EXHIBIT 1.2
FORM OF SOLICITING DEALERS AGREEMENT
INLAND RETAIL REAL ESTATE TRUST, INC.
FORM OF
SOLICITING DEALERS AGREEMENT
Ladies and Gentlemen:
We have entered into an agreement (the "Dealer Manager Agreement")
which is a part hereof and attached hereto, with Inland Retail Real Estate
Trust, Inc., a Maryland corporation (the "Company"), under which we have
agreed to use our best efforts to solicit subscriptions for the shares of
Common Stock (the "Shares") in the Company. The Company is offering to the
public an aggregate maximum of up to 50,000,000 Shares at a price of $10 per
Share on a "best efforts" basis, up to 4,000,000 Shares issued pursuant to
the Distribution Reinvestment Program at a price of $9.50 per Share and
1,250,000 Soliciting Dealer Warrants (and Shares issuable on exercise of the
Soliciting Dealer Warrants) which are issuable in certain circumstances in
connection with the sale of Shares (the "Offering"). Unless otherwise
defined, capitalized terms used herein shall have the same meaning as in the
Registration Statement.
In connection with the performance of our obligations under Section 2
of the Dealer Manager Agreement, we are authorized to retain the services of
securities dealers who are members of the National Association of Securities
Dealers, Inc. (the "Soliciting Dealers") to solicit subscriptions. You are
hereby invited to become a Soliciting Dealer and, as such, to use your best
efforts to solicit subscribers for Shares, in accordance with the following
terms and conditions:
1. A registration statement (the "Registration Statement") with
respect to the 55,250,000 Shares has been filed with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), and has become effective. The 55,250,000 Shares and the
Offering are more particularly described in the enclosed prospectus (the
"Prospectus") which is part of the Registration Statement. Additional copies
of the Prospectus will be supplied to you in reasonable quantities upon
request. We will also provide you with reasonable quantities of any
supplemental literature prepared by the Company in connection with the
offering of the Shares.
2. Solicitation and other activities by the Soliciting Dealers
hereunder shall be undertaken only in accordance with the Dealer Manager
Agreement, this Agreement, the Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the applicable rules and regulations of the
Commission, the Blue Sky Survey hereinafter referred to and the Rules of the
National Association of Securities Dealers, Inc. (the "NASD"), specifically
including, but not in any way limited to, NASD Rules 2440, 2730, 2740, and
2750. In offering the sale of Shares to any person, each Soliciting Dealer
shall have reasonable grounds to believe (based on such information as the
investment objectives, other investments, financial situation and needs of
the person or any other information known by you after due inquiry) that:
(i) such person is or will be in a financial position appropriate to enable
such person to realize to a
significant extent the benefits described in the Prospectus and has a net
worth sufficient to sustain the risks inherent in the program, including loss
of investment and lack of liquidity; (ii) the purchase of the Shares is
otherwise suitable for such person, and each Soliciting Dealer shall maintain
records disclosing the basis upon which each Soliciting Dealer determined the
suitability of any persons offered Shares; and (iii) such person has either:
(a) a minimum annual gross income of $45,000 and a minimum net worth
(exclusive of home, home furnishings and automobiles) of $45,000; or (b) a
minimum net worth (determined with the foregoing exclusions) of $150,000.
If the investor is a resident of California, Massachusetts or
Tennessee, the investor must have either: (i) a minimum net worth (excluding
home, home furnishings and automobiles) of $225,000; or (ii) a minimum annual
gross income of $60,000 and a minimum net worth (exclusive of home, home
furnishings and automobiles) of $60,000.
If the investor is a resident of Maine, the investor must have either:
(i) a minimum net worth (excluding home, home furnishings and automobiles) of
$200,000; or (ii) a minimum annual gross income of $50,000 and a minimum net
worth (exclusive of home, home furnishings and automobiles) of $50,000.
Each Soliciting Dealer agrees: (i) to deliver to each person who
subscribes for the Shares, a Prospectus, as then supplemented or amended,
prior to the tender of his subscription agreement (the "Subscription
Agreement"); (ii) to comply promptly with the written request of any person
for a copy of the Prospectus during the period between the effective date of
the Registration Statement and the later of the termination of the
distribution of the Shares or the expiration of 40 days after the first date
upon which the Shares were offered to the public; (iii) to deliver in
accordance with applicable law or as prescribed by any state securities
administrator to any person a copy of any prescribed document included within
the Registration Statement; and (iv) to maintain in its files for at least
six years, documents disclosing the basis upon which the determination of
suitability was reached as to each purchaser of Shares.
3. Subject to the terms and conditions set forth herein and in the
Dealer Manager Agreement, the Company shall pay to you a selling commission
of 7% of the price paid per Share for all Shares sold (except for Special
Sales) from the 50,000,000 Shares offered on a "best efforts" basis for which
you have acted as Soliciting Dealer pursuant to this Agreement. Soliciting
Dealers will also receive, subject to applicable federal and state securities
laws, one Soliciting Dealer Warrant for each 40 Shares sold by such
Soliciting Dealer during the Offering (the "Warrants"), which Warrants will
be reallowed from the Dealer Manager from the Warrants issued and sold to it
by the Company for a purchase price of $.0008 per Warrant. The Company will
not issue more than 1,250,000 of the Warrants in connection with the Offering
of the Shares. The Warrants will be issued quarterly commencing 60 days
after the date on which Shares are first sold pursuant to the Offering. In
making a request that the Company or the Dealer Manager transfer Warrants,
you hereby represent that the transfer of such Warrants to you is permissible
and proper under applicable state securities laws for sales of Shares to
residents of the appropriate state(s). The Dealer Manager will not transfer
and the Company will not issue Warrants to Soliciting Dealers registered in
Minnesota or South
2
Carolina in connection with the sale of Shares to residents of the States of
Minnesota or South Carolina, respectively. All Shares sold by the Company in
the Offering, other than (i) through the Distribution Reinvestment Program or
(ii) to residents of the above-referenced states, will be included in the
computation of the number of Shares sold to determine the number of
Soliciting Dealer Warrants to be issued. The holder of a Warrant will be
entitled to purchase one Share from the Company at a price of $12 (or 120% of
the public offering price per Share, if the then current offering price of
Shares in the Offering is higher than $10 per Share) during the time period
beginning one year from the date of the first issuance of any of the
Soliciting Dealer Warrants and ending five years from the date of such first
issuance (the "Exercise Period"). If a Soliciting Dealer Warrant has not
been exercised by the end of the Exercise Period, it will terminate and the
holder thereof will have no further rights thereunder. Soliciting Dealers
should consult their tax advisors regarding the income tax aspects of
receiving and/or exercising the Soliciting Dealer Warrants.
Investors purchasing at least $200,000 worth of Shares (20,000 Shares)
during the Offering will be entitled to a reduction in selling commissions
payable in connection with the purchase of such Shares in accordance with the
following schedule:
Amount of Maximum Commission Per
Purchaser's Investment Share
--------------------------------- ----------------------
From To
------------ ----------
$ 200,000 $ 499,999 5.5%
500,000 999,999 4.0%
1,000,000 1,999,999 2.5%
2,000,000 and over 1.0%
Any reduction from the amount otherwise payable to you in respect of a
subscription will be credited to such purchaser in the form of additional
whole Shares or fractional Shares purchased net of commissions. As to sales
of Shares which are entitled to the above described volume discounts, only
the reduced selling commissions set forth above will be paid.
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 reallowable to you so long as all
such combined purchases are made through you and approved by the Company.
Subscriptions of spouses and of Persons holding as joint tenants or tenants
in common may be combined for purposes of computing amounts invested.
Subscriptions from Tax-Exempt Entities may be combined for purposes of
computing accounts invested only if investment decisions are made by the same
Person for each such Tax-Exempt Entity, except however, if the investment
decisions are made by an independent investment adviser, that investment
adviser may not have any direct or indirect beneficial interest in any of the
Tax-Exempt Entities whose subscriptions are sought to be combined. Subscriptions
of Tax-Exempt Entities may not be combined with subscriptions of any Persons
other than such other Tax-Exempt Entities. The investor must xxxx the
"Additional Investment" space on the Subscription Agreement Signature Page in
order for subscriptions to be combined. The
3
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 Dealer Manager (for credit to the Company) any excess commissions
received. The Dealer Manager may adjust any future commissions due to you for
any such excess commissions that have not been returned.
You (and other Soliciting Dealers) also may receive an amount equal to
a maximum of an additional 1.5% of the price per Share for all Shares sold
(except for Special Sales) from the 50,000,000 Shares offered on a "best
efforts" basis for which you have acted as Soliciting Dealer hereunder, as a
sales credit (as described it the following paragraph) (equal to 1%) and due
diligence expense allowance (equal to 0.5%). However, except to the extent
set forth below, such amounts will only be paid to a Soliciting Dealer for
actual marketing and due diligence expenses. Furthermore, you (and other
Soliciting Dealers) will not be paid any portion of the wholesaling fees paid
in connection with the Offering. Such wholesaling fees and the sales credit
described in the following paragraph are included within the maximum
Marketing Contribution.
You (and other Soliciting Dealers) who sell more than a predetermined
number of Shares (to be determined by the Dealer Manager annually on a
calendar year basis) shall be entitled to receive a sales credit in the
amount of 1% of the price of all Shares sold by that Soliciting Dealer, which
amount(s) shall be paid quarterly, in arrears, upon first reaching the
predetermined annual threshold and each quarter thereafter during the
calendar year in which the Soliciting Dealer is credited with additional
sales. Certain marketing and due diligence expenses such as Soliciting
Dealer conferences and due diligence fees may be advanced to a Soliciting
Dealer and later deducted from that Soliciting Dealer's sales credit. Any
sales credit shall be deducted from the maximum Marketing Contribution, which
may otherwise be reallowable to the Soliciting Dealer.
You (and other Soliciting Dealers) may reallow any portion of the
above sales credit to its registered representatives as is permitted under
applicable law and regulations including, without limitation, the federal and
any applicable state securities laws, any rules and/or regulations thereunder
and the rules and regulations of the NASD.
4
Employees and associates of the Company and its Affiliates, the
Advisor, Affiliates of the Advisor, the Dealer Manager and the Soliciting
Dealers will be permitted to purchase Shares net of sales commissions, the
Marketing Contribution and the Due Diligence Expense Allowance, and you shall
not be entitled to receive any compensation attributable to any such
purchase(s).
Your compensation may also be adjusted in the manner set forth in
Section 4(g) of the Dealer Manager Agreement.
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, as
provided in the form of Subscription Agreement for any reason or for no
reason. Accordingly, you shall have no authority to issue a confirmation
(pursuant to Exchange Act Rule 10b-10) to any subscriber; such authority
residing solely in us, as the Dealer Manager and processing broker-dealer.
4. We reserve the right to notify you by telegram or by other means
of the number of Shares reserved for sale by you. Such Shares will be
reserved for sale by you until the time specified in our notification to you.
Sales of any reserved Shares after the time specified in the notification to
you or any requests for additional Shares will be subject to rejection in
whole or in part.
5. Payments for Shares shall be made by checks payable to "LNB,
Escrow Agent for IRRET" and forwarded together with a copy of the
Subscription Agreement, which is attached as Appendix C to the Prospectus,
executed by the subscriber, to Inland Securities Corporation, 0000
Xxxxxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxx 00000, not later than noon of the next
business day after receipt of such Subscription Agreement and check (when
your internal supervisory procedures are completed at the site at which the
Subscription Agreement and check were received by you) or, when your internal
supervisory procedures are performed at a different location (the "Final
Review Office"), you shall transmit the check and Subscription Agreement to
the Final Review Office by the end of the next business day following your
receipt of the Subscription Agreement and check. The Final Review Office
will, by the end of the next business day following its receipt of the
Subscription Agreement and check, forward both the Subscription Agreement and
check to the Dealer Manager as processing broker-dealer. If any Subscription
Agreement solicited by you is rejected by the Company, the Subscription
Agreement and check will be forwarded to the Escrow Agent for prompt return
to the rejected subscriber.
6. We will inform you as to the jurisdictions in which we have been
advised by the Company that the Shares have been qualified for sale or are
exempt under the respective securities or "blue sky" laws of such
jurisdictions; but we have not assumed and will not assume any obligation or
responsibility as to your right to act as a broker and/or dealer with respect
to the Shares in any such jurisdiction. You agree that you will not make any
offers except in states in which we may advise you that the Offering has been
qualified or is exempt and further agree to assure that each person to whom
you sell Shares (at both the time of the
5
initial purchase as well as at the time of any subsequent purchases) meets
any special suitability standards which apply to sales in a particular
jurisdiction, as described in the Blue Sky Survey and the Subscription
Agreement. Neither we nor the Company assume any obligation or
responsibility in respect of the qualification of the Shares covered by the
Prospectus under the laws of any jurisdiction or your qualification to act as
a broker and/or dealer with respect to the Shares in any jurisdiction. The
Blue Sky Survey which has been or will be furnished to you indicates the
jurisdictions in which it is believed that the offer and sale of Shares
covered by the Prospectus is exempt from, or requires action under, the
applicable blue sky or securities laws thereof, and what action, if any, has
been taken with respect thereto.
It is understood and agreed that under no circumstances will you, as a
Soliciting Dealer, engage in any activities hereunder in any jurisdiction in
which you may not lawfully so engage or in any activities in any jurisdiction
with respect to the Shares in which you may lawfully so engage unless you
have complied with the provisions hereof.
7. Neither you nor any other person is authorized by the Company or
by us to give any information or make any representations in connection with
this Agreement or the offer of Shares other than those contained in the
Prospectus, as then amended or supplemented, or any sales literature approved
by us and the Company. You agree not to publish, circulate or otherwise use
any other advertisement or solicitation material without our prior written
approval. You are not authorized to act as our agent in any respect, and you
agree not to act as such agent and not to purport to act as such agent.
8. We shall have full authority to take such action as we may deem
advisable with respect to all matters pertaining to the Offering or arising
thereunder. We shall not be under any liability (except for (i) our own lack
of good faith and (ii) for obligations expressly assumed by us hereunder) for
or in respect of the validity or value of or title to, the Shares; the form
of, or the statements contained in, or the validity of, the Registration
Statement, the Prospectus or any amendment or supplement thereto, or any
other instrument executed by Inland Retail Real Estate Advisory Services,
Inc., the Company's advisor (the "Advisor"), the Company or by others; the
form or validity of the Dealer Manager Agreement or this Agreement; the
delivery of the Shares; the performance by the Advisor, the Company or by
others of any agreement on its or their part; the qualification of the Shares
for sale under the laws of any jurisdiction; or any matter in connection with
any of the foregoing; provided, however, that nothing in this paragraph shall
be deemed to relieve the Company or the undersigned from any liability
imposed by the Act. No obligations on the part of the Company or the
undersigned shall be implied or inferred herefrom.
9. Under the Dealer Manager Agreement, the Company has agreed to
indemnify you and us and each person, if any, who controls you or us, in
certain instances and against certain liabilities, including liabilities
under the Act in certain circumstances. You agree to indemnify the Company
and each person who controls it as provided in the Dealer Manager Agreement
and to indemnify us to the extent and in the manner that you agree to
indemnify the Company in such Dealer Manager Agreement.
6
10. You hereby authorize and ratify the execution and delivery of the
Dealer Manager Agreement by us as Dealer Manager for ourselves and on behalf
of the Soliciting Dealers (including you) and authorize us to agree to any
variation of its terms or provisions and to execute and deliver any
amendment, modification or supplement thereto. Each Soliciting Dealer hereby
agrees to be bound by all provisions of the Dealer Manager Agreement relating
to Soliciting Dealers. You also authorize us to exercise, in our discretion,
all the authority or discretion now or hereafter vested in us by the
provisions of the Dealer Manager Agreement and to take all such actions as we
may believe desirable in order to carry out the provisions of the Dealer
Manager Agreement and of this Agreement.
11. This Agreement, except for the provisions of Sections 8 and 9
hereof, may be terminated at any time by either party hereto by two days
prior written notice to the other party and, in all events, this Agreement
shall terminate on the termination date of the Dealer Manager Agreement,
except for the provisions of Sections 8 and 9 hereof.
12. Any communications from you should be in writing addressed to us
at Inland Securities Corporation, 0000 Xxxxxxxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxx
00000, Attention: Xx. Xxxxxx X. Xxxxxx, President. Any notice from us to
you shall be deemed to have been duly given if mailed, communicated by
telegraph or telefacsimile or delivered by overnight courier to you at your
address shown below.
13. Nothing herein contained shall constitute the undersigned, you,
the other Soliciting Dealers or any of them as an association, partnership,
limited liability company, unincorporated business or other separate entity.
14. Prior to offering the Shares for sale, you shall have conducted
an inquiry such that you have reasonable grounds to believe, based on
information made available to you by the Company or the Advisor through the
Prospectus or other materials, that all material facts are adequately and
accurately disclosed and provide a basis for evaluating a purchase of Shares.
In determining the adequacy of disclosed facts pursuant to the foregoing,
each Soliciting Dealer may obtain, upon request, information on material
facts relating at a minimum to the following:
(1) items of compensation;
(2) physical properties;
(3) tax aspects;
(4) financial stability and experience of the Company and the
Advisor;
(5) conflicts and risk factors; and
(6) appraisals and other pertinent reports.
Notwithstanding the foregoing, each Soliciting Dealer may rely upon the results
of an inquiry conducted by another Soliciting Dealer, provided that:
7
(i) such Soliciting Dealer has reasonable grounds to believe that
such inquiry was conducted with due care;
(ii) the results of the inquiry were provided to you with the
consent of the Soliciting Dealer conducting or directing the
inquiry; and
(iii) no Soliciting Dealer that participated in the inquiry is an
affiliate of the Company.
Prior to the sale of the Shares, each Soliciting Dealer shall inform the
prospective purchaser of all pertinent facts relating to the liquidity and
marketability of the Shares during the term of the investment.
If the foregoing is in accordance with your understanding and
agreement, please sign and return the attached duplicate of this Agreement.
Your indicated acceptance thereof shall constitute a binding agreement
between you and us.
Very truly yours,
INLAND SECURITIES CORPORATION
By:
--------------------------------
Title:
--------------------------------
____________, 199__
8
We confirm our agreement to act as a Soliciting Dealer pursuant to all the
terms and conditions of the above Soliciting Dealer Agreement and the attached
Dealer Manager Agreement. We hereby represent that we will comply with the
applicable requirements of the Act and the Exchange Act and the published Rules
and Regulations of the Commission thereunder, and applicable blue sky or other
state securities laws. We confirm that we are a member in good standing of the
NASD. We hereby represent that we will comply with the Rules of the NASD and
all rules and regulations promulgated by the NASD.
Dated: ____________, 199__
--------------------------------
Name of Soliciting Dealer
--------------------------------
Federal Identification Number
By:
--------------------------------
Authorized Signature
Kindly have checks representing commissions forwarded as follows (if different
than above):
(Please type or print)
Name of Firm: _______________________________________
Address: _______________________________________
Street
_______________________________________
City
_______________________________________
State and Zip Code
_______________________________________
(Area Code) Telephone No.
Attention: _______________________________________
9
