EXHIBIT 1.2
Form of Participating Broker Agreement
FORM OF PARTICIPATING BROKER AGREEMENT
CNL AMERICAN REALTY FUND, INC.
THIS PARTICIPATING BROKER AGREEMENT (the "Agreement") is made and
entered into as of the day indicated on Exhibit A attached hereto and by this
reference incorporated herein, between CNL SECURITIES CORP., a Florida
corporation (the "Managing Dealer"), and the Participating Broker (the "Broker")
identified in Exhibit A hereto.
WHEREAS, CNL AMERICAN REALTY FUND, INC. is a Maryland
corporation (the "Company"); and
WHEREAS, the Company proposes to offer and sell up to 16,500,000
shares of Common Stock of the Company (the "Shares") to the general public,
pursuant to a public offering (the "Offering") of the Shares pursuant to a
prospectus (the "Prospectus") filed with the Securities and Exchange Commission
("SEC"); and
WHEREAS, the Managing Dealer, which has heretofore entered into a
Managing Dealer Agreement with the Company pursuant to which it has been
designated the managing dealer to sell and manage the sale by others of the
Shares pursuant to the terms of such agreement and the Offering, is a
corporation incorporated in and presently in good standing in the State of
Florida, and is presently registered with the Florida Securities Commission
and with the National Association of Securities Dealers, Inc. ("NASD") as a
securities broker-dealer qualified to offer and sell to members of the public
securities of the type represented by the Shares; and
WHEREAS, the Broker is an entity, as designated in Exhibit A hereto,
organized and presently in good standing in the state or states designated in
Exhibit A hereto, presently registered as a broker-dealer with the NASD, and
presently licensed by the appropriate regulatory agency of each state in which
it will offer and sell the Shares as a securities broker-dealer qualified to
offer and sell to members of the public securities of the type represented by
the Shares or exempt from all such registration requirements; and
WHEREAS, the Company has filed with the SEC a registration
statement on Form S-11, including a preliminary or final prospectus, for the
registration of the Shares under the Securities Act of 1933, as amended
(such registration statement, as it may be amended, and the prospectus and
exhibits on file with the SEC at the time the registration statement becomes
effective, including any post-effective amendments or supplements to such
registration statement or prospectus after the effective date of registration,
being herein respectively referred to as the "Registration Statement" and the
"Prospectus"); and
WHEREAS, the offer and sale of the Shares shall be made pursuant to
the terms and conditions of the Registration Statement and the Prospectus and,
further, pursuant to the terms and conditions of all applicable securities laws
of all states in which the Shares are offered and sold; and
WHEREAS, the Managing Dealer desires to retain the Broker to use
its best efforts to sell the Shares, and the Broker is willing and desires to
serve as a broker for the Managing Dealer for the sale of the Shares upon the
following terms and conditions;
NOW, THEREFORE, in consideration of the premises and terms and
conditions thereof, it is agreed between the Managing Dealer and the Broker as
follows.
1. EMPLOYMENT.
(a) Subject to the terms and conditions herein set
forth, the Managing Dealer hereby employs the Broker to use its best efforts to
sell for the account of the Company a portion of the Shares described
in
the Registration Statement, as specified on Exhibit A hereto. The Broker
hereby accepts such employment and covenants, warrants and agrees to sell the
Shares according to all of the terms and conditions of the Registration
Statement, all applicable state and federal laws, including the Securities Act
of 1933, as amended, and any and all regulations and rules pertaining
thereto, heretofore or hereafter issued by the SEC and the NASD. Neither the
Broker nor any other person shall have any authority to give any information or
make any representations in connection with any offer or sale of the Shares
other than as contained in the Prospectus, as amended and supplemented, and
as is otherwise expressly authorized in writing by the Managing Dealer.
(b) The Broker shall use its best efforts, promptly
following receipt of written notice from the Managing Dealer of the effective
date of the Registration Statement, to sell the Shares in such quantities and
for the account of Company as shall be agreed between the Broker and the
Managing Dealer and specified on Exhibit A hereto, and to such persons and
according to all such terms as are contained in the Registration
Statement and the Prospectus. The Broker shall comply with all requirements
set forth in the Registration Statement and the Prospectus. The Broker
shall use and distribute, in connection with the offer and sale of the
Shares, only the Prospectus and such sales literature and advertising as shall
conform in all respects to any restrictions of local law and the applicable
requirements of the Securities Act of 1933, as amended, and which has been
approved in writing by the Company or the Managing Dealer. The Managing Dealer
reserves the right to establish such additional procedures as it may deem
necessary to ensure compliance with the requirements of the Registration
Statement, and the Broker shall comply with all such additional procedures to
the extent that it has received written notice thereof.
(c) The Broker shall be permitted to accept
subscriptions for the Shares by telephone from residents of those states
identified on Schedule A attached hereto and made a part hereof provided
that: (1) the registered representative and branch manager of the Broker
execute the subscription agreement on behalf of any investor who subscribes
for Shares by telephone; and (2) the Broker does not charge any additional
fees, including but not limited to fees relating to opening an account with
the Broker, to any investor who telephonically or orally subscribes for
Shares. It is understood and agreed between the Managing Dealer and the Broker
that the Managing Dealer may, in its discretion, change, modify, add to or
delete from the list of states identified on Schedule A. Any such modification
shall be effective ten days from the date written notice to the Broker has
been mailed by the Managing Dealer. The Broker shall not execute a
subscription agreement on behalf of any investor who subscribes for Shares
by telephone unless such investor has specifically authorized the registered
representative and the branch manager of the Broker to execute the
subscription agreement on behalf of such investor and has made or agreed to
make full payment for all Shares covered by such subscription agreement.
Notwithstanding anything contained herein to the contrary, the Broker shall
have no authority to make representations on behalf of an investor or
to initial representations contained in the subscription agreement on
behalf of an investor. In connection with telephonic or other oral
subscriptions for Shares, the Broker represents and warrants as follows: (i)
that a Prospectus was delivered to the investor before the investor made a
decision to invest; (ii) that the investor meets the suitability requirements
set forth in the Prospectus; and (iii) that, in compliance with the NASD's
Conduct Rules, the Broker has reasonable grounds to believe that the
investment in the Company is suitable for the investor, based upon
information supplied by the investor to such Broker. Further, the Broker
shall explain to any investor from a state identified in the Prospectus as
having such additional requirements, that: (i) the investor has the right to
rescind such subscription for a period of at least ten days following the date
written confirmation of the subscription has been received by the investor from
the Managing Dealer; and (ii) unless the investor rescinds such subscription
within the applicable period of time, the investor shall be bound by the
subscription agreement.
(d) Notwithstanding anything to the contrary contained
in Section 2 of this Agreement, in the event that the Managing Dealer pays any
commission to the Broker for sale of one or more Shares, including, but not
limited to, those Shares sold pursuant to a telephonic or other oral
subscription therefor, where representatives of the Broker execute the
subscription agreement relating to such Shares, and the subscription is
rescinded as to one or more of the Shares covered by such subscription, the
Managing Dealer shall decrease the next payment of commissions or other
compensation otherwise payable to the Broker by the Managing Dealer under this
Agreement by an amount equal to the commission rate established in Section 2
and Exhibit A of this Agreement, multiplied by the number of Shares as to which
the subscription is rescinded. In the event that no payment of commissions or
other compensation is due to the Broker after such withdrawal occurs, the
Broker shall pay the amount specified in
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the preceding sentence to the Managing Dealer within ten (10) days following
mailing of notice to the Broker by the Managing Dealer stating the amount
owed as a result of rescinded subscriptions.
(e) All monies received for purchase of any of the
Shares shall be forwarded by the Broker to the Managing Dealer for delivery
to SouthTrust Asset Management Company of Florida, N.A. (the "Escrow Agent"),
where such monies will be deposited in an escrow account established by
the Company solely for such subscriptions, except that, until such time (if any)
that such monies are deliverable to the Company pursuant to the Escrow Agreement
between the Company and the Escrow Agent, the Broker shall return any check not
made payable to "SouthTrust Asset Management Company of Florida, N.A.,
Escrow Agent" directly to the subscriber who submitted the check. Thereafter,
the Broker may accept checks made payable to either the Company or the
Escrow Agent. Subscriptions will be executed as described in the
Registration Statement or as directed by the Managing Dealer. The monies
shall be deposited or transmitted by the Broker to the Managing Dealer no
later than the close of business of the first business day after receipt
of the subscription documents by the Broker; provided, however, that if the
Broker maintains a branch office, the branch office shall transmit the
subscription documents and check to the Broker by the close of business on
the first business day following their receipt by the branch office and the
Broker shall review the subscription documents and check to ensure their proper
execution and form and, if they are acceptable, transmit the check to the
Managing Dealer by the close of business on the first business day after their
receipt by the Broker. Pursuant to the terms of the Managing Dealer
Agreement, the Managing Dealer will transmit the check or monies to the Escrow
Agent by no later than the close of business on the first business day after
the check is received from the Broker.
(f) During the full term of this Agreement the
Managing Dealer shall have full authority to take such action as it may deem
advisable in respect to all matters pertaining to the performance of the Broker
under this Agreement.
(g) The Shares shall be offered and sold by the Broker
only where the Shares may be legally offered and sold, and only to such persons
in such states who shall be legally qualified to purchase the Shares. The
Managing Dealer shall give the Broker written notice at the time of
effectiveness of those states in which the offering and sale of Shares may be
made, and shall amend such notice thereafter as additional states are added; no
Shares shall be offered or sold in any other states.
(h) The Broker shall have no obligation under this
Agreement to purchase any of the Shares for its own account.
(i) The Broker will use every reasonable effort to
assure that Shares are sold only to investors who:
(1) meet the investor suitability standards,
including the minimum income and net worth standard established by the
Company, and minimum purchase requirements set forth in the Registration
Statement;
(2) can reasonably benefit from the Company
based on the prospective investor's overall investment objectives and
portfolio structure;
(3) are able to bear the economic risk of the
investment based on each prospective investor's overall financial
situation; and
(4) have apparent understanding of: (a) the
fundamental risks of the investment; (b) the risk that the
prospective investor may lose the entire investment; (c) the lack of
liquidity of the Shares; (d) the restrictions on transferability of
the Shares; (e) the background and qualifications of the
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officers and directors of CNL Real Estate Advisors, Inc., the advisor
to the Company (the "Advisor"); and (f) the tax consequences of an
investment in the Shares.
(5) The Broker will make the determinations
required to be made by it pursuant to subparagraph (i) based on
information it has obtained from a prospective investor, including, at a
minimum, but not limited to, the prospective investor's age,
investment objectives, investment experience, income, net worth,
financial situation, other investments of the prospective investor, as
well as any other pertinent factors deemed by the Broker to be
relevant.
(j) In addition to the complying with the
provisions of subparagraph (i) above, and not in limitation of any other
obligations of the Broker to determine suitability imposed by state or federal
law, the Broker agrees that it will comply fully with all of the applicable
provisions of the NASD's Conduct Rules, and the following provisions:
(1) The Broker shall have reasonable grounds
to believe, based upon information provided by the investor
concerning his investment objectives, other investments, financial
situation and needs, and upon any other information known by the
Broker, that (A) each investor to whom the Broker sells Shares is or
will be in a financial position appropriate to enable him to realize
to a significant extent the benefits (including tax benefits) of an
investment in the Shares, (B) each investor to whom the Broker sells
Shares has a fair market net worth sufficient to sustain the risks
inherent in an investment in the Shares (including potential loss and
lack of liquidity), and (C) the Shares otherwise are or will be a
suitable investment for each investor to whom it sells Shares, and the
Broker shall maintain files disclosing the basis upon which the
determination of suitability was made;
(2) The Broker shall not execute any transaction
involving the purchase of Shares in a discretionary account without
prior written approval of the transactions by the investor;
(3) The Broker shall have reasonable grounds
to believe, based upon the information made available to it, that all
material facts are adequately and accurately disclosed in the
Registration Statement and provide a basis for evaluating the Shares;
(4) In making the determination set forth in
subparagraph (3) above, the Broker shall evaluate items of
compensation, physical properties, tax aspects, financial stability and
experience of the sponsor, conflicts of interest and risk factors,
appraisals, as well as any other information deemed pertinent by it;
(5) If the Broker relies upon the results of
any inquiry conducted by another member of the NASD with respect to
the obligations set forth in subparagraphs (3) or (4) above, the
Broker shall have reasonable grounds to believe that such inquiry was
conducted with due care, that the member or members conducting or
directing the inquiry consented to the disclosure of the results of
the inquiry and that the person who participated in or conducted the
inquiry is not a sponsor or an affiliate of the sponsor of the Company;
and
(6) Prior to executing a purchase transaction in
the Shares, the Broker shall have informed the prospective investor of
all pertinent facts relating to the liquidity and marketability of the
Shares.
(k) The Broker agrees that it will comply with Rules
2730, 2740 and 2750 of the NASD's Conduct Rules.
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(l) The Broker agrees to retain in its files, for a
period of at least six years, information which will establish that each
purchaser of Shares falls within the permitted class of investors.
(m) The Broker shall not, directly or indirectly, pay or
award any finder's fees, commissions or other compensation to any persons
engaged by a potential investor for investment advice as an inducement to such
advisor to advise the potential investor to purchase Shares in the Company.
(n) The Broker either (i) shall not purchase Shares
for its own account or (ii) shall hold for investment any Shares purchased
for its own account.
(o) The Broker hereby confirms that it is familiar with
Securities Act Release No. 4968 and Rule 15c2-8 under the Securities Exchange
Act of 1934, relating to the distribution of preliminary and final
prospectuses, and confirms that it has and will comply therewith.
(p) The Broker shall deliver a copy of the
Articles of Incorporation of the Company with each Prospectus that is
delivered to potential investors in Mississippi.
2. COMPENSATION OF BROKER.
The Managing Dealer shall pay the Broker, as compensation for all
services to be rendered by the Broker hereunder, a commission equal to 7.0%
on sales of Shares by such Broker, as set forth in Exhibit A hereto, subject to
reduction as specified in this Section 2 and the Prospectus. The Managing
Dealer, in its sole discretion, may reallow to the Broker, from its marketing
support and due diligence expense reimbursement fee, up to an additional 0.5% on
sales of Shares by such Broker, based on such factors as the number of Shares
sold by the Broker, the assistance of the Broker in marketing the Offering,
and BONA FIDE due diligence expenses incurred by the Broker. Such commission
rates shall remain in effect during the full term of this Agreement unless
otherwise changed by a written agreement between the parties hereto. A sale of
Shares shall be deemed to be completed only after the Company receives a
properly completed subscription agreement for Shares from the Broker
evidencing the fact that the investor had received a final Prospectus for a
period of not less than five full business days, together with payment of the
full purchase price of each purchased Share from a buyer who satisfies each of
the terms and conditions of the Registration Statement and Prospectus, and only
after such subscription agreement has been accepted in writing by the
Company. Such compensation shall be payable to the Broker by the Managing
Dealer after such acceptance of the subscription agreement; PROVIDED, HOWEVER,
that compensation or commissions shall not be paid by the Managing Dealer: (i)
other than from funds received as compensation or commissions from the Company
for the sale of its Shares; (ii) until such time as subscriptions for a
minimum of 250,000 Shares ($2,500,000), excluding subscriptions from
Pennsylvania investors, have been received and approved by the Company, and
deposited into the escrow account provided for in Paragraph 1(e) hereof;
(iii) until any and all compensation or commissions payable by the Company to
the Managing Dealer have been received by the Managing Dealer; and (iv) if the
commission payable to any broker-dealer or salesman exceeds the amount allowed
by any regulatory agency. The Broker shall not reallow any commissions to
non-NASD members. The Company (and the Managing Dealer) may pay reduced
commissions or may eliminate commissions on certain sales of Shares, including
the reduction or elimination of commissions in accordance with the following
paragraph of this Section 2. Any such reduction or elimination of
commissions will not, however, change the net proceeds to the Company.
A registered principal or representative of the Managing Dealer or
a Broker, employees, officers, Directors, and directors of the Company or the
Advisor, or any of their Affiliates (and the families of any of the foregoing
persons), and any Plan (as defined in the Prospectus) established exclusively
for the benefit of such persons may purchase Shares net of 7% commissions,
at a per Share purchase price of $9.30. In addition, clients of an investment
adviser registered under the Investment Advisers Act of 1940, as amended, who
have been advised by such adviser on an ongoing basis regarding investments
other than in the Company, and who are not being charged by such adviser or
its Affiliates, through the payment of commissions or otherwise, for the
advice rendered by such adviser in connection with the purchase of the
Shares, may purchase the Shares net of commissions. In
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addition, brokers that have a contractual arrangement with their clients for
the payment of fees which is consistent with accepting selling commissions,
in their sole discretion, may elect not to accept any selling commissions
offered by the Company for Shares that they sell. In that event, such Shares
shall be sold to the investor net of all selling commissions, at a per share
purchase price of $9.30.
In addition to the commissions described above in this Section 2,
the Managing Dealer may reallow to the Broker all or a portion of its annual
fee actually received from the Company of .20% of the Company's Invested
Capital (as defined below) on December 31 of each year, commencing in the year
following the year in which the Offering terminates. It is understood that
payment of such fee by the Company to the Managing Dealer is subject to any
limitations imposed on the Company by the NASD, state securities regulators or
otherwise. The Managing Dealer may reallow this fee only to a Broker whose
clients hold Shares on December 31 of the applicable year. In general, Invested
Capital is the amount of cash contributed by the shareholders to the Company,
reduced by certain prior capital distributions to the shareholders from the
sale of Company properties. This fee will terminate as of the beginning of
any year in which the Company is liquidated or the Shares become listed on a
national securities exchange or over-the-counter market.
The Managing Dealer shall pay the Broker commissions on Shares
purchased pursuant to the Company's Dividend Reinvestment Plan on the same
basis as commissions paid for Shares otherwise purchased in the Offering.
3. ASSOCIATION WITH OTHER DEALERS.
It is expressly understood between the Managing Dealer and the
Broker that the Managing Dealer may cooperate with other broker-dealers who are
registered as broker-dealers with the NASD and duly licensed by the appropriate
regulatory agency of each state in which they will offer and sell the Shares
or with broker-dealers exempt from all such registration requirements. Such
other participating broker-dealers may be employed by the Managing Dealer as
brokers on terms and conditions identical or similar to this Agreement and
shall receive such rates of commission as are agreed to between the Managing
Dealer and the respective other participating broker-dealers and as are in
accordance with the terms of the Registration Statement. The Broker understands
that, to that extent, such other participating broker-dealers shall compete
with the Broker in the sale of the Shares.
4. CONDITIONS OF THE BROKER'S OBLIGATIONS.
The Broker's obligations hereunder are subject, during the full
term of this Agreement and the Offering, to (a) the performance by the
Managing Dealer of its obligations hereunder; and (b) the conditions that: (i)
the Registration Statement shall become and remain effective; and (ii) no stop
order shall have been issued suspending the effectiveness of the Offering.
5. CONDITIONS TO THE MANAGING DEALER'S OBLIGATIONS.
The obligations of the Managing Dealer hereunder are subject, during
the full term of this Agreement and the Offering, to the conditions that: (a)
at the effective date of the Registration Statement and thereafter during the
term of this Agreement while any Shares remain unsold, the Registration
Statement shall remain in full force and effect authorizing the offer and sale
of the Shares; (b) no stop order suspending the effectiveness of the
Offering or other order restraining the offer or sale of the Shares shall have
been issued nor proceedings therefor initiated or threatened by any state
regulatory agency or the SEC; and (c) the Broker shall have satisfactorily
performed all of its obligations hereunder.
6. COVENANTS OF THE MANAGING DEALER.
The Managing Dealer covenants, warrants and represents, during the
full term of this Agreement, that:
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(a) It shall use its best efforts to prevent the sale of the
Shares through persons other than registered NASD broker-dealers.
(b) It shall use its best efforts to cause the Company to
maintain the effectiveness of the Registration Statement and to file such
applications or amendments to the Registration Statement as may be reasonably
necessary for that purpose.
(c) It shall advise the Broker whenever and as soon as it
receives or learns of any order issued by the SEC, any state regulatory agency
or any other regulatory agency which suspends the effectiveness of the
Registration Statement or prevents the use of the Prospectus or which otherwise
prevents or suspends the offering or sale of the Shares, or receives
notice of any proceedings regarding any such order.
(d) It shall use its best efforts to prevent the issuance of
any order described herein at subparagraph (c) hereof and to obtain the lifting
of any such order if issued.
(e) It shall give the Broker written notice when the
Registration Statement becomes effective and shall deliver to the Broker such
number of copies of the Prospectus, and any supplements and amendments
thereto, which are finally approved by the SEC, as the Broker may reasonably
request for sale of the Shares.
(f) It shall promptly notify the Broker of any
post-effective amendments or supplements to the Registration Statement or
Prospectus, and shall furnish the Broker with copies of any revised
Prospectus and/or supplements and amendments to the Prospectus.
(g) To the extent to which the Managing Dealer has knowledge,
it shall keep the Broker fully informed of any material development to which
the Company is a party or which concerns the business and condition of
the Company.
(h) In conjunction with the Company, it shall use its best
efforts to cause, at or prior to the time the Registration Statement
becomes effective, the qualification of the Shares for offering and sale
under the securities laws of such states as the Company shall elect.
7. PAYMENT OF COSTS AND EXPENSES.
The Broker shall pay all costs and expenses incident to the
performance of its obligations under this Agreement, including:
(a) All expenses incident to the preparation, printing and
filing of all advertising originated by it related to the sale of the Shares;
and
(b) All other costs and expenses incurred in connection
with its sales efforts related to the sales of the Shares which are not
expressly assumed by the Company in its Managing Dealer Agreement with the
Managing Dealer.
8. INDEMNIFICATION.
(a) The Broker agrees to indemnify, defend and hold
harmless the Company, its affiliates and their or its officers, directors,
trustees, employees and agents, including the Managing Dealer, against all
losses, claims, demands, liabilities and expenses, joint or several,
including reasonable legal and other expenses incurred in defending such
claims or liabilities, whether or not resulting in any liability to the
Company, its affiliates and their or its officers, directors, trustees,
employees or agents, which they or any of them may incur arising out of the
offer or sale by the Broker, or any person acting on its behalf, of any Shares
pursuant to this Agreement if such
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loss, claim, demand, liability, or expense arises out of or is based upon (i)
an untrue statement or alleged untrue statement of a material fact, or any
omission or alleged omission of a material fact, other than a statement,
omission, or alleged omission by the Broker which is also, as the case may
be, contained in or omitted from the Prospectus or the Registration Statement
and which statement or omission was not based on information supplied to
the Company or the Managing Dealer by such Broker, or (ii) the breach by the
Broker, or any person acting on its behalf, of any of the terms and conditions
of this Agreement. This indemnity provision shall survive the termination of
this Agreement.
(b) The Managing Dealer agrees to indemnify, defend
and hold harmless the Broker, its officers, directors, employees and agents,
against all losses, claims, demands, liabilities and expenses, including
reasonable legal and other expenses incurred in defending such claims or
liabilities, which they or any of them may incur, including, but not limited
to, alleged violations of the Securities Act of 1933, as amended, but only to
the extent that such losses, claims, demands, liabilities and expenses shall
arise out of or be based upon (i) any untrue statement of a material fact
contained in the Prospectus or the Registration Statement, as filed and in
effect with the SEC, or in any amendment or supplement thereto, or in any
application prepared or approved in writing by counsel to the Company and
filed with any state regulatory agency in order to register or qualify
the Shares under the securities laws thereof (the "Blue Sky applications"), or
(ii) any omission or alleged omission to state therein a material fact required
to be stated in the Prospectus or the Registration Statement or the Blue Sky
applications, or necessary to make such statements, and any part thereof,
not misleading; provided, further, that any such untrue statement,
omission or alleged omission is not based on information included in any such
document which was supplied to the Managing Dealer, the Company, or any officer
of the Company by such Broker. This indemnity provision shall survive the
termination of this Agreement.
(c) No indemnifying party shall be liable under the
indemnity agreements contained in subparagraphs (a) and (b) above unless the
party to be indemnified shall have notified such indemnifying party in writing
promptly after the summons or other first legal process giving information
of the nature of the claim shall have been served upon the party to be
indemnified, but failure to notify an indemnifying party of any such claim
shall not relieve it from any liabilities which it may have to the
indemnified party against whom action is brought other than on account of
its indemnity agreement contained in subparagraphs (a) and (b) above. In the
case of any such claim, if the party to be indemnified notified the
indemnifying party of the commencement thereof as aforesaid, the
indemnifying party shall be entitled to participate at its own expense in
the defense of such claim. If it so elects, in accordance with arrangements
satisfactory to any other indemnifying party or parties similarly notified,
the indemnifying party has the option to assume the entire defense of the
claim, with counsel who shall be satisfactory to such indemnified party and
all other indemnified parties who are defendants in such action; and after
notice from the indemnifying party of its election so to assume the defense
thereof and the retaining of such counsel by the indemnifying party, the
indemnifying party shall not be liable to such indemnified party under
subparagraphs (a) and (b) above for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof,
other than for the reasonable costs of investigation.
9. TERM OF AGREEMENT.
This Agreement shall become effective at 8:00 A.M. (Eastern
Standard Time) on the first full business day following the day on which
the Registration Statement becomes effective, or if later, the date on which
this Agreement is executed by the Managing Dealer and the Broker. The Broker
and the Managing Dealer may each prevent this Agreement from becoming
effective, without liability to the other, by written notice before the time
this Agreement would otherwise become effective. After this Agreement becomes
effective, either party may terminate it at any time for any reason by giving
thirty (30) days' written notice to the other party; provided, however, that
this Agreement shall in any event automatically terminate at the first
occurrence of any of the following events: (a) the Registration Statement for
offer and sale of the Shares shall cease to be effective; (b) the Company
shall be terminated; or (c) the Broker's license or registration to act as a
broker-dealer shall be revoked or suspended by any federal, self-regulatory or
state agency and such revocation or suspension is not cured within ten
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(10) days from the date of such occurrence. In any event, this Agreement
shall be deemed suspended during any period for which such license is revoked
or suspended.
10. NOTICES.
All notices and communications hereunder shall be in writing and
shall be deemed to have been given and delivered when deposited in the
United States mail, postage prepaid, registered or certified mail, to the
applicable address set forth below.
IF SENT TO THE MANAGING DEALER:
CNL SECURITIES CORP.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, President
IF SENT TO THE BROKER: TO THE PERSON WHOSE NAME AND ADDRESS ARE
IDENTIFIED IN EXHIBIT A HERETO.
11. SUCCESSORS.
This Agreement shall be binding upon and inure to the benefit of
the parties hereto, and shall not be assigned or transferred by the Broker by
operation of law or otherwise.
12. MISCELLANEOUS.
(a) This Agreement shall be construed in accordance
with the applicable laws of the State of Florida.
(b) Nothing in this Agreement shall constitute the
Broker as in association with or in partnership with the Managing Dealer.
Instead, this Agreement shall only authorize the Broker to sell the Shares
according to the terms as expressly set forth herein; provided, further, that
the Broker shall not in any event have any authority to act as the agent or
broker of the Managing Dealer except according to the terms expressly set forth
herein.
(c) This Agreement, including Exhibit A and Schedule
A hereto, embodies the entire understanding between the parties to the
Agreement, and no variation, modification or amendment to this Agreement shall
be deemed valid or effective unless it is in writing and signed by both parties
hereto.
(d) If any provision of this Agreement shall be
deemed void, invalid or ineffective for any reason, the remainder of the
Agreement shall remain in full force and effect.
(e) This Agreement may be executed in counterpart
copies, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument comprising this Agreement.
-9-
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date and year indicated on Exhibit A hereto.
BROKER: MANAGING DEALER:
_______________________________________ CNL SECURITIES CORP.
(Name of Broker)
By:_____________________________________ By_________________________________
Print Name:_____________________________ Print Name:________________________
Title:__________________________________ Title:_____________________________
Witness:________________________________ Witness:___________________________
-10-
EXHIBIT A
TO
PARTICIPATING BROKER AGREEMENT
OF
CNL AMERICAN REALTY FUND, INC.
This Exhibit A is attached to and made a part of that certain
Participating Broker Agreement, dated as of the ___ day of ___________________,
19__, by and between CNL SECURITIES CORP., as Managing Dealer,
and __________________________________, as Broker.
1. Date of Agreement:_______________________________________________________
2. Identity of Broker:
Name:_____________________________________________________________________
Firm NASD (CRD) No:_______________________________________________________
Type of Entity____________________________________________________________
(TO BE COMPLETED BY BROKER, E.G., CORPORATION, PARTNERSHIP
OR SOLE PROPRIETORSHIP.)
State Organized in:_______________________________________________________
(TO BE COMPLETED BY BROKER)
Qualified To Do Business and in Good Standing in the Following
Jurisdictions (INCLUDING YOUR STATE OF ORGANIZATION) (NOTE:
QUALIFICATION TO DO BUSINESS IN ANY JURISDICTION IS GENERALLY A
REQUIREMENT IMPOSED BY THE SECRETARY OF STATE OR OTHER AUTHORITY OF
JURISDICTIONS IN WHICH YOU DO BUSINESS, AND IS NOT RELATED TO YOUR
HOLDING A LICENSE AS A SECURITIES BROKER-DEALER IN SUCH JURISDICTIONS.
QUESTIONS CONCERNING THIS MATTER SHOULD BE DIRECTED TO YOU OR YOUR LEGAL
COUNSEL.):
__________________________________________________________________________
__________________________________________________________________________
(TO BE COMPLETED BY BROKER)
Licensed as Broker-Dealer in The Following States:________________________
__________________________________________________________________________
__________________________________________________________________________
(TO BE COMPLETED BY BROKER)
3. Schedule of Commissions Payable to Participating Broker (see Section 2
of Agreement):
Number of Shares
Purchased in Sales Price As a Percentage
Individual Order To Subscriber of the Sales Price(1) Dollar Amount
---------------- ------------- --------------------- -------------
1 or more $10.00 7.0% $0.70
________________________
(1) Subject to reduction as set forth in Section 2 of the Participating
Broker Agreement.
A-1
[Exhibit A
Page 1 of 2]
4. Name and Address for Notice Purposes (see Paragraph 10 of Agreement):
Name:______________________________________________________________________
Title:_____________________________________________________________________
Company:___________________________________________________________________
Address:___________________________________________________________________
City, State and Zip Code:__________________________________________________
Telephone Number (including area code):____________________________________
5. Please complete the following for our records:
(a) Please name those individuals who hold the following positions:
President:___________________________________________________________
Due Diligence Officer:_______________________________________________
Marketing Director:__________________________________________________
In-House Editor:_____________________________________________________
(b) Does your company hold national or regional conferences?
Yes _____ No _____
If so, when?_________________________________________________________
Who is the coordinator?______________________________________________
(c) How many representatives are registered with your broker-dealer?
________________________
PLEASE ENCLOSE A CURRENT LIST. ALL INFORMATION WILL BE HELD IN
CONFIDENCE.
(d) Does your firm publish a newsletter? Yes _____ No _____
What is/are the frequency of the publication(s)?
_____ Weekly _____ Monthly _____ Quarterly
_____ Bi-weekly _____ Bi-monthly _____ Other (please specify)
PLEASE PLACE CNL ON YOUR MAILING LIST AND PROVIDE A SAMPLE OF THE
PUBLICATION IF AVAILABLE.
(e) Does your firm have regular internal mailings, or bulk package
mailings to representatives? Yes _____ No _____
PLEASE PLACE CNL ON YOUR MAILING LIST AND PROVIDE A SAMPLE OF THE
PUBLICATION IF AVAILABLE.
(f) Does your firm have a computerized electronic mail (E-Mail) system
for your representatives? Yes _____ No _____
A-2
[Exhibit A
Page 2 of 2]
SCHEDULE A
TO
PARTICIPATING BROKER AGREEMENT
OF
CNL AMERICAN REALTY FUND, INC.
This Schedule A is attached to and made a part of that certain
Participating Broker Agreement, dated as of the ___ day of
____________________, 19__, by and between CNL SECURITIES CORP., as
Managing Dealer, and _____________________________________________, as
Broker.
TELEPHONIC SUBSCRIPTION AUTHORIZATION
The list of states in which the Broker is permitted to accept
telephonic subscriptions shall be those states identified by Item 2 of
Exhibit A, as amended from time to time, to the Broker Agreement between the
parties hereto, as states in which the Broker is licensed as a Broker-Dealer,
EXCEPT FOR THE FOLLOWING STATES IN WHICH THE BROKER IS SPECIFICALLY PROHIBITED
FROM ACCEPTING TELEPHONIC SUBSCRIPTIONS: Florida, Iowa, Maine,
Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New
Mexico, North Carolina, Ohio, Oregon, South Dakota, Tennessee and Washington.
Initials: ______________ CNL SECURITIES CORP.
______________ PARTICIPATING BROKER
