EXHIBIT 1.1
XXXXXXX COMMERCIAL PROPERTIES REIT
Up to 11,000,000 Common Shares of Beneficial Interest
DEALER MANAGER AGREEMENT
____________, 2004
X.X. Xxxx Securities, LLP
00000 Xxx 00 Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxx X. Xxxx
Ladies and Gentlemen:
Xxxxxxx Commercial Properties REIT, a Maryland real estate investment trust (the
"Company"), is registering for public sale a maximum of 11,000,000 common shares
of beneficial interest (the "Shares" or the "Stock"), $0.001 par value per share
(the "Offering"), to be issued and sold for $10.00 per share at an aggregate
purchase price of $109,500,000 (10,000,000 Shares to be offered to the public
and 1,000,000 Shares to be offered pursuant to the Company's dividend
reinvestment plan at $9.50 per share). There shall be a minimum purchase by any
one person of 100 Shares (except as otherwise indicated in the Prospectus or in
any letter or memorandum from the Company to X.X. Xxxx Securities, LLP (the
"Dealer Manager")). Terms not defined herein shall have the same meaning as in
the Prospectus. In connection therewith, the Company hereby agrees with you, the
Dealer Manager, as follows:
1. Representations and Warranties of the Company
The Company represents and warrants to the Dealer Manager and each dealer with
whom the Dealer Manager has entered into or will enter into a Selected Dealer
Agreement in the form attached to this Agreement as Exhibit A (said dealers
being hereinafter called the "Dealers") that:
1.1 A registration statement with respect to the Company has been prepared by
the Company in accordance with applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the applicable rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "SEC") promulgated thereunder, covering the Shares. Such
registration statement, which includes a preliminary prospectus, was initially
filed with the SEC on December 31, 2003. Copies of such registration statement
and each amendment thereto have been or will be delivered to the Dealer Manager.
(The registration statement and prospectus contained therein, as finally amended
and revised at the effective date of the registration statement, are
respectively hereinafter referred to as the "Registration Statement" and the
"Prospectus," except that if the Prospectus first filed by the Company pursuant
to Rule 424(b) under the Securities Act shall differ from the Prospectus, the
term "Prospectus" shall also include the Prospectus filed pursuant to Rule
424(b).)
1.2 The Company has been duly and validly organized and formed as a corporation
under the laws of the state of Maryland, with the power and authority to conduct
its business as described in the Prospectus.
1.3 The Registration Statement and Prospectus comply with the Securities Act and
the Rules and Regulations and do not contain any untrue statements of material
facts or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; provided,
however, that the foregoing provisions of this Section 1.3 will not extend to
such statements contained in or omitted from the Registration Statement or
Prospectus as are primarily within the knowledge of the Dealer Manager or any of
the Dealers and are
based upon information furnished by the Dealer Manager in writing to the Company
specifically for inclusion therein.
1.4 The Company intends to use the funds received from the sale of the Shares as
set forth in the Prospectus.
1.5 No consent, approval, authorization or other order of any governmental
authority is required in connection with the execution or delivery by the
Company of this Agreement or the issuance and sale by the Company of the Shares,
except such as may be required under the Securities Act or applicable state
securities laws.
1.6 There are no actions, suits or proceedings pending or to the knowledge of
the Company, threatened against the Company at law or in equity or before or by
any federal or state commission, regulatory body or administrative agency or
other governmental body, domestic or foreign, which will have a material adverse
effect on the business or property of the Company.
1.7 The execution and delivery of this Agreement, the consummation of the
transactions herein contemplated and compliance with the terms of this Agreement
by the Company will not conflict with or constitute a default under any charter,
bylaw, indenture, mortgage, deed of trust, lease, rule, regulation, writ,
injunction or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company, except to the extent
that the enforceability of the indemnity and/or contribution provisions
contained in Section 4 of this Agreement may be limited under applicable
securities laws.
1.8 The Company has full legal right, power and authority to enter into this
Agreement and to perform the transactions contemplated hereby, except to the
extent that the enforceability of the indemnity and/or contribution provisions
contained in Section 4 of this Agreement may be limited under applicable
securities laws.
1.9 At the time of the issuance of the Shares, the Shares will have been duly
authorized and validly issued, and upon payment therefor, will be fully paid and
nonassessable and will conform to the description thereof contained in the
Prospectus.
2. Covenants of the Company
The Company covenants and agrees with the Dealer Manager that:
2.1 It will, at no expense to the Dealer Manager, furnish the Dealer Manager
with such number of printed copies of the Registration Statement, including all
amendments and exhibits thereto, as the Dealer Manager may reasonably request.
It will similarly furnish to the Dealer Manager and others designated by the
Dealer Manager as many copies as the Dealer Manager may reasonably request in
connection with the offering of the Shares of: (a) the Prospectus in preliminary
and final form and every form of supplemental or amended prospectus; (b) this
Agreement; and (c) any other printed sales literature or other materials
(provided that the use of said sales literature and other materials has been
first approved for use by the Company and all appropriate regulatory agencies).
2.2 It will furnish such proper information and execute and file such documents
as may be necessary for the Company to qualify the Shares for offer and sale
under the securities laws of such jurisdictions as the Dealer Manager may
reasonably designate and will file and make in each year such statements and
reports as may be required. The Company will furnish to the Dealer Manager a
copy of such papers filed by the Company in connection with any such
qualification.
2.3 It will: (a) use its best efforts to cause the Registration Statement to
become effective; (b) furnish copies of any proposed amendment or supplement of
the Registration Statement or Prospectus to the Dealer Manager; (c) file every
amendment or supplement to the Registration Statement or the Prospectus that may
be required by the SEC; and (d) if at any time the SEC shall issue any stop
order suspending the effectiveness of the Registration Statement, it will use
its best efforts to obtain the lifting of such order at the earliest possible
time.
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2.4 If at any time when a Prospectus is required to be delivered under the
Securities Act any event occurs as a result of which, in the opinion of either
the Company or the Dealer Manager, the Prospectus or any other prospectus then
in effect would include an untrue statement of a material fact or, in view of
the circumstances under which they were made, omit to state any material fact
necessary to make the statements therein not misleading, the Company will
promptly notify the Dealer Manager thereof (unless the information shall have
been received from the Dealer Manager) and will effect the preparation of an
amended or supplemental prospectus which will correct such statement or
omission. The Company will then promptly prepare such amended or supplemental
prospectus or prospectuses as may be necessary to comply with the requirements
of Section 10 of the Securities Act.
3. Obligations and Compensation of Dealer Manager
3.1 The Company hereby appoints the Dealer Manager as its agent and principal
distributor for the purpose of selling for cash up to a maximum of 10,000,000
Shares through Dealers, all of whom shall be members of the National Association
of Securities Dealers, Inc. (NASD). The Dealer Manager may also sell Shares for
cash directly to its own clients and customers at the public offering price and
subject to the terms and conditions stated in the Prospectus. The Dealer Manager
hereby accepts such agency and distributorship and agrees to use its best
efforts to sell the Shares on said terms and conditions. The Dealer Manager
represents to the Company that (i) it is a member of the NASD; (ii) it will at
all times maintain and employ an adequate number of administrative personnel
(who shall be acceptable to the Company) to fulfill its obligations under this
agreement and any supplemental or successor agreement and shall be solely
responsible for the compensation of such personnel; (iii) it will be responsible
for payment of such other costs incurred by it in connection with the Offering
as shall be agreed between the Company and the Dealer Manager, which costs are
not expected to exceed the amounts received by the Dealer Manager as a dealer
manager fee (discussed below); (iv) it and its employees and representatives
have all required licenses and registrations to act under this Agreement; and
(v) it has established and implemented anti-money laundering compliance programs
in accordance with applicable law, including applicable NASD rules, SEC rules
and the USA PATRIOT Act of 2001, reasonably expected to detect and cause the
reporting of suspicious transactions in connection with the sale of Shares of
the Company. The Dealer Manager agrees to be bound by the terms of the Escrow
Agreement executed as of __________, 2004, among Xxxxx Fargo Bank, N.A., as
escrow agent, the Dealer Manager and the Company, a copy of which is enclosed
(the "Escrow Agreement").
3.2 Promptly after the effective date of the Registration Statement, the Dealer
Manager and the Dealers shall commence the offering of the Shares for cash to
the public in jurisdictions in which the Shares are registered or qualified for
sale or in which such offering is otherwise permitted. The Dealer Manager and
the Dealers will suspend or terminate offering of the Shares upon request of the
Company at any time and will resume offering the Shares upon subsequent request
of the Company.
3.3 Except as provided in the "Plan of Distribution" Section of the Prospectus,
as compensation for the services rendered by the Dealer Manager, the Company
agrees that it will pay to the Dealer Manager selling commissions in the amount
of 7.0% of the gross proceeds of the Shares sold to the public, plus a dealer
manager fee in the amount of up to 2.5% of the gross proceeds of the Shares
sold. As provided in the Prospectus, no selling commissions will be paid to the
Dealer Manager for sales made by broker-dealers who are affiliated with the
Company or by the Company's employees who may be registered with the NASD and
sponsored by the Dealer Manager, but only for sales made through Dealers.
Notwithstanding the foregoing, no commissions, payments or amount whatsoever
will be paid to the Dealer Manager under this Section 3.3 unless or until the
gross proceeds of the Shares sold are disbursed to the Company pursuant to
paragraph 3(a) of the Escrow Agreement. Until the Required Capital, the
Pennsylvania Required Capital or the New York Required Capital (as applicable
and as defined in the Escrow Agreement) is obtained, investments will be held in
escrow and, if the Required Capital, the Pennsylvania Required Capital or the
New York Required Capital, as applicable, is not obtained, investments will be
returned to the investors in accordance with the Prospectus. The Company will
not be liable or responsible to any Dealer for direct payment of commissions to
such Dealer, it being the sole and exclusive responsibility of the Dealer
Manager for payment of commissions to Dealers. Notwithstanding the above, at its
discretion, the Company may act as agent of the Dealer Manager by making direct
payment of commissions to such Dealers without incurring any liability therefor.
No sales commission or dealer manager fee will be paid with respect to Shares
sold pursuant to the Company's dividend reinvestment plan. Under the rules of
the NASD, total underwriting compensation, including
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sales commissions, the dealer manager fee and underwriter expense reimbursement,
may not exceed 10% of the gross proceeds from the sale of the Shares, except for
bona fide due diligence expenses, which may not exceed 0.5% of the gross
proceeds from the sale of the Shares.
3.4 The Dealer Manager represents and warrants to the Company and each person
and firm that signs the Registration Statement that the information under the
caption "Plan of Distribution" in the Prospectus and all other information
furnished to the Company by the Dealer Manager in writing expressly for use in
the Registration Statement, any preliminary prospectus, the Prospectus, or any
amendment or supplement thereto does not contain 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 not misleading.
3.5 The Dealer Manager shall use and distribute in conjunction with the offer
and sale of any Shares only the Prospectus and such sales literature and
advertising as shall have been previously approved in writing by the Company.
3.6 The Dealer Manager shall cause Shares to be offered and sold only in those
jurisdictions specified in writing by the Company for whose account Shares are
then offered for sale, and such list of jurisdictions shall be updated by the
Company as additional states are added. The Company shall specify only such
jurisdictions in which the offering and sale of its Shares has been authorized
by appropriate state regulatory authorities. No Shares shall be offered or sold
for the account of the Company in any other states.
3.7 The Dealer Manager represents and warrants to the Company that it will not
represent or imply that the escrow agent, as identified in the Prospectus, has
investigated the desirability or advisability of investment in the Company, or
has approved, endorsed or passed upon the merits of the Shares or the Company,
nor will it use the name of said escrow agent in any manner whatsoever in
connection with the offer or sale of the Shares other than by acknowledgment
that it has agreed to serve as escrow agent.
4. Indemnification
4.1 The Company will indemnify and hold harmless the Dealers and the Dealer
Manager, their officers and directors and each person, if any, who controls such
Dealer or Dealer Manager within the meaning of Section 15 of the Securities Act
from and against any losses, claims, damages or liabilities, joint or several,
to which such Dealers or Dealer Manager, their officers and directors, or such
controlling person may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (a) any untrue statement or alleged
untrue statement of a material fact contained (i) in any Registration Statement
(including the Prospectus as a part thereof) or any post-effective amendment
thereto or in the Prospectus or any amendment or supplement to the Prospectus or
(ii) in any blue sky application or other document executed by the Company or on
its behalf specifically for the purpose of qualifying any or all of the Shares
for sale under the securities laws of any jurisdiction or based upon written
information furnished by the Company under the securities laws thereof (any such
application, document or information being hereinafter called a "Blue Sky
Application"), or (b) the omission or alleged omission to state in the
Registration Statement (including the Prospectus as a part thereof) or any
post-effective amendment thereof or in any Blue Sky Application a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (c) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus, if used prior to the
effective date of the Registration Statement, or in the Prospectus or any
amendment or supplement to the Prospectus or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, and will reimburse each Dealer or Dealer
Manager, its officers and each such controlling person for any legal or other
expenses reasonably incurred by such Dealer or Dealer Manager, its officers and
directors, or such controlling person in connection with investigating or
defending such loss, claim, damage, liability or action; provided that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability 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 or
Dealer Manager by or on behalf of any Dealer or Dealer Manager specifically for
use with reference to such Dealer or
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Dealer Manager in the preparation of the Registration Statement or any such
post-effective amendment thereof, any such Blue Sky Application or any such
preliminary prospectus or the Prospectus or any such amendment thereof or
supplement thereto; and further provided that the Company will not be liable in
any such case if it is determined that such Dealer or Dealer Manager was at
fault in connection with the loss, claim, damage, liability or action.
Notwithstanding the foregoing, the Company may not indemnify or hold harmless
the Dealer Manager, any Dealer or any of their affiliates in any manner that
would be inconsistent with the provisions of Section II.G. of the Statement of
Policy Regarding Real Estate Investment Trusts of the North American Securities
Administrators Association, Inc. effective September 29, 1993, as amended (the
"NASAA REIT Guidelines"). In particular, but without limitation, the Company may
not indemnify or hold harmless the Dealer Manager, any Dealer or any of their
affiliates for liabilities arising from or out of a violation of state or
federal securities laws, unless one or more of the following conditions are met:
(a) there has been a successful adjudication on the merits of each
count involving alleged securities law violations;
(b) such claims have been dismissed with prejudice on the merits
by a court of competent jurisdiction; or
(c) a court of competent jurisdiction approves a settlement of the
claims against the indemnitee and finds that indemnification
of the settlement and the related costs should be made, and
the court considering the request for indemnification has been
advised of the position of the SEC and of the published
position of any state securities regulatory authority in which
the securities were offered as to indemnification for
violations of securities laws.
4.2 The Dealer Manager will indemnify and hold harmless the Company and each
person or firm which has signed the Registration Statement and each person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act, from and against any losses, claims, damages or liabilities to which any of
the aforesaid parties may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (a) any untrue statement of a material
fact contained (i) in the Registration Statement (including the Prospectus as a
part thereof) or any post-effective amendment thereof or (ii) any Blue Sky
Application, or (b) the omission to state in the Registration Statement
(including the Prospectus as a part thereof) or any post-effective amendment
thereof or in any Blue Sky Application a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (c) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, if used prior to the effective date of the Registration
Statement, or in the Prospectus, or in any amendment or supplement to the
Prospectus or the omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein in the light
of the circumstances under which they were made not misleading in each case to
the extent, but, for purposes of subsections (a), (b) and (c) of this Section
4.2, only to the extent, that such untrue statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Dealer Manager specifically for use with
reference to the Dealer Manager in the preparation of the Registration Statement
or any such post-effective amendments thereof or any such Blue Sky Application
or any such preliminary prospectus or the Prospectus or any such amendment
thereof or supplement thereto, or (d) any unauthorized use of sales materials or
use of unauthorized verbal representations concerning the Shares by the Dealer
Manager, or (e) any failure to comply with applicable laws governing money
laundry abatement and anti-terrorist financing efforts, including applicable
NASD rules, SEC rules and the USA PATRIOT Act of 2001, and will reimburse the
aforesaid parties, in connection with investigation or defending such loss,
claim, damage, liability or action. This indemnity agreement will be in addition
to any liability which the Dealer Manager may otherwise have.
4.3 Each Dealer severally will indemnify and hold harmless the Company, Dealer
Manager and each of their directors (including any persons named in any of the
Registration Statements with his consent, as about to become a director), each
of their officers who has signed any of the Registration Statements and each
person, if any, who controls the Company and the Dealer Manager within the
meaning of Section 15 of the Securities Act from and against any losses, claims,
damages or liabilities to which the Company, the Dealer Manager, any such
director or
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officer, or controlling person may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (a) any untrue statement or
alleged untrue statement of a material fact contained (i) in the Registration
Statement (including the Prospectus as a part thereof) or any post-effective
amendment thereof or (ii) in any Blue Sky Application, or (b) the omission or
alleged omission to state in the Registration Statement (including the
Prospectus as a part thereof or any post-effective amendment thereof or in any
Blue Sky Application a material fact required to be stated therein or necessary
to make the statements therein not misleading, or (c) any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, if used prior to the effective date of the Registration Statement,
or in the Prospectus, or in any amendment or supplement to the Prospectus or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company or the
Dealer Manager by or on behalf of such Dealer specifically for use with
reference to such Dealer in the preparation of the Registration Statement or any
such post-effective amendments thereof or any such Blue Sky Application or any
such preliminary prospectus or the Prospectus or any such amendment thereof or
supplement thereto, or (d) any unauthorized use of sales materials or use of
unauthorized verbal representations concerning the Shares by such Dealer or
Dealer's representations or agents in violation of Section VII of the Selected
Dealer Agreement or otherwise, or (e) any failure to comply with applicable laws
governing money laundry abatement and anti-terrorist financing efforts,
including applicable NASD rules, SEC rules and the USA PATRIOT Act of 2001, and
will reimburse the Company and the Dealer Manager and any such directors or
officers, or controlling person, in connection with investigating or defending
any such loss, claim, damage, liability or action. This indemnity agreement will
be in addition to any liability which such Dealer may otherwise have.
4.4 Within thirty (30) business days after receipt by an indemnified party under
this Section 4 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 4, notify in writing the indemnifying party of the
commencement thereof and the omission so to notify the indemnifying party will
relieve such indemnifying party from any liability under this Section 4 as to
the particular item for which indemnification is then being sought, but not from
any other liability which it may have to any indemnified party. In case any such
action is brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be entitled, to
the extent it may wish, jointly with any other indemnifying party similarly
notified, to participate in the defense thereof, with separate counsel. Such
participation shall not relieve such indemnifying party of the obligation to
reimburse the indemnified party for reasonable legal and other expenses (subject
to Section 4.5) incurred by such indemnified party in defending itself, except
for such expenses incurred after the indemnifying party has deposited funds
sufficient to effect the settlement, with prejudice, of the claim in respect of
which indemnity is sought. Any such indemnifying party shall not be liable to
any such indemnified party on account of any settlement of any claim or action
effected without the consent of such indemnifying party.
4.5 The indemnifying party shall pay all legal fees and expenses of the
indemnified party in the defense of such claims or actions; provided, however,
that the indemnifying party shall not be obligated to pay legal expenses and
fees to more than one law firm in connection with the defense of similar claims
arising out of the same alleged acts or omissions giving rise to such claims
notwithstanding that such actions or claims are alleged or brought by one or
more parties against more than one indemnified party. If such claims or actions
are alleged or brought against more than one indemnified party, then the
indemnifying party shall only be obliged to reimburse the expenses and fees of
the one law firm that has been selected by a majority of the indemnified parties
against which such action is finally brought; and in the event a majority of
such indemnified parties is unable to agree on which law firm for which expenses
or fees will be reimbursable by the indemnifying party, then payment shall be
made to the first law firm of record representing an indemnified party against
the action or claim. Such law firm shall be paid only to the extent of services
performed by such law firm and no reimbursement shall be payable to such law
firm on account of legal services performed by another law firm.
4.6 The indemnity agreements contained in this Section 4 shall remain operative
and in full force and effect regardless of (a) any investigation made by or on
behalf of any Dealer, or any person controlling any Dealer or by
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or on behalf of the Company, the Dealer Manager or any officer or director
thereof, or by or on behalf of the Company or the Dealer Manager, (b) delivery
of any Shares and payment therefor, and (c) any termination of this Agreement. A
successor of any Dealer or of any of the parties to this Agreement, as the case
may be, shall be entitled to the benefits of the indemnity agreements contained
in this Section 4.
5. Survival of Provisions
The respective agreements, representations and warranties of the Company and the
Dealer Manager set forth in this Agreement shall remain operative and in full
force and effect regardless of (a) any termination of this Agreement, (b) any
investigation made by or on behalf of the Dealer Manager or any Dealer or any
person controlling the Dealer Manager or any Dealer or by or on behalf of the
Company or any person controlling the Company, and (c) the acceptance of any
payment for the Shares.
6. Applicable Law; Venue
This Agreement was executed and delivered in, and its validity, interpretation
and construction shall be governed by the laws of, the State of Texas; provided
however, that causes of action for violations of federal or state securities
laws shall not be governed by this Section. Venue for any action brought
hereunder shall lie exclusively in Houston, Texas.
7. Counterparts
This Agreement may be executed in any number of counterparts. Each counterpart,
when executed and delivered, shall be an original contract, but all
counterparts, when taken together, shall constitute one and the same Agreement.
8. Successors and Amendment
This Agreement shall inure to the benefit of and be binding upon the Dealer
Manager and the Company and their respective successors. Nothing in this
Agreement is intended or shall be construed to give to any other person any
right, remedy or claim, except as otherwise specifically provided herein. This
Agreement shall inure to the benefit of the Dealers to the extent set forth in
Sections 1 and 4 hereof. This Agreement may be amended by the written agreement
of the Dealer Manager and the Company.
9. Term
This Agreement may be terminated by either party (i) immediately upon notice to
the other party in the event that the other party shall have materially failed
to comply with any of the material provisions of this Agreement on its part to
be performed during the term of this Agreement or if any of the representations,
warranties, covenants or agreements of such party contained herein shall not
have been materially complied with or satisfied within the times specified or
(ii) by either party on 60 days' written notice.
In any case, this Agreement shall expire at the close of business on the
effective date that the Offering is terminated. The provisions of Section 4
hereof shall survive such termination. In addition, the Dealer Manager, upon the
expiration or termination of this Agreement, shall (i) promptly deposit any and
all funds in its possession which were received from investors for the sale of
Shares into the appropriate escrow account or, if the minimum number of Shares
have been sold and accepted by the Company, into such other account as the
Company may designate; and (ii) promptly deliver to the Company all records and
documents in its possession which relate to the Offering and are not designated
as dealer copies. The Dealer Manager, at its sole expense, may make and retain
copies of all such records and documents, but shall keep all such information
confidential. The Dealer Manager shall use its best efforts to cooperate with
the Company to accomplish an orderly transfer of management of the Offering to a
party designated by the Company. Upon expiration or termination of this
Agreement, the Company shall pay to the Dealer Manager all commissions to which
the Dealer Manager is or becomes entitled under Section 3 at such time as such
commissions become payable.
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10. Confirmation
The Company hereby agrees and assumes the duty to confirm on its behalf and on
behalf of dealers or brokers who sell the Shares all orders for purchase of
Shares accepted by the Company. Such confirmations will comply with the rules of
the SEC and the NASD, and will comply with applicable laws of such other
jurisdictions to the extent the Company is advised of such laws in writing by
the Dealer Manager.
11. Suitability of Investors
The Dealer Manager will offer Shares, and in its agreements with Dealers will
require that the Dealers offer Shares, only to persons who meet the financial
qualifications set forth in the Prospectus or in any suitability letter or
memorandum sent to it by the Company and will only make offers to persons in the
states in which it is advised in writing that the Shares are qualified for sale
or that such qualification is not required. In offering Shares, the Dealer
Manager will, and in its agreements with Dealers, the Dealer Manager will
require that the Dealers will, comply with the provisions of all applicable
rules and regulations relating to suitability of investors, including without
limitation, the provisions of Article III.C. of the NASAA REIT Guidelines.
12. Submission of Orders
12.1 Those persons who purchase Shares will be instructed by the Dealer Manager
or the Dealer to make their checks payable to "Xxxxx Fargo Bank, Xxxxxxx
Commercial Properties REIT." The Dealer Manager and any Dealer receiving a check
not conforming to the foregoing instructions shall return such check directly to
such subscriber not later than the end of the next business day following its
receipt. Checks received by the Dealer Manager or Dealer which conform to the
foregoing instructions shall be transmitted for deposit pursuant to one of the
methods described in this Section 12. Transmittal of received investor funds
will be made in accordance with the following procedures. The Dealer Manager may
authorize certain Dealers which are "$250,000 broker-dealers" to instruct their
customers to make their checks for Shares subscribed for payable directly to the
Dealer. In such case, the Dealer will collect the proceeds of the subscribers'
checks and issue a check for the aggregate amount of the subscription proceeds
made payable to the order of the escrow agent.
12.2 If a Dealer conducts its internal supervisory procedures at the location
where subscription documents and checks are initially received, the Dealer shall
forward (i) the subscription documents to the Dealer Manager and (ii) the checks
to the escrow agent by noon of the next business day following receipt of the
subscription documents and the check.
12.3 If a Dealer's internal supervisory procedures are to be performed at a
different location (the "Final Review Office"), the subscription documents and
check must be transmitted to the Final Review Office by the end of the next
business day following receipt of the subscription documents and check by the
Dealer. The Final Review Office will, by the next business day following receipt
of the subscription documents and check, forward both the subscription documents
and check to the Dealer Manager as processing broker-dealer in order that the
Dealer Manager may complete its review of the documentation and process the
subscription documents and check.
12.4 Any check received by the Dealer Manager directly or as processing
broker-dealer from the 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 the Dealer Manager of the subscription documents and
check. Checks of rejected subscribers will be promptly returned to such
subscribers.
12.5 If requested by the Company, the Dealer Manager shall obtain, and shall
cause the Dealers to obtain, from subscribers for the Shares, other
documentation reasonably deemed by the Company to be required under applicable
law or as may be necessary to reflect the policies of the Company. Such
documentation may include, without limitation, subscribers' written
acknowledgement and agreement to the privacy policies of the Company.
-8-
13. Selected Investment Advisor Agreement
With respect to any provision of information concerning the Offering by a
selected investment advisor (the "Investment Advisor") presently registered
under the Investment Advisers Act of 1940, as amended, and presently and
appropriately registered in each state in which the Investment Advisor has
clients, the Company and the Investment Advisor shall enter into a Selected
Investment Advisor Agreement in substantially the form attached hereto as
Exhibit B.
14. Notices.
Any notice, approval, request, authorization, direction or other communication
under this Agreement shall be given in writing and shall be deemed to be
delivered when delivered in person or deposited in the United States mail,
properly addressed and stamped with the required postage, registered or
certified mail, return receipt requested, to the intended recipient as set forth
below:
If to the Company: Xxxxxxx Commercial Properties REIT
0000 X. Xxx Xxxxxxx Xxxx. X, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
If to the Dealer Manager: X.X. Xxxx Securities, LLP
00000 Xxx 00 X., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxx X. Xxxx
Any party may change its address specified above by giving the other party
notice of such change in accordance with this Section 14.
If the foregoing correctly sets forth our understanding, please indicate your
acceptance thereof in the space provided below for that purpose, whereupon this
letter and your acceptance shall constitute a binding agreement between us as of
the date first above written.
Very truly yours,
XXXXXXX COMMERCIAL PROPERTIES REIT
By:
----------------------------------------
Xxxxx X. Xxxxxxx, President
Accepted and agreed as of the
date first above written.
X.X. XXXX SECURITIES, LLP
By: H&H Services, Inc., general partner
By:
----------------------------------
Xxx X. Xxxx President
-9-
EXHIBIT A
XXXXXXX COMMERCIAL PROPERTIES REIT
Up to 11,000,000 Common Shares of Beneficial Interest
SELECTED DEALER AGREEMENT
Ladies and Gentlemen:
X.X. Xxxx Securities, LLP, as the dealer manager ("Dealer Manager") for Xxxxxxx
Commercial Properties REIT (the "Company"), a Maryland real estate investment
trust, invites you (the "Dealer") to participate in the distribution of shares
of common stock ("Shares") of the Company subject to the following terms:
I. Dealer Manager Agreement
The Dealer Manager has entered into an agreement with the Company called the
Dealer Manager Agreement dated ___________, 2004, in the form attached hereto as
Exhibit A (the "Dealer Manager Agreement"; the terms of the Dealer Manager
Agreement relating to the Dealer are incorporated herein by reference as if set
forth verbatim and capitalized terms not otherwise defined herein shall have the
meanings given them in the Dealer Manager Agreement). By your acceptance of this
Agreement, you will become one of the Dealers referred to in the Dealer Manager
Agreement and will be entitled and subject to the indemnification provisions
contained in the Dealer Manager Agreement, including the provisions of the
Dealer Manager Agreement wherein the Dealers severally agree to indemnify and
hold harmless the Company, the Dealer Manager and each officer and director
thereof, and each person, if any, who controls the Company and the Dealer
Manager within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"). Except as otherwise specifically stated herein, all terms
used in this Agreement have the meanings provided in the Dealer Manager
Agreement. The Shares are offered solely through broker-dealers who are members
of the National Association of Securities Dealers, Inc. ("NASD").
Dealer hereby agrees to use its best efforts to sell the Shares for cash on the
terms and conditions stated in the Prospectus. Nothing in this Agreement shall
be deemed or construed to make Dealer an employee, agent, representative or
partner of the Dealer Manager or of the Company, and Dealer is not authorized to
act for the Dealer Manager or the Company or to make any representations on
their behalf except as set forth in the Prospectus and such other printed
information furnished to Dealer by the Dealer Manager or the Company to
supplement the Prospectus ("supplemental information").
II. Submission of Orders
Those persons who purchase Shares will be instructed by the Dealer to make their
checks payable to "Xxxxx Fargo Bank, Xxxxxxx Commercial Properties REIT." Any
Dealer receiving a check not conforming to the foregoing instructions shall
return such check directly to such subscriber not later than the end of the next
business day following its receipt. Checks received by the Dealer which conform
to the foregoing instructions shall be transmitted for deposit pursuant to one
of the methods in this Article II. The Dealer Manager may authorize Dealer if
Dealer is a "$250,000 broker-dealer" to instruct its customers to make its
checks for Shares subscribed for payable directly to the Dealer, in which case
the Dealer will collect the proceeds of the subscriber's checks and issue a
check made payable to the order of the escrow agent for the aggregate amount of
the subscription proceeds. Transmittal of received investor funds will be made
in accordance with the following procedures:
(a) If the Dealer conducts its internal supervisory procedures at
the location where subscription documents and checks are
initially received, the Dealer shall forward (i) the
subscription documents to the Dealer Manager and (ii) the
checks to the escrow agent by noon of the next business day
following receipt of the subscription documents and the check.
-10-
(b) If the internal supervisory procedures are to be performed at
a different location (the "Final Review Office"), the
subscription documents and check must be transmitted to the
Final Review Office by the end of the next business day
following receipt of the subscription documents and check by
the Dealer. The Final Review Office will, by the next business
day following receipt of the subscription documents and check,
forward both the subscription documents and check to the
Dealer Manager as processing broker-dealer in order that the
Dealer Manager may complete its review of the documentation
and process the subscription documents and check.
If requested by the Company or the Dealer Manager, the Dealer shall obtain from
subscribers for the Shares, other documentation reasonably deemed by the Company
or the Dealer Manager to be required under applicable law or as may be necessary
to reflect the policies of the Company or the Dealer Manager. Such documentation
may include, without limitation, subscribers' written acknowledgement and
agreement to the privacy policies of the Company or the Dealer Manager.
III. Pricing
Shares shall be offered to the public at the offering price of $10.00 per Share
payable in cash, and shares offered pursuant to the Company's dividend
reinvestment plan shall be offered at $9.50 per share. Except as otherwise
indicated in the Prospectus or in any letter or memorandum sent to the Dealer by
the Company or Dealer Manager, a minimum initial purchase of 100 Shares is
required. Except as otherwise indicated in the Prospectus, additional
investments may be made in cash in minimal increments of at least 2.5 Shares.
The Shares are nonassessable. The Dealer hereby agrees to place any order for
the full purchase price.
IV. Dealers' Commissions
Except for discounts described in or as otherwise provided in the "Plan of
Distribution" Section of the Prospectus, the Dealer's selling commission
applicable to the total public offering price of Shares sold by Dealer which it
is authorized to sell hereunder is 7.0% of the gross proceeds of Shares sold by
it and accepted and confirmed by the Company, which commission will be paid by
the Dealer Manager. With respect to sales of Shares pursuant to the Company's
dividend reinvestment plan, no selling commission shall be paid. For these
purposes, a "sale of Shares" shall occur if and only if a transaction has closed
with a securities purchaser pursuant to all applicable offering and subscription
documents and the Company has thereafter distributed the commission to the
Dealer Manager in connection with such transaction. The Dealer hereby waives any
and all rights to receive payment of commissions due until such time as the
Dealer Manager is in receipt of the commission from the Company. The Dealer
affirms that the Dealer Manager's liability for commissions payable is limited
solely to the proceeds of commissions receivable associated therewith. In
addition, as set forth in the Prospectus, the Dealer Manager may reallow out of
its dealer manager fee a marketing fee and due diligence expense reimbursement
of up to 1.5% of the gross proceeds of Shares sold by Dealers participating in
the offering of Shares, based on such factors as the number of Shares sold by
such participating Dealer, the assistance of such participating Dealer in
marketing the offering of Shares, and bona fide conference fees incurred. Under
the rules of the NASD, total underwriting compensation, including sales
commissions, the dealer manager fee and underwriter expense reimbursement, may
not exceed 10% of the gross proceeds from the sale of the Shares, except for
bona fide due diligence expenses, which may not exceed 0.5% of the gross
proceeds from the sale of the Shares.
Dealer acknowledges and agrees that no commissions, payments or amount
whatsoever will be paid to the Dealer unless or until the gross proceeds of the
Shares sold are disbursed to the Company pursuant to paragraph 3(a) of the
Escrow Agreement. Until the Required Capital, the Pennsylvania Required Capital
or the New York Required Capital, as applicable and as defined in the Escrow
Agreement, is obtained, investments will be held in escrow and, if the Required
Capital or the Pennsylvania Required Capital, as applicable, is not obtained,
investments will be returned to the investors in accordance with the Prospectus.
The parties hereby agree that the foregoing commission is not in excess of the
usual and customary distributors' or sellers' commission received in the sale of
securities similar to the Shares, that Dealer's interest in the offering is
limited to such commission from the Dealer Manager and Dealer's indemnity
referred to in Section 4 of the Dealer
-11-
Manager Agreement, that the Company is not liable or responsible for the direct
payment of such commission to the Dealer.
V. Payment
Payments of selling commissions will be made by the Dealer Manager (or by the
Company as provided in the Dealer Manager Agreement) to Dealer within 30 days of
the receipt by the Dealer Manager of the gross commission payments from the
Company.
VI. Right to Reject Orders or Cancel Sales
All orders, whether initial or additional, are subject to acceptance by and
shall only become effective upon confirmation by the Company, which reserves the
right to reject any order for any or no reason. Orders not accompanied by a
Subscription Agreement and Signature Page and the required check in payment for
the Shares may be rejected. Issuance and delivery of the Shares will be made
only after actual receipt of payment therefor. If any check is not paid upon
presentment, or if the Company is not in actual receipt of clearinghouse funds
or cash, certified or cashier's check or the equivalent in payment for the
Shares within 15 days of sale, the Company reserves the right to cancel the sale
without notice. In the event an order is rejected, canceled or rescinded for any
reason, the Dealer agrees to return to the Dealer Manager any commission
theretofore paid with respect to such order.
VII. Prospectus and Supplemental Information
Dealer is not authorized or permitted to give and will not give, any information
or make any representation concerning the Shares except as set forth in the
Prospectus and supplemental information. The Dealer Manager will supply Dealer
with reasonable quantities of the Prospectus, any supplements thereto and any
amended Prospectus, as well as any supplemental information, for delivery to
investors, and Dealer will deliver a copy of the Prospectus and all supplements
thereto and any amended Prospectus to each investor to whom an offer is made
prior to or simultaneously with the first solicitation of an offer to sell the
Shares to an investor. The Dealer agrees that it will not send or give any
supplements thereto and any amended Prospectus to that investor unless it has
previously sent or given a Prospectus and all supplements thereto and any
amended Prospectus to that investor or has simultaneously sent or given a
Prospectus and all supplements thereto and any amended Prospectus with such
supplemental information. Dealer agrees that it will not show or give to any
investor or prospective investor or reproduce any material or writing which is
supplied to it by the Dealer Manager and marked "dealer only" or otherwise
bearing a legend denoting that it is not to be used in connection with the sale
of Shares to members of the public. Dealer agrees that it will not use in
connection with the offer or sale of Shares any material or writing which
relates to another Company supplied to it by the Company or the Dealer Manager
bearing a legend which states that such material may not be used in connection
with the offer or sale of any securities other than the Company to which it
relates. Dealer further agrees that it will not use in connection with the offer
or sale of Shares any materials or writings which have not been previously
approved by the Dealer Manager. Each Dealer agrees, if the Dealer Manager so
requests, to furnish a copy of any revised preliminary Prospectus to each person
to whom it has furnished a copy of any previous preliminary Prospectus, and
further agrees that it will itself mail or otherwise deliver all preliminary and
final Prospectuses required for compliance with the provisions of Rule 15c2-8
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Regardless of the termination of this Agreement, Dealer will deliver a
Prospectus in transactions in the Shares for a period of 90 days from the
effective date of the Registration Statement or such longer period as may be
required by the Exchange Act. On becoming a Dealer, and in offering and selling
Shares, Dealer agrees to comply with all the applicable requirements under the
Securities Act and the Exchange Act. Notwithstanding the termination of this
Agreement or the payment of any amount to Dealer, Dealer agrees to pay Dealer's
proportionate share of any claim, demand or liability asserted against Dealer
and the other Dealers on the basis that Dealers or any of them constitute an
association, unincorporated business or other separate entity, including in each
case Dealer's proportionate share of any expenses incurred in defending against
any such claim, demand or liability.
-12-
VIII. License and Association Membership
Dealer's acceptance of this Agreement constitutes a representation to the
Company and the Dealer Manager that Dealer is a properly registered or licensed
broker-dealer, duly authorized to sell Shares under Federal and state securities
laws and regulations and in all states where it offers or sells Shares, and that
it is a member in good standing of the NASD. This Agreement shall automatically
terminate if the Dealer ceases to be a member in good standing of such
association, or in the case of a foreign dealer, so to conform. Dealer agrees to
notify the Dealer Manager immediately if Dealer ceases to be a member in good
standing, or in the case of a foreign dealer, so to conform. The Dealer Manager
also hereby agrees to comply with the Conduct Rules of the NASD, including but
not limited to Rules 2730, 2740, 2420 and 2750.
IX. Anti-Money Laundering Compliance Programs
Dealer represents to the Company and the Dealer Manager that Dealer has
established and implemented anti-money laundering compliance programs in
accordance with applicable law, including applicable NASD rules, SEC rules and
the USA PATRIOT Act of 2001, reasonably expected to detect and cause the
reporting of suspicious transactions in connection with the sale of Shares of
the Company.
X. Limitation of Offer
Dealer will offer Shares only to persons who meet the financial qualifications
set forth in the Prospectus or in any suitability letter or memorandum sent to
it by the Company or the Dealer Manager and will only make offers to persons in
the states in which it is advised in writing that the Shares are qualified for
sale or that such qualification is not required. In offering Shares, Dealer will
comply with the provisions of the NASD Conduct Rules set forth in the NASD
Manual, as well as all other applicable rules and regulations relating to
suitability of investors, including without limitation, the provisions of
Article III.C. of the Statement of Policy Regarding Real Estate Investment
Trusts of the North American Securities Administrators Association, Inc.
XI. Termination
Dealer will suspend or terminate its offer and sale of Shares upon the request
of the Company or the Dealer Manager at any time and will resume its offer and
sale of Shares hereunder upon subsequent request of the Company or the Dealer
Manager. Any party may terminate this Agreement by written notice. Such
termination shall be effective 48 hours after the mailing of such notice. This
Agreement is the entire agreement of the parties and supersedes all prior
agreements, if any, between the parties hereto.
This Agreement may be amended at any time by the Dealer Manager by written
notice to the Dealer, and any such amendment shall be deemed accepted by Dealer
upon placing an order for sale of Shares after he has received such notice.
XII. Privacy Laws
The Dealer Manager and Dealer (each referred to individually in this section as
"party") agree as follows:
(a) Each party agrees to abide by and comply with (i) the privacy standards and
requirements of the Xxxxx-Xxxxx-Xxxxxx Act of 1999 ("GLB Act"), (ii) the privacy
standards and requirements of any other applicable Federal or state law, and
(iii) its own internal privacy policies and procedures, each as may be amended
from time to time.
(b) Each party agrees to refrain from the use or disclosure of nonpublic
personal information (as defined under the GLB Act) of all customers who have
opted out of such disclosures except as necessary to service the customers or as
otherwise necessary or required by applicable law; and
(c) Each party shall be responsible for determining which customers have opted
out of the disclosure of nonpublic personal information by periodically
reviewing and, if necessary, retrieving a list of such customers (the
-13-
"List") as provided by each to identify customers that have exercised their
opt-out rights. In the event either party uses or discloses nonpublic personal
information of any customer for purposes other than servicing the customer, or
as otherwise required by applicable law, that party will consult the List to
determine whether the affected customer has exercised his or her opt-out rights.
Each party understands that each is prohibited from using or disclosing any
nonpublic personal information of any customer that is identified on the List as
having opted out of such disclosures.
XIII. Notice
All notices will be in writing and will be duly given to the Dealer Manager when
mailed to X.X. Xxxx Securities, LLP, 00000 Xxx 00 Xxxxx, Xxxxx 000, Xxxxxx,
Xxxxx 00000, Attention: Xxx X. Xxxx, and to Dealer when mailed to the address
specified by Dealer herein.
XIV. Attorneys' Fees, Applicable Law and Venue
In any action to enforce the provisions of this Agreement or to secure damages
for its breach, the prevailing party shall recover its costs and reasonable
attorney's fees. This Agreement shall be construed under the laws of the State
of Texas and shall take effect when signed by Dealer and countersigned by the
Dealer Manager. Venue for any action (including arbitration) brought hereunder
shall lie exclusively in Houston, Texas.
[SIGNATURES ON FOLLOWING PAGES]
-14-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on its behalf by its duly authorized agent.
THE DEALER MANAGER:
X.X. XXXX SECURITIES, LLP
By: H&H Services, Inc., general partner
By:
-----------------------------------
Xxx X. Xxxx President
-15-
We have read the foregoing Agreement and we hereby accept and agree to the terms
and conditions therein set forth. We hereby represent that the list below of
jurisdictions in which we are registered or licensed as a broker or dealer and
are fully authorized to sell securities is true and correct, and we agree to
advise you of any change in such list during the term of this Agreement.
1. Identity of Dealer:
Name:
---------------------------------------------------------------------------
Type of entity:
-----------------------------------------------------------------
(corporation, partnership, proprietorship, etc.)
Organized in the State of:
------------------------------------------------------
Licensed as broker-dealer in the following States:
------------------------------
--------------------------------------------------------------------------------
Tax I.D. #:
--------------------------------------------------------------------
2. Person to receive notice pursuant to Section XIII:
Name:
---------------------------------------------------------------------------
Company:
------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
City, State and Zip Code:
-------------------------------------------------------
Telephone No.:
-----------------------------------------------------------------
Facsimile No.:
------------------------------------------------------------------
-16-
AGREED TO AND ACCEPTED BY THE DEALER:
-------------------------------------------------------
(Dealer's Firm Name)
By:
---------------------------------------------------
Signature
Name:
-------------------------------------------------
Title:
-------------------------------------------------
-17-
EXHIBIT B
XXXXXXX COMMERCIAL PROPERTIES REIT
Up to 11,000,000 Common Shares of Beneficial Interest
SELECTED INVESTMENT ADVISOR AGREEMENT
This Selected Investment Advisor 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 Xxxxxxx Commercial Properties REIT,
a Maryland corporation (the "Company"), and the selected investment advisor (the
"Investment Advisor") identified in Exhibit A hereto.
WHEREAS, the Company is offering up to 11,000,000 common shares of
beneficial interest (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 (the "SEC"),
1,000,000 of which Shares are being offered pursuant to the Company's dividend
reinvestment plan (the "DRIP"); and
WHEREAS, the Investment Advisor 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 an investment advisor
under the Investment Advisers Act of 1940, as amended, and presently registered
or licensed as an investment advisor by the appropriate regulatory agency of
each state in which the Investment Advisor has clients, or exempt from such
registration requirements; and
WHEREAS, the Company has a currently effective registration statement
on Form S-11, including a 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, as well as
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 federal
securities laws and the applicable securities laws of all states in which the
Shares are offered and sold; and
WHEREAS, the Company desires to give the clients of the Investment
Advisor the opportunity to purchase the Shares, and the Investment Advisor is
willing and desires to provide its clients with information concerning the
Shares and the procedures for subscribing for 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 Company and the Investment Advisor
as follows.
1. Purchase of Shares
(a) Subject to the terms and conditions herein set forth, the
Company hereby makes available for purchase by the clients of
the Investment Advisor a portion of the Shares described in
the Registration Statement. The Investment Advisor hereby
covenants, warrants and agrees that, in regard to any purchase
of the Shares by its clients, it will comply with all of the
terms and conditions of the Registration Statement and the
Prospectus, all applicable state and federal laws, including
the Securities Act of 1933, as amended (the "Securities Act"),
the Investment Advisers Act of 1940, as amended, and any and
all regulations and rules pertaining thereto, heretofore or
hereafter issued by the Securities and Exchange Commission
("SEC"). Neither the Investment Advisor nor any other person
shall have any authority to give any information or make any
representations in connection with the Shares other than as
contained in the Registration Statement
-18-
and the Prospectus, as amended and supplemented, and as is
otherwise expressly authorized in writing by the Company.
(b) Clients of the Investment Advisor may, following receipt of
written notice by the Investment Advisor from the Company of
the effective date of the Registration Statement, purchase the
Shares according to all such terms as are contained in the
Registration Statement and the Prospectus. The Investment
Advisor shall comply with all requirements set forth in the
Registration Statement and the Prospectus. The Investment
Advisor shall use and distribute, in connection with the
Shares, only the Prospectus and, if necessary, any separate
prospectus relating solely to the DRIP, and such sales
literature and advertising materials that shall conform in all
respects to any restrictions of local law and the applicable
requirements of the Securities Act of 1933, as amended, and
that have been approved in writing by the Company. The Company
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 Investment
Advisor shall comply with all such additional procedures to
the extent that it has received written notice thereof.
(c) All monies received for purchase of any of the Shares shall be
forwarded by the Investment Advisor to X.X. Xxxx Securities,
LLP for delivery to Xxxxx Fargo Bank, 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
Investment Advisor shall return any check not made payable to
"Xxxxx Fargo Bank, Xxxxxxx Commercial Properties REIT"
directly to the subscriber who submitted the check.
Subscriptions will be accepted as described in the Prospectus.
Each Investment Advisor receiving a subscriber's check will
deliver such check to the Escrow Agent no later than the close
of business of the first business day after receipt of the
subscription documents by the Investment Advisor.
(d) During the full term of this Agreement, the Company shall have
full authority to take such action as it may deem advisable in
respect to all matters pertaining to the performance of the
Investment Advisor under this Agreement.
(e) The Shares may be purchased by clients of the Investment
Advisor only where the Shares may be legally offered and sold,
only by such persons who shall be legally qualified to
purchase the Shares, and only by such persons in such states
in which the Investment Advisor is registered as an investment
advisor or exempt from any applicable registration
requirements.
(f) The Investment Advisor shall have no obligation under this
Agreement to advise its clients to purchase any of the Shares.
(g) The Investment Advisor will use every reasonable effort to
assure that Shares are purchased only by investors who:
(1) meet the "investor suitability" standards, including
the minimum income and net worth standards established
by the Company and set forth in the Prospectus, and
minimum purchase requirements set forth in the
Registration Statement;
(2) can reasonably benefit from an investment in the
Company based on each 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
-19-
qualifications of the employees and agents of Xxxxxxx
Management, L.P., the advisor to the Company; and (f)
the tax consequences of an investment in the Shares.
(5) The Investment Advisor will make the determinations
required to be made by it pursuant to this subparagraph
(g) based on information it has obtained from each
prospective investor, including, at a minimum, but not
limited to, the prospective investor's age, investment
objectives, investment experience, income, net worth,
financial situation and other investments of the
prospective investor, as well as any other pertinent
factors deemed by the Investment Advisor to be
relevant.
(h) In addition to complying with the provisions of subparagraph
(g) above, and not in limitation of any other obligations of
the Investment Advisor to determine suitability imposed by
state or federal law, the Investment Advisor agrees that it
will comply fully with the following provisions:
(1) The Investment Advisor shall have reasonable grounds to
believe, based upon information provided by the
investor concerning his or her investment objectives,
other investments, financial situation and needs, and
upon any other information known by the Investment
Advisor, that (A) each client of the Investment Advisor
that purchases Shares is or will be in a financial
position appropriate to enable him or her to realize to
a significant extent the benefits (including tax
benefits) of an investment in the Shares, (B) each
client of the Investment Advisor that purchases 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 client of the Investment Advisor
that purchases Shares, and the Investment Advisor shall
maintain files disclosing the basis upon which the
determination of suitability was made;
(2) The Investment Advisor 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 Investment Advisor 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 Investment Advisor 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) The Investment Advisor shall inform each prospective
investor of all pertinent facts relating to the lack of
liquidity or marketability of the Shares.
(i) The Investment Advisor agrees to retain in its files, for a
period of at least six years, information that will establish
that each purchaser of Shares falls within the permitted class
of investors.
(j) The Investment Advisor either (i) shall not purchase shares
for its own account or (ii) shall hold for investment any
Shares purchased for its own account.
(k) The Investment Advisor hereby confirms that it is familiar
with Securities Act Release No. 4968 and Rule 15c2-8 under the
Securities Exchange Act of 1934, as amended, relating to the
distribution of preliminary and final prospectuses, and
confirms that it has complied and will comply therewith.
(l) A sale of Shares shall be deemed to be completed only after
the Company receives a properly completed subscription
agreement for Shares from the Investment Advisor evidencing
the fact that the investor had received a final Prospectus at
least five full business days prior to the completion
-20-
date, 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 the
Prospectus, and only after such subscription agreement has
been accepted in writing by the Company.
(m) Clients of an Investment Advisor who have been advised by such
Investment Advisor on an ongoing basis regarding investments
other than in the Company, and who are not being charged by
such Investment Advisor, through the payment of commissions or
otherwise, direct transaction based fees in connection with
the purchase of the Shares, may reduce the amount of selling
commissions payable with respect to the purchase of their
shares down to zero.
2. Compensation to Investment Advisor
The Company shall pay no fees, commissions or other compensation to the
Investment Advisor.
3. Association of the Company with Other Advisors and Dealers
It is expressly understood between the Company and the Investment
Advisor that the Company may cooperate with broker-dealers who are registered as
broker-dealers with the National Association of Securities Dealers, Inc. (the
"NASD") or with other investment advisors registered under the Investment
Advisers Act of 1940, as amended. Such broker-dealers and investment advisors
may enter into agreements with the Company on terms and conditions identical or
similar to this Agreement and shall receive such rates of commission or other
fees as are agreed to between the Company and the respective broker-dealers and
investment advisors and as are in accordance with the terms of the Prospectus.
4. Conditions of the Investment Advisor's Obligations
The Investment Advisor's obligations hereunder are subject, during the
full term of this Agreement and the Offering to (a) the performance by the
Company of its obligations hereunder and compliance by the Company with the
covenants set forth in Section 7 hereof 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 Company's Obligations
The obligations of the Company 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 Investment Advisor shall have satisfactorily performed all
of its obligations hereunder and complied with the covenants set forth in
Section 6 hereof.
6. Covenants of the Investment Advisor
The Investment Advisor covenants, warrants and represents, during the
full term of this Agreement, that:
(a) The Investment Advisor is registered as an investment advisor
under the Investment Advisers Act of 1940, as amended, and
registered or licensed as an investment advisor by the
appropriate regulatory agency of each state in which the
advisor has clients, or exempt from such registration
requirements.
(b) Neither the Investment Advisor nor any person associated with
the Investment Advisor is registered as a broker-dealer or
registered representative with the NASD.
(c) The Investment Advisor shall comply with all applicable
federal and state securities laws, including, without
limitation, the disclosure requirements of the Investment
Advisers Act of 1940,
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as amended, and the provisions thereof requiring disclosure of
the existence of this Agreement and the compensation to be
paid to the Investment Advisor hereunder.
(d) The Investment Advisor shall maintain the records required by
Section 204 of the Investment Advisers Act of 1940, as
amended, and Rule 204-2 thereunder in the form and for the
periods required thereby.
7. Covenants of the Company
The Company covenants, warrants and represents, during the full term of
this Agreement, that:
(a) It shall use its best efforts 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.
(b) It shall promptly inform the Investment Advisor 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.
(c) It shall use its best efforts to prevent the issuance of any
order described herein at subparagraph (b) hereof and to
obtain the lifting of any such order if issued.
(d) It shall give the Investment Advisor written notice when the
Registration Statement becomes effective and shall deliver to
the Investment Advisor such number of copies of the
Prospectus, and any supplements and amendments thereto, which
are finally approved by the SEC, as the Investment Advisor may
reasonably request for sale of the Shares.
(e) It shall promptly notify the Investment Advisor of any
post-effective amendments or supplements to the Registration
Statement or Prospectus, and shall furnish the Investment
Advisor with copies of any revised Prospectus and/or
supplements and amendments to the Prospectus and/or any
prospectus relating solely to the DRIP.
(f) It shall keep the Investment Advisor fully informed of any
material development to which the Company is a party or which
concerns the business and condition of the Company.
(g) 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.
8. Payment of Costs and Expenses
The Investment Advisor shall pay all costs and expenses incident to the
performance of its obligations under this Agreement.
9. Indemnification
(a) The Investment Advisor agrees to indemnify, defend and hold
harmless the Company, its affiliates and their or its
officers, directors, trustees, employees and agents, 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 (i)
the offer or sale (as such term is defined in the Securities
Act) by the Investment Advisor, or any person acting on its
behalf, of any Shares pursuant to this
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Agreement, if such loss, claim, demand, liability, or expense
arises out of or is based upon 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 Investment Advisor 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 by such Investment Advisor; (ii) the breach by the
Investment Advisor, or any person acting on its behalf, of any
of the terms and conditions of this Agreement; or (iii) the
negligence, malpractice or malfeasance of the Investment
Advisor. This indemnity provision shall survive the
termination of this Agreement.
(b) The Company agrees to indemnify, defend and hold harmless the
Investment Advisor, 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, 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 the SEC or 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
Company, or any officer of the Company by such Investment
Advisor; provided in each case that such claims or liabilities
did not arise from Investment Advisor's own negligence,
malpractice or malfeasance. This indemnity provision shall
survive the termination of this Agreement.
(c) No indemnifying party shall be liable under the indemnity
provisions 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 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 that 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.
10. Term of Agreement
This Agreement shall become effective on the date on which this
Agreement is executed by the Company and the Investment Advisor. The Investment
Advisor and the Company may each prevent this Agreement from becoming effective,
without liability to the other, by written notice before the time this Agreement
otherwise would 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
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for offer and sale of the Shares shall cease to be effective; (b) the Offering
shall be terminated; or (c) the Investment Advisor's license or registration to
act as an investment advisor shall be revoked or suspended by any federal,
self-regulatory or state agency and such revocation or suspension is not cured
within ten (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.
11. 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 Company: Xxxxxxx Commercial Properties REIT
0000 X. Xxx Xxxxxxx Xxxx. X, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
If sent to the Investment Advisor: to the person whose name and address are
identified in Exhibit A hereto.
12. 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 Investment
Advisor by operation of law or otherwise.
13. Miscellaneous
(a) This Agreement shall be construed in accordance with the
applicable laws of the State of Maryland.
(b) Nothing in this Agreement shall constitute the Investment
Advisor as in association with or in partnership with the
Company.
(c) This Agreement, including Exhibit 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.
[SIGNATURES ON FOLLOWING PAGES]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year indicated on Exhibit A hereto.
SELECTED INVESTMENT ADVISOR: COMPANY:
XXXXXXX COMMERCIAL PROPERTIES REIT
--------------------------------------
(Name of Investment Advisor)
By: By:
----------------------------------- --------------------------------
Print Name: Print Name:
------------------------ ---------------------
Title: Title:
------------------------------ --------------------------
-------------------------------------- -----------------------------------
Witness Witness
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EXHIBIT A
TO
SELECTED INVESTMENT ADVISOR AGREEMENT
OF
XXXXXXX COMMERCIAL PROPERTIES REIT
This Exhibit A is attached to and made a part of that certain Selected
Investment Advisor Agreement, dated as of the ___ day of ____________________,
200_, by and between Xxxxxxx Commercial Properties REIT, (the "Company") and
____________________________ (the "Advisor").
1. Date of Agreement: , 200
-------------------- ---
2. Identity of Advisor:
Name:
---------------------------------------------------------
Type of Entity:
-----------------------------------------------
State Organized in:
-------------------------------------------
Qualified to Do Business and in Good Standing in:
-------------
Registered as an Investment Advisor in the
Following States:
---------------------------------------------
3. Name and Address for Notice Purposes:
Name:
---------------------------------------------------------
Title:
---------------------------------------------------------
Company:
------------------------------------------------------
Address:
------------------------------------------------------
City, State and Zip Code:
-------------------------------------
Telephone Number (including area code):
-----------------------
4. Please complete the following for our records:
How many registered investment advisors are with your firm?
------------
(Please enclose a current list.)
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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 XXXXXXX COMMERCIAL PROPERTIES REIT ON YOUR MAILING LIST
AND PROVIDE A SAMPLE OF THE PUBLICATION IF AVAILABLE.
Does your firm have regular internal mailings, or bulk package mailings
to its registered investment advisors? [ ] Yes [ ] No
PLEASE PLACE XXXXXXX COMMERCIAL PROPERTIES REIT ON YOUR MAILING LIST
AND PROVIDE A SAMPLE OF THE PUBLICATION IF AVAILABLE.
Does your firm have a computerized electronic mail (E-Mail) system for
your registered investment advisors? [ ] Yes [ ] No
If so, please provide e-mail address:
----------------------------------
Website address:
-------------------------------------------------------
Person responsible:
----------------------------------------------------
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