shares through you or any other Soliciting
Dealer will be required to complete and execute the Subscription
Agreement and to deliver such document to you or such Soliciting Dealer,
together with a check payable to the order of "[_____], Escrow Agent for
Orion Multifamily Investment Fund, Inc." in the amount of $10 per Share.
Each Soliciting Dealer shall forward any such Subscription Agreement and
check to you not later than noon of the next business day after receipt
of such Subscription Agreement, if the Soliciting Dealer conducts its
internal supervisory procedures at the location where the Subscription
Agreement and check were initially received. When such internal
supervisory procedures are to be performed at a different location (the
"Final Review Office"), the Subscription Agreement and check must be
transmitted to the Final Review Office by the end of the next business
day following receipt of the Subscription Agreement and check by the
Soliciting Dealer. The Final Review Office will, by the next business
day following receipt of the Subscription Agreement and check, forward
both the Subscription Agreement and check to you as processing
broker-dealer in order that you may complete your review of the
documentation and process the Subscription Agreement and check. The
Company will have representatives available to review the Subscription
Agreement at your location in order to determine whether it wishes to
accept the proposed purchaser as a Stockholder, it being understood that
the Company reserves the unconditional right to reject the tender of any
Subscription Agreement and check (exclusive of the Company's
Distribution Reinvestment Program). Any check received by you directly
or as processing broker-dealer from the Soliciting Dealers will, in all
cases, be forwarded to the Escrow Agent as soon as practicable, but in
any event by the end of the second business day following receipt by you
of the Subscription Agreement and check. The Company will promptly
notify you or the Soliciting Dealer, as appropriate, of any rejection,
and you shall send the check and the Subscription Agreement to the
Escrow Agent with directions to promptly return both the Subscription
Agreement and check to the rejected subscriber. All subscription funds
may be deposited directly with the Company.
Nothing contained in this Section 2 shall be construed to impose
upon the Company the responsibility of assuring that prospective
purchasers meet the suitability standards contained in the Prospectus or
to relieve you or any of the Soliciting Dealers of the responsibility of
complying with the Rules of the NASD.
(c) TERMINATION OF THE OFFERING. The Offering Period will
terminate on a date on or before one year from the date of the
Prospectus (subject to requalification in certain states, the Company
may extend the Offering Period from time to time, but in no event for
longer than two years from the date of the original Prospectus), subject
in any event to the Company's right to terminate the Offering at any
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time (the "Termination Date") and the proceeds will be applied as set
forth in the Prospectus.
(d) DEALER-MANAGER COMPENSATION.
(i) The Company agrees to pay to you a sales
commission of 7% of the sales price for each Share sold (except for
Special Sales) from the 20,000,000 Shares offered on a "best efforts"
basis, as set forth in the Prospectus under the caption "Plan of
Distribution," subject to the limitations described below, to award and
issue to you one Soliciting Dealer Warrant for every 50 Shares sold from
the 20,000,000 Shares offered on a "best efforts" basis, of which such
compensation may be retained or reallowed by you, subject to federal and
state securities laws, to the Soliciting Dealer who sold the Shares, as
described more fully in the Soliciting Dealers Agreement. In lieu of
reimbursement of specific expenses, and as compensation for acting as
the managing dealer, you will also receive, subject to the limitations
described herein and in the Prospectus, a managing dealer fee equal to
1% of the sale price from the 20,000,000 Shares offered on a "best
efforts" basis, of which such fee may be retained or reallowed by you,
subject to federal and state securities laws, to the Soliciting Dealer
who sold the Shares, as described more fully in the Soliciting Dealers
Agreement
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Single Purchasers (as defined below) purchasing more
than $250,000 worth of Shares (25,000 Shares) will be entitled to a
reduced Share purchase price and a reduction in selling commissions
payable in connection with the purchase of such Shares in accordance
with the following schedule:
Amount of Single Purchase price per Share for Maximum Commission
-------------------------- incremental Share in discount ------------------
Purchaser's Investment range Per Share
-------------------------- ----------------------------- ------------------
$1,000 -$250,000 $10.00 $0.70
$250,001 - $500,000 $9.85 $0.55
$500,001 - $750,000 $9.70 $0.40
$750,001 - $1,000,000 $9.60 $0.30
$1,000,001 - $5,000,000 $9.50 $0.20
-------------------------------------------------------------------------------
Any reduction from the amount of selling commissions
otherwise payable to you and reallowable to a Soliciting Dealer in
respect of a purchaser's subscription will be credited to the purchaser
in the form of additional whole Shares purchased net of commissions. No
fractional Shares will be issued. As to sales of Shares which are
entitled to the above described volume discounts, the Company will pay
the reduced selling commissions set forth above.
Selling commissions for purchases of $5,000,000 or more
will, in the Company's sole discretion, be reduced to $0.20 per Share or
less, but in no event will the proceeds to the Company from the sale of
such Shares be less than $9.30 per Share (except for Shares sold to
affiliates of the Company at a price of $9.10 per share, which is the
purchase price per Share net of any selling commissions and organization
and offering expenses). Selling commissions paid will in all cases be
the same for the same level of sales. In the event of a sale of
$5,000,000 or more, the Company will supplement the Prospectus in the
manner described in the Prospectus under the section "Volume Discounts".
Certain subscriptions may be combined for the purpose of
crediting a purchaser or purchasers with additional Shares for the above
described volume discount and for determining commissions payable to you
and reallowable to Soliciting Dealers so long as all such combined
purchases are made through the same Soliciting Dealer and approved by
the Company. As used herein, the term "Single Purchaser" will include
(i) any person or entity, or persons or entities, acquiring Shares as
joint purchasers; (ii) all profit-sharing, pension and other retirement
trusts maintained by a given corporation,
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partnership or other entity; (iii) all funds and foundations maintained
by a given corporation partnership or other entity; and (iv) all
profit-sharing, pension and other retirement trusts and all funds or
foundations over which a designated bank or other trustee, person or
entity (except an investment advisor registered under the Investment
Advisors Act of 1940) exercises discretionary authority with respect to
an investment in the Company.
The investor must xxxx the "Additional Investment" space
on the Subscription Agreement Signature Page, and set forth the basis
for the discount and identity the orders to be combined in order for
subscriptions to be combined. The Company is not responsible for failing
to combine subscriptions, where the investor fails to xxxx the
"Additional Investment" space.
If the Subscription Agreements for the subscriptions 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 subscriptions 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 subscriptions 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.
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 Company any excess commissions
received. The Company may adjust any future commissions due to you for
any such excess commissions that have not been returned.
Notwithstanding the foregoing, it is understood and
agreed that no commission shall be payable with respect to particular
Shares if the Company rejects a proposed subscriber's Subscription
Agreement, which it may do for any reason or for no reason, as set forth
in the form of Subscription Agreement. In addition, no selling
commission shall be payable in connection with the sale of Shares to
employees and associates of the Company and its Affiliates, the Advisor,
affiliates of the Advisor, the Dealer Manager or the Soliciting Dealers.
Volume discounts will not be available to California
residents to the extent that such discounts do not comply with the
provisions of Rule 260.145.51 adopted pursuant to the California
Corporate Securities Law of 1968, which provides that volume discounts
can be made available to California residents only in accordance with
the following conditions: (i) there can be no variance in the net
proceeds to the Company
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from the sale of the Shares to difference purchasers of the same
offering; (ii) all purchasers of the Shares must be informed of the
availability of quantity discounts; (iii) the same volume discounts must
be allowed to all purchasers of Shares which are part of the offering;
(iv) the minimum amount of shares as to which volume discounts are
allowed cannot be less than $10,000; (v) the variance in the price of
the shares must result solely from a different range of commissions, and
all discounts must be based on a uniform scale of commissions; and (vi)
no discounts are allowed to any group of purchasers. Accordingly, volume
discounts for California residents will be available in accordance with
the foregoing table of uniform discount levels based on dollar volume of
shares purchased, but no discounts are allowed to any group of
purchasers, and no subscriptions may be aggregated as part of a combined
order for purposes of determining the number of Shares issued.
(ii) All sales commissions payable to you will be
paid on a monthly basis, substantially concurrently with the acceptance
of a subscriber as a Stockholder by the Company, in an amount equal to
the sales commissions payable with respect to such Shares; provided
however, the Company reserves the right, at its sole discretion, to
change the frequency of the payment of such commissions to a monthly
basis.
3. COVENANTS OF THE COMPANY. The Company covenants and agrees with
you as follows:
(a) REGISTRATION STATEMENT. The Company will use its best
efforts to cause the Registration Statement and any subsequent
amendments thereto to become effective as promptly as possible and will
not, at any time after the Effective Date, file any amendment to the
Registration Statement or supplement to the Prospectus of which you
shall not previously have been advised and furnished a copy at a
reasonable time prior to the proposed filing or to which you shall have
reasonably objected or which is not, to the best of the Company's
knowledge in compliance with the Act and the Rules and Regulations. The
Company will prepare and file with the Commission and will use its best
efforts to cause to become effective as promptly as possible:
(i) any amendments to the Registration Statement or
supplements to the Prospectus which may be required pursuant to
the undertakings in the Registration Statement; and
(ii) upon your reasonable request any amendments to
the Registration Statement or supplements to the Prospectus
which, in the opinion of you or your counsel, may be necessary
or advisable in view of the requirements of the Act and the
Rules and Regulations in connection with the offer and sale of
the Shares during the Offering Period.
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(b) SEC ORDERS. As soon as the Company is advised or obtains
knowledge thereof, it will advise you of any request made by the
Commission for amending the Registration Statement, supplementing the
Prospectus or for additional information, or of the issuance by the
Commission of any stop order or of any other order preventing or
suspending the use of the Prospectus or the institution of any
proceedings for that purpose, and will use its best efforts to prevent
the issuance or any such order and, if any such order is issued, to
obtain the removal thereof as promptly as possible.
(c) BLUE SKY QUALIFICATIONS. The Company will use its best
efforts to qualify the Shares for offering and sale under the securities
or blue sky laws of such jurisdictions as you may reasonably request and
to make such applications, file such documents and furnish such
information as may be reasonably required for that purpose. The Company
will, at your request, furnish you copies of all material documents and
correspondence sent to or received from such jurisdictions (including,
but not limited to, summaries of telephone calls and copies of
telegrams) and will promptly advise you as soon as the Company obtains
knowledge thereof to the effect that the Shares are qualified for
offering and sale in each such jurisdiction. The Company will promptly
advise you of any request made by the securities administrators of each
such jurisdiction for revising the Registration Statement or the
Prospectus or for additional information or of the issuance by such
securities administrators of any stop order preventing or suspending the
use of the Prospectus or of the institution of any proceedings for that
purpose, and will use its best efforts to prevent the issuance of any
such order and if any such order is issued, to obtain the removal
thereof as promptly as possible. The Company will furnish you with a
Blue Sky Survey dated as of the Effective Date, which will be
supplemented to reflect changes or additions to the information
disclosed in such survey.
(d) AMENDMENTS AND SUPPLEMENTS. If at any time when a
Prospectus relating to the Shares is required to be delivered under the
Act, any event shall have occurred to the knowledge of the Company as a
result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact, or omit to state a
material fact necessary to make the statements therein not misleading in
light of the circumstances existing at the time it is so required to be
delivered to a subscriber, or if it is necessary at any time to amend
the Registration Statement or supplement the Prospectus relating to the
Shares to comply with the Act, the Company will promptly notify you
thereof and will prepare and file with the Commission an amendment or
supplement which will correct such statement or effect such compliance.
(e) COPIES OF REGISTRATION STATEMENT. The Company will
furnish you copies of the Registration Statement (only one of which need
be signed and need include all exhibits), the Prospectus and all
amendments and supplements thereto, including any amendment or
supplement prepared after the Effective Date, and such other information
with respect to the Company as you may from time to time reasonably
request, in each case as soon as available and in such quantities as you
may reasonably request.
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(f) QUALIFICATION TO TRANSACT BUSINESS. The Company will
take all steps necessary to ensure that at all times the Company will be
validly existing as a Maryland corporation and will be qualified to do
business in all jurisdictions in which the conduct of its business
requires such qualification and where such qualification is required
under local law.
(g) AUTHORITY TO PERFORM AGREEMENTS. The Company undertakes
to obtain all consents, approvals, authorizations or orders of any court
or governmental agency or body which are required for the performance of
this Agreement and under the Organizational Documents or the
consummation of the transactions contemplated hereby and thereby,
respectively, or the conducting by the Company of the business described
in the Prospectus.
(h) COPIES OF REPORTS. The Company will use its best efforts
to furnish to you as promptly as shall be practicable the following:
(i) a copy of each report or general communication
(whether financial or otherwise) sent to the Stockholders;
(ii) a copy of each report (whether financial or
otherwise) filed with the Commission; and
(iii) such other information as you may from time to
time reasonably request regarding the financial condition and
operations of the Company including, but not limited to, copies
of operating statements of properties acquired by the Company.
(i) USE OF PROCEEDS. The Company will apply the proceeds
from the sale of the Shares as stated in the Prospectus or, if for any
reason whatsoever all or a portion of the proceeds of the Offering are
not applied or committed for use as stated within 24 months of the
Termination Date, or if at least 2,500,000 Shares are not sold within
one year from the effective date of the Prospectus, the Company shall
promptly return those proceeds from the sale of the Shares not so
applied or committed, or from the sale of the Shares below 2,500,000, as
stated in the Prospectus, with interest, to the subscribers, each
subscriber sharing in the return in the ratio that the number of the
Shares owned by such subscriber bears to the total number of the Shares
owned by all subscribers.
(j) ORGANIZATION AND OFFERING EXPENSES. In no event shall
the total of the organizational expenses and expenses of the Offering to
be paid directly by the Company exceed 10% of the gross proceeds of the
Offering.
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4. COVENANTS OF THE DEALER MANAGER. You covenant and agree with the
Company on your behalf and on behalf of the Soliciting Dealers as follows:
(a) COMPLIANCE WITH LAWS. With respect to your participation
and the participation by each Soliciting Dealer in the offer and sale of
the Shares (including, without limitation any resales and transfers of
Shares), you agree, and each Soliciting Dealer agrees, to comply and
shall comply with any applicable requirements of the Act, the Securities
Exchange Act of 1934, as amended, and the published rules and
regulations of the Commission thereunder, and the applicable state
securities or blue sky laws, and the Rules of the NASD, specifically
including, but not in any way limited to, Rules 2440, 2730, 2740, and
2750 therein. In particular, you agree not to deliver the sales
literature (as defined above) to any person prior to the Effective Date
and, after the Effective Date, not to deliver the sales literature to
any person unless the sales literature is accompanied or preceded by the
Prospectus. In addition, you shall, in accordance with applicable law or
as prescribed by any state securities administrator, provide or cause
Soliciting Dealers to provide to any prospective investor copies of any
prescribed document which is part of the Registration Statement.
With respect to your and each Soliciting Dealer's participation
in any resales or transfers of the Shares, you agree, and each
Soliciting Dealer agrees, to comply and shall comply with any applicable
requirements as set forth above. In addition, you and each Soliciting
Dealer agree that should you or they assist with the resale or transfer
of the Shares, you and each Soliciting Dealer will fulfill the
obligations pursuant to Sections 3(b) and 4(d) of Rule 2810 of the Rules
of the NASD.
(b) NO ADDITIONAL INFORMATION. In offering the Shares for
sale, you and each Soliciting Dealer shall not give or provide any
information or make any representation other than those contained in the
Prospectus, the sales literature or any other document provided to you
for such purpose by the Company.
(c) SALES OF SHARES. You and each Soliciting Dealer shall
solicit purchases of the Shares only in the jurisdictions in which you
and such Soliciting Dealer are legally qualified to so act and in which
you and each Soliciting Dealer have been advised by the Company that
such solicitations can be made.
(d) SUBSCRIPTION AGREEMENT. Subscriptions will be submitted
by you and each Soliciting Dealer to the Company only on the form which
is included as Appendix C to the Prospectus. You and each Soliciting
Dealer understand and acknowledge that the Subscription Agreement must
be executed and initialed by the subscriber.
(e) SUITABILITY. In offering the Shares to any person, you
and each Soliciting Dealer shall have reasonable grounds to believe
(based on such information as the investment objectives, other
investments, financial situation and needs of the person or any other
information known by you after due inquiry) that: (i) such person has
the
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capability of understanding the fundamental aspects of the Company,
which capacity may be evidenced by the following: (A) the nature of
employment experience; (B) educational level achieved; (C) access to
advice from qualified sources, such as attorneys, accountants and tax
advisors; and (D) prior experience with investments of a similar nature;
(ii) such person has apparent understanding of: (A) the fundamental
risks and possible financial hazards of this type of investment; (B) the
lack of liquidity of this investment; (C) the Advisor's role in
directing or managing the investment; and (D) the tax consequences of
the investment; and (iii) such person has the financial capability to
invest in the Company and you or each Soliciting Dealer (as the case may
be) shall maintain records disclosing the basis upon which you and each
Soliciting Dealer determined the suitability of any persons offered
Shares. Notwithstanding the foregoing, you and each Soliciting Dealer
shall have reasonable grounds to believe that such person has either:
(a) a minimum annual gross income of $45,000 and a minimum net worth
(exclusive of home, home furnishing and automobiles) of $45,000; or (b)
a minimum net worth (determined with the foregoing exclusions) of
$150,000. Suitability standards are higher in certain states as set
forth in the Subscription Agreement and the Prospectus. You and/or the
Soliciting Dealers shall maintain, for at least six years, a record of
the information obtained to determine that an investor meets the
suitability standards imposed on the offer and sale of the Shares (both
at the time of the initial subscription and at the time of any
additional subscriptions) and a representation of the investor that the
investor is investing for the investor's own account or, in lieu of such
representation, information indicating that the investor for whose
account the investment was made met the suitability standards.
(f) DUE DILIGENCE. Prior to offering the Shares for sale,
you and each Soliciting Dealer shall have conducted an inquiry such that
you have reasonable grounds to believe, based on information made
available to you by the Company through the Prospectus or other
materials, that all material facts are adequately and accurately
disclosed and provide a basis for evaluating the purchase of the Shares.
In determining the adequacy of disclosed facts pursuant to the
foregoing, you and each Soliciting Dealer may obtain, upon request,
information on material facts relating at a minimum to the following:
(1) items of compensation;
(2) Company properties, if any;
(3) tax aspects;
(4) conflicts and risk factors; and
(5) appraisals and other pertinent reports.
Notwithstanding the foregoing, you and each Soliciting Dealer may rely upon the
results of an inquiry conducted by another Soliciting Dealer, provided that:
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(i) such Soliciting Dealer has reasonable grounds to
believe that such inquiry was conducted with due care;
(ii) the results of the inquiry were provided to you
with the consent of the Soliciting Dealer conducting or
directing the inquiry; and
(iii) no Soliciting Dealer that participated in the
inquiry is an affiliate of the Company or the Advisor.
(g) OFFERING PRICE ADJUSTMENT. If, after the Effective Date,
the Company shall adjust the initial purchase price of $10.00 per Share
for the 20,000,000 Shares to be offered for sale on a "best efforts"
basis in the Offering, you agree (and each Soliciting Dealer agrees)
that the total of all compensation payable to the Dealer Manager as
provided in Section 2(d) above, shall be adjusted proportionally. In no
event shall the total of all such compensation paid to you and to all
Soliciting Dealers (i.e., the aggregate of the sales commission exceed
seven percent (7%) of the total of all subscription proceeds received by
the Company.
Prior to the sale of the Shares, you and each Soliciting Dealer shall inform the
prospective purchaser of all pertinent facts relating to the liquidity and
marketability of the Shares during the term of the investment.
5. EXPENSES. The Company agrees with you that, whether or not the
transactions contemplated in this Agreement are consummated, the Company will
pay all fees and expenses incident to the performance of its obligations under
this Agreement, including, but not limited to:
(a) the Commission's registration fee;
(b) expenses of printing the Registration Statement, the
Prospectus and any amendment or supplement thereto and the expense of
furnishing to you copies of the Registration Statement, the Prospectus
and any amendment or supplement thereto as herein provided;
(c) fees and expenses of its and your accountants and
counsel in connection with the Offering contemplated by this Agreement;
(d) fees and expenses incurred in connection with any
required filing with the NASD;
(e) all of your expenses in connection with the Offering,
subject to the limitations contained in the Prospectus, including, but
not limited to, the salaries, fringe benefits, travel expenses and
similar expenses of your employees and personnel incurred in connection
with the Offering; and
16
(f) expenses of qualifying the Shares for offering and sale
under state blue sky and securities laws, and expenses in connection
with the preparation and printing of the Blue Sky Survey.
In no event, however, will the total of the selling commissions paid to
you (which you may reallow to the Soliciting Dealers) exceed 7% of the gross
proceeds of the Offering.
6. CONDITIONS OF OBLIGATIONS. Your obligations hereunder shall be
subject to the accuracy of the representations and warranties on the part of the
Company contained in Section 1 hereof, the accuracy of the statements of the
Company made pursuant to the provisions hereof, to the performance by the
Company of its covenants, agreements and obligations contained in Sections 3 and
5 hereof, and to the following additional conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The
Registration Statement shall have become effective not later than 5:00
p.m., New York, New York time, on the day following the date of this
Agreement, or such later time and date as you and the Company shall have
agreed; no stop order suspending the effectiveness of the Registration
Statement shall have been issued by the Commission and, to the best
knowledge of the Company or you, no proceedings for that purpose shall
have been instituted, threatened or contemplated by the Commission; and
any request by the Commission for additional information (to be included
in the Registration Statement or Prospectus or otherwise) shall have
been complied with to the reasonable satisfaction of you or your
counsel.
(b) ACCURACY OF REGISTRATION STATEMENT. You shall not have
advised the Company that the Registration Statement or the Prospectus,
or any amendment or any supplement thereto, in the reasonable opinion of
you or your counsel, contains any untrue statement of fact which is
material, or omits to state a fact which is material and is required to
be stated therein or is necessary to make the statements therein not
misleading.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless you, each
Soliciting Dealer and each person, if any, who controls you or any Soliciting
Dealer within the meaning of the Act (collectively, the "Indemnified Parties"),
against any and all loss, liability, claim, damage and expense whatsoever caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement, the Prospectus or any amendment or supplement
thereto, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Such
indemnification shall be subject to the provisions of Sections 7(b) and (c) of
this Agreement.
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The Company shall not provide indemnification for any liability or loss
suffered by you, nor shall it provide that you be held harmless for any
liability suffered by the Company unless all of the following conditions are
met: (i) the party seeking indemnification has determined, in good faith, that
its course of conduct, if such course of conduct caused the loss or liability,
was in the best interests of the Company; (ii) the person seeking
indemnification was acting on behalf of or performing services on behalf of the
Company; (iii) such liability or loss was not the result of gross negligence or
willful misconduct on the part of the party seeking indemnification or the
Indemnified Party; and (iv) such indemnification or agreement to be held
harmless is recoverable only out of the assets of the Company and not from the
Stockholders.
In no case shall the Company be liable under this indemnity agreement
with respect to any claim made against any of the Indemnified Parties unless the
Company shall have been notified in writing (in the manner provided in Section
10 hereof) of the nature of the claim within a reasonable time after the
assertion thereof; but the failure to so notify the Company shall not relieve
the Company from any liability which the Company would have incurred otherwise
than on account of this indemnity agreement. The Company shall be entitled to
participate, at its own expense, in the defense of, or if it so elects within a
reasonable time after receipt of such notice, to assume the defense of any claim
or suit for which any of the Indemnified Parties seek indemnification hereunder.
If the Company elects to assume said defense, such defense shall be conducted by
counsel chosen by it and reasonably satisfactory to the Indemnified Parties.
In the event that the Company elects to assume the defense of any such
suit and retains such counsel, the Company shall not be liable under this
Section 7 to the Indemnified Parties in the suit for any legal or other expenses
subsequently incurred by the Indemnified Parties, and the Indemnified Parties
shall bear the fees and expenses of any additional counsel retained by the
Indemnified Parties unless: (A) the employment of counsel by the Indemnified
Party has been authorized by the Company; or (B) the Company shall not in fact
have employed counsel to assume the defense of such action, in either of which
events such fees and expenses shall be borne by the Company.
The Company may advance amounts to the Indemnified Parties for legal and
other expenses and costs incurred as a result of any legal action for which
indemnification is being sought only if all of the following conditions are
satisfied: (i) the legal action relates to acts or omissions with respect to the
performance of duties or services by one or more Indemnified Parties for or on
behalf of the Company; (ii) the legal action is initiated by a third party who
is not a Stockholder and a court of competent jurisdiction specifically approves
such advancement; and (iii) the Indemnified Parties receiving such advances
undertake to repay the advanced funds to the Company, together with the
applicable legal rate of interest thereon, in cases in which such Indemnified
Parties are thereafter found not to be entitled to indemnification.
Notwithstanding the foregoing provisions of this Section 7, the Company
will not be liable in any such case to the extent that any loss, liability,
claim, damage or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished to the Company by
18
or on behalf of you or any Soliciting Dealer for use in the preparation of the
Registration Statement (or any amendment thereof) or the Prospectus (or any
supplement thereto). The foregoing indemnity agreement is subject to the further
condition that, insofar as it relates to any untrue statement, alleged untrue
statement, omission or alleged omission made in the Prospectus but eliminated or
remedied in any amendment or supplement thereto, such indemnity agreement shall
not inure to your benefit or to any Soliciting Dealer from whom the person
asserting any loss, liability, claim, damage or expense purchased the Shares
which are the subject thereof (or to the benefit of any person who controls you
or any Soliciting Dealer), if a copy of the Prospectus as so amended or
supplemented was not sent or given to such person at or prior to the time the
subscription of such person was accepted by the Company; but only if a copy of
the Prospectus (as so amended or supplemented) had been supplied by the Company
to you or any Soliciting Dealer prior to such acceptance. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
(b) The indemnification and agreement to hold harmless provided in
subparagraph (a) of this Section 7 is further limited to the extent that no such
indemnification by the Company of you or a Soliciting Dealer shall be permitted
under this Agreement for or arising out of an alleged violation of federal or
state securities laws unless one or more of the following conditions are met:
(i) there has been a successful adjudication on the merits of each count
involving alleged securities law violations by you or any Soliciting Dealer and
a court of competent jurisdiction has approved indemnification of the litigation
costs; (ii) such claims against you or any Soliciting Dealer have been dismissed
with prejudice on the merits by a court of competent jurisdiction as to the
particular indemnitee and the court has approved indemnification of the
litigation costs; or (iii) a court of competent jurisdiction approves a
settlement of the claims against you or any Soliciting Dealer and finds that
indemnification of the settlement and related costs should be made and the court
considering the request has been advised of the position of the Commission and
of any state securities regulatory authority in which securities of the Company
were offered and sold respecting the availability and/or propriety of
indemnification for securities law violations.
(c) You and each Soliciting Dealer agree to indemnify and hold
harmless the Company, and each person, if any, who controls the Company within
the meaning of the Act and any controlling person of the Company: (i) to the
same extent as in the foregoing indemnity from the Company to you and each
Soliciting Dealer, but only with reference to statements or omissions based upon
the information relating to you or any Soliciting Dealer furnished in writing by
you or such Soliciting Dealer or on your or their behalf for use in the
Registration Statement or the Prospectus, or any amendment or supplement
thereto; and (ii) for any violation by you or any Soliciting Dealer in the sale
of the Shares of any applicable state or federal law or any rule, regulation or
instruction thereunder, provided that such violation is not committed in
reliance on any violation by the Company of such law, rule, regulation or
instruction. You and each Soliciting Dealer further agree to indemnify and hold
harmless the Company and any controlling person of the Company against any
losses, liabilities, claims, damages or expenses to which the Company or any
such controlling person may become subject under the securities or blue sky laws
of any jurisdiction insofar as such losses, liabilities, claims, damages or
expenses
19
(or actions, proceedings or investigations in respect thereof) arise by reason
of a sale of the Shares through the efforts of you (with respect to sales
effected without the assistance of a Soliciting Dealer) or a Soliciting Dealer
(with respect to sales effected by such Soliciting Dealer) which is effected
other than in accordance with the Blue Sky Survey supplied to you by the Company
(a "Non-Permitted Sale"), whether such Non-Permitted Sale is caused by a sale in
a jurisdiction other than those specified in the Blue Sky Survey, by a sale in a
jurisdiction in which you or the Soliciting Dealer is not registered to sell the
Shares or which results in a sale in a jurisdiction in excess of the number of
Shares permitted to be sold in such jurisdiction, and will reimburse the Company
or any such controlling person for any legal fees, monetary penalties or other
expenses reasonably incurred by any of them in connection with investigating,
curing or defending against any such losses, liabilities, claims, damages,
actions, proceedings or investigations. This indemnity agreement will be in
addition to any liability which you or any Soliciting Dealer may otherwise have.
(d) The notice provisions contained in Section 7(a) hereof, relating
to notice to the Company, shall be equally applicable to you and each Soliciting
Dealer if the Company or any controlling person of the Company seeks
indemnification pursuant to Section 7(c) hereof. In addition, you and each
Soliciting Dealer may participate in the defense, or assure the defense, of any
such suit so sought under Section 7(c) hereof and have the same rights and
privileges as the Company enjoys with respect to such suits under Section 7(a)
hereof.
8. TERMINATION OF THIS AGREEMENT. This Agreement may be terminated
by you in the event that the Company shall have materially failed to comply with
any of the material provisions of this Agreement on its part to be performed at
or prior to the Effective Date or if any of the representations, warranties,
covenants or agreements of the Company herein contained shall not have been
materially complied with or satisfied within the times specified.
In any case, this Agreement shall terminate at the close of business on
the Termination Date. Termination of this Agreement pursuant to this Section 8
shall be without liability of any party to any other party other than as
provided in Sections 5 and 7 hereof, which shall survive such termination.
9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement or
contained in certificates of the Company submitted pursuant hereto shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of you or any person who controls you, or by or on behalf of the
Company, and shall survive the Termination Date.
10. NOTICES. All communications hereunder shall be in writing and,
if sent to you, shall be mailed by registered mail or delivered, telefacsimilied
or telegraphed and confirmed in writing to Related Equities Corporation, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Attention: Xxxx Xxxxxx) and, if sent
to the Company, shall be mailed by registered mail or delivered, telefacsimilied
or telegraphed and confirmed in writing to Orion Multifamily
20
Investment Fund, Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, (Attention:
Xxxxxx X. Xxxxxx).
11. REFERENCE TO RELATED EQUITIES CORPORATION. All references herein
to Related Equities Corporation or the Dealer Manager hereunder shall be deemed
to include all successors and assigns of Related Equities Corporation
12. PARTIES. This Agreement shall inure to the benefit of and be
binding upon you, the Company and the successors and assigns of you and the
Company. This Agreement and the conditions and provisions hereof, are intended
to be and shall be for the sole and exclusive benefit of the parties hereto and
their respective successors and controlling persons, and for the benefit of no
other person, firm or corporation, and the term "successors and assigns," as
used herein, shall not include any purchaser of Shares as such.
13. APPLICABLE LAW. This Agreement and any disputes relative to the
interpretation or enforcement hereto shall be governed by and construed under
the internal laws, as opposed to the conflicts of laws provisions, of the State
of New York.
14. EFFECTIVENESS OF AGREEMENT. This Agreement shall become
effective at 5:00 p.m., New York, New York time, on the Effective Date, or at
such earlier time as you and the Company agree.
15. NOT A SEPARATE ENTITY. Nothing contained herein shall constitute
you and/or the Soliciting Dealers or any of them an association, partnership,
limited liability company, unincorporated business or other separate entity.
21
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return it to us, whereupon this instrument will
become a binding agreement between you and the Company in accordance with its
terms.
Orion Multifamily Investment Fund, Inc.
a Maryland corporation
By:
--------------------------
Title:
------------------------
Accepted as of the date first above written:
Related Equities Corporation
By: --------------------------
Title: ------------------
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