EXHIBIT 1.2
Form of Participating Broker Agreement
PARTICIPATING BROKER AGREEMENT
CNL RETIREMENT PROPERTIES, INC.
THIS PARTICIPATING BROKER AGREEMENT (the "Agreement") is made and
entered into as of the day indicated on Exhibit A attached hereto and by this
reference incorporated herein, between CNL SECURITIES CORP., a Florida
corporation (the "Managing Dealer"), and the Participating Broker (the "Broker")
identified in Exhibit A hereto.
WHEREAS, CNL RETIREMENT PROPERTIES, INC. is a Maryland corporation (the
"Company"); and
WHEREAS, the Company proposes to offer and sell up to 400,000,000
shares of Common Stock of the Company (the "Shares") to the general public,
pursuant to a public offering (the "Offering") of the Shares pursuant to a
prospectus (the "Prospectus") filed with the Securities and Exchange Commission
(the "SEC"); and
WHEREAS, the Managing Dealer, which has heretofore entered into a
Managing Dealer Agreement with the Company pursuant to which it has been
designated the Managing Dealer to sell and manage the sale by others of the
Shares pursuant to the terms of such agreement and the Offering, is a
corporation incorporated in and presently in good standing in the State of
Florida, and is presently registered with the Florida Securities Commission and
with the National Association of Securities Dealers, Inc. (the "NASD") as a
securities broker-dealer qualified to offer and sell to members of the public
securities of the type represented by the Shares; and
WHEREAS, the Broker is an entity, as designated in Exhibit A hereto,
organized and presently in good standing in the state or states designated in
Exhibit A hereto, presently registered as a broker-dealer with the NASD, and
presently licensed by the appropriate regulatory agency of each state in which
it will offer and sell the Shares as a securities broker-dealer qualified to
offer and sell to members of the public securities of the type represented by
the Shares or exempt from all such registration requirements; and
WHEREAS, the Company has filed with the SEC a registration statement on
Form S-11, including a preliminary or final prospectus, for the registration of
the Shares under the Securities Act of 1933, as amended (such registration
statement, as it may be amended, and the prospectus and exhibits on file with
the SEC at the time the registration statement becomes effective, including any
post-effective amendments or supplements to such registration statement or
prospectus after the effective date of registration, being herein respectively
referred to as the "Registration Statement" and the "Prospectus"); and
WHEREAS, the offer and sale of the Shares shall be made pursuant to the
terms and conditions of the Registration Statement and the Prospectus and,
further, pursuant to the terms and conditions of all applicable securities laws
of all states in which the Shares are offered and sold; and
WHEREAS, the Managing Dealer desires to retain the Broker to use its
best efforts to sell the Shares, and the Broker is willing and desires to serve
as a broker for the Managing Dealer for the sale of the Shares upon the
following terms and conditions;
NOW, THEREFORE, in consideration of the premises and terms and
conditions thereof, it is agreed between the Managing Dealer and the Broker as
follows.
1. Relationship.
(a) Subject to the terms and conditions herein set forth,
the Managing Dealer hereby retains the Broker to use its best efforts to sell
for the account of the Company a portion of the Shares described in the
Registration Statement, as specified on Exhibit A hereto. The Broker hereby
accepts such retention and covenants, warrants and agrees to sell the Shares
according to all of the terms and conditions of the Registration Statement, all
applicable state and federal laws, including the Securities Act of 1933, as
amended, and any and all regulations and rules pertaining thereto, heretofore or
hereafter issued by the SEC and the NASD. Neither the Broker nor any other
person shall have
any authority to give any information or make any representations in connection
with any offer or sale of the Shares other than as contained in the Prospectus,
as amended and supplemented, and as is otherwise expressly authorized in writing
by the Managing Dealer.
(b) The Broker shall use its best efforts, promptly
following receipt of written notice from the Managing Dealer of the effective
date of the Registration Statement, to sell the Shares in such quantities and
for the account of the Company as shall be agreed between the Broker and the
Managing Dealer and specified on Exhibit A hereto, and to such persons and
according to all such terms as are contained in the Registration Statement and
the Prospectus. The Broker shall comply with all requirements set forth in the
Registration Statement and the Prospectus. The Broker shall use and distribute,
in connection with the offer and sale of the Shares, only the Prospectus and
such sales literature and advertising as shall conform in all respects to any
restrictions of local law and the applicable requirements of the Securities Act
of 1933, as amended, and which has been approved in writing by the Company or
the Managing Dealer. The Managing Dealer reserves the right to establish such
additional procedures as it may deem necessary to ensure compliance with the
requirements of the Registration Statement, and the Broker shall comply with all
such additional procedures to the extent that it has received written notice
thereof.
(c) The Broker shall be permitted to accept subscriptions
for the Shares by telephone from residents of those states identified on
Schedule A attached hereto and made a part hereof provided that: (1) the
registered representative and branch manager of the Broker execute the
subscription agreement on behalf of any investor who subscribes for Shares by
telephone; and (2) the Broker does not charge any additional fees, including but
not limited to fees relating to opening an account with the Broker, to any
investor who telephonically or orally subscribes for Shares. It is understood
and agreed between the Managing Dealer and the Broker that the Managing Dealer
may, in its discretion, change, modify, add to or delete from the list of states
identified on Schedule A. Any such modification shall be effective ten days from
the date written notice to the Broker has been mailed by the Managing Dealer.
The Broker shall not execute a subscription agreement on behalf of any investor
who subscribes for Shares by telephone unless such investor has specifically
authorized the registered representative and the branch manager of the Broker to
execute the subscription agreement on behalf of such investor and has made or
agreed to make full payment for all Shares covered by such subscription
agreement. Notwithstanding anything contained herein to the contrary, the Broker
shall have no authority to make representations on behalf of an investor or to
initial representations contained in the subscription agreement on behalf of an
investor. In connection with telephonic or other oral subscriptions for Shares,
the Broker represents and warrants as follows: (i) that a Prospectus was
delivered to the investor before the investor made a decision to invest; (ii)
that the investor meets the suitability requirements set forth in the
Prospectus; and (iii) that, in compliance with the NASD's Conduct Rules, the
Broker has reasonable grounds to believe that the investment in the Company is
suitable for the investor, based upon information supplied by the investor to
such Broker. Further, the Broker shall explain to any investor from a state
identified in the Prospectus as having such additional requirements, that: (i)
the investor has the right to rescind such subscription for a period of at least
ten days following the date written confirmation of the subscription has been
received by the investor from the Managing Dealer; and (ii) unless the investor
rescinds such subscription within the applicable period of time, the investor
shall be bound by the subscription agreement.
(d) Notwithstanding anything to the contrary contained in
Section 2 of this Agreement, in the event that the Managing Dealer pays any
commissions and fees to the Broker for sale of one or more Shares, including,
but not limited to, those Shares sold pursuant to a telephonic or other oral
subscription therefor, where representatives of the Broker execute the
subscription agreement relating to such Shares, and the subscription is
rescinded as to one or more of the Shares covered by such subscription, the
Managing Dealer shall decrease the next payment of commissions or other
compensation otherwise payable to the Broker by the Managing Dealer under this
Agreement by an amount equal to the commission rate established in Section 2 and
Exhibit A of this Agreement, multiplied by the number of Shares as to which the
subscription is rescinded. In the event that no payment of commissions or other
compensation is due to the Broker after such withdrawal occurs, the Broker shall
pay the amount specified in the preceding sentence to the Managing Dealer within
ten (10) days following mailing of notice to the Broker by the Managing Dealer
stating the amount owed as a result of rescinded subscriptions.
(e) Except as set forth in paragraph 1(f) of this
Agreement, all monies received for purchase of any of the Shares shall be
forwarded by the Broker to the Managing Dealer for delivery to SouthTrust Bank
(the
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"Escrow Agent"), where such monies will be deposited in an escrow account
established by the Company solely for such subscriptions. The Broker may accept
checks made payable to either the Company or the Escrow Agent. Subscriptions
will be executed as described in the Registration Statement or as directed by
the Managing Dealer. The monies shall be deposited or transmitted by the Broker
to the Managing Dealer no later than the close of business of the first business
day after receipt of the subscription documents by the Broker; provided,
however, that if the Broker maintains a branch office, the branch office shall
transmit the subscription documents and check to the Broker by the close of
business on the first business day following their receipt by the branch office
and the Broker shall review the subscription documents and check to ensure their
proper execution and form and, if they are acceptable, transmit the check to the
Managing Dealer by the close of business on the first business day after their
receipt by the Broker. Pursuant to the terms of the Managing Dealer Agreement,
the Managing Dealer will transmit the check or monies to the Escrow Agent by no
later than the close of business on the first business day after the check is
received from the Broker.
(f) Notwithstanding paragraph 1(e) of this Agreement, in
connection with a subscription for Shares, the Broker may withhold the selling
commissions to which it is entitled (pursuant to Section 2 of this Agreement,
Exhibit A hereto and the Prospectus) from the purchase price for the Shares and
forward the balance to the Managing Dealer for delivery to the Escrow Agent if:
(i) the Broker is legally permitted to do so and the Managing Dealer and the
Broker have executed Addendum B to this Agreement; and (ii) (x) the Broker meets
all applicable net capital requirements under rules of the NASD or other
applicable rules regarding such an arrangement; (y) the Broker forwards the
subscription agreement to the Company and receives the Company's written
acceptance of the subscription prior to forwarding the purchase price for the
Shares, net of the commissions to which the Broker is entitled, to the Managing
Dealer for delivery to the Escrow Agent; and (z) the Broker verifies that there
are sufficient funds in the investor's account with the Broker to cover the
entire cost of the subscription.
(g) During the full term of this Agreement the Managing
Dealer shall have full authority to take such action as it may deem advisable in
respect to all matters pertaining to the performance of the Broker under this
Agreement.
(h) The Shares shall be offered and sold by the Broker
only where the Shares may be legally offered and sold, and only to such persons
in such states who shall be legally qualified to purchase the Shares. The
Managing Dealer shall give the Broker written notice at the time of
effectiveness of those states in which the offering and sale of Shares may be
made, and shall amend such notice thereafter as additional states are added; no
Shares shall be offered or sold in any other states.
(i) The Broker shall have no obligation under this
Agreement to purchase any of the Shares for its own account.
(j) The Broker will use every reasonable effort to assure
that Shares are sold only to investors who:
(1) meet the investor suitability standards,
including the minimum income and net worth standards established by the
Company, and minimum purchase requirements set forth in the
Registration Statement;
(2) can reasonably benefit from an investment in
the Shares based on the prospective investor's overall investment
objectives and portfolio structure;
(3) are able to bear the economic risk of the
investment based on each prospective investor's overall financial
situation; and
(4) have apparent understanding of: (a) the
fundamental risks of the investment; (b) the risk that the prospective
investor may lose the entire investment; (c) the lack of liquidity of
the Shares; (d) the restrictions on transferability of the Shares; (e)
the background and qualifications of the officers and directors of CNL
Retirement Corp., the advisor to the Company (the "Advisor"); and (f)
the tax consequences of an investment in the Shares.
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The Broker will make the determinations required to
be made by it pursuant to subparagraph (i) based on information it has
obtained from a prospective investor, including, at a minimum, but not
limited to, the prospective investor's age, investment objectives,
investment experience, income, net worth, financial situation, other
investments and information gathered pursuant to the NASD's anti-money
laundering rules and the SEC's current books and records rules, as well
as any other pertinent factors deemed by the Broker to be relevant.
(k) In addition to complying with the provisions of
subparagraph (i) above, and not in limitation of any other obligations of the
Broker to determine suitability imposed by state or federal law, the Broker
agrees that it will comply fully with all of the applicable provisions of the
NASD's Conduct Rules, and the following provisions:
(1) The Broker shall have reasonable grounds to
believe, based upon information provided by the investor concerning his
investment objectives, other investments, financial situation and
needs, and upon any other information known by the Broker, that (A)
each investor to whom the Broker sells Shares is in a financial
position appropriate to enable him to realize to a significant extent
the benefits (including tax benefits) of an investment in the Shares,
(B) each investor to whom the Broker sells Shares has a fair market net
worth sufficient to sustain the risks inherent in an investment in the
Shares (including potential loss and lack of liquidity), and (C) the
Shares otherwise are a suitable investment for each investor to whom it
sells Shares, and the Broker shall maintain files disclosing the basis
upon which the determination of suitability was made;
(2) The Broker shall not execute any transaction
involving the purchase of Shares in a discretionary account without
prior written approval of the transaction by the investor;
(3) The Broker shall have reasonable grounds to
believe, based upon the information made available to it, that all
material facts are adequately and accurately disclosed in the
Registration Statement and provide a basis for evaluating the Shares;
(4) In making the determination set forth in
subparagraph (3) above, the Broker shall evaluate items of
compensation, physical properties, tax aspects, financial stability and
experience of the sponsor, conflicts of interest and risk factors,
appraisals, as well as any other information deemed pertinent by it;
(5) If the Broker relies upon the results of any
inquiry conducted by another member of the NASD with respect to the
obligations set forth in subparagraphs (3) or (4) above, the Broker
shall have reasonable grounds to believe that such inquiry was
conducted with due care, that the member or members conducting or
directing the inquiry consented to the disclosure of the results of the
inquiry and that the person who participated in or conducted the
inquiry is not a sponsor or an affiliate of the sponsor of the Company;
and
(6) Prior to executing a purchase transaction in
the Shares, the Broker shall have informed the prospective investor of
all pertinent facts relating to the liquidity and marketability of the
Shares.
(l) The Broker agrees that it will comply with Rules
2730, 2740 and 2750 of the NASD's Conduct Rules.
(m) The Broker agrees to retain in its files, for a
period of at least six (6) years, information which will establish that each
purchaser of Shares falls within the permitted class of investors and will
update all such information as may be required under the NASD's anti-money
laundering rules and the SEC's books and records rules.
(n) The Broker agrees to comply with any applicable U.S.
Department of Treasury regulations issued pursuant to Title III of the USA
PATRIOT Act that require reasonable efforts to verify the identity of new
customers, maintain customer records, and check the names of new customers
against a government terrorist list. Further, the Broker agrees upon receipt of
an "information request" issued under Section 314(a) of the USA PATRIOT Act to
provide the Financial Crimes Enforcement Network with information regarding: (1)
the identity of
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a specified individual or organization; (2) account number; (3) all identifying
information provided by the account holder, and (4) the date and type of
transaction. The Broker from time to time will manually monitor account activity
to identify patterns of unusual size or volume, geographic factors, and any
other potential signals of suspicious activity, including possible money
laundering or terrorist financing. The Managing Dealer reserves the right to
reject account applications from new customers who fail to provide necessary
account information or who intentionally provide misleading information.
(o) The Broker shall not, directly or indirectly, pay or
award any finder's fees, commissions or other compensation to any persons
engaged by a potential investor for investment advice as an inducement to such
advisor to advise the potential investor to purchase Shares in the Company.
(p) The Broker either (i) shall not purchase Shares for
its own account or (ii) shall hold for investment any Shares purchased for its
own account.
(q) The Broker hereby confirms that it is familiar with
Securities Act Release No. 4968 and Rule 15c2-8 under the Securities Exchange
Act of 1934, relating to the distribution of preliminary and final prospectuses,
and confirms that it has and will comply therewith.
(r) The Broker shall not in any way participate in, or
effect the sale or transfer of Shares in connection with, a tender offer with
respect to shares of the Company's common stock, whether or not such offer is
subject to Section 14(d)(1) of the Securities Exchange Act of 1934, as amended,
other than with the written consent of the Company and/or the Managing Dealer.
(s) Neither the Broker, nor any officer, director,
employee or agent of the Broker, shall disclose to any person, other than an
officer, director, employee or agent of the Broker, any password relating to a
restricted website or portion of a website provided to such Broker in connection
with any offering. Neither the Broker, nor any officer, director, employee or
agent of the Broker, shall disclose to any person, other than an officer,
director, employee or agent of the Broker, any material downloaded from such a
restricted website or portion of a website.
2. Compensation of Broker.
The Managing Dealer shall pay the Broker, as compensation for all
services to be rendered by the Broker hereunder, a commission of up to 6.0% on
sales of Shares by such Broker, as set forth in Exhibit A hereto, subject to
reduction as specified in this Section 2 and the Prospectus, and provided the
Broker has not previously received the commission pursuant to paragraph 1(f) of
this Agreement. Brokers that sell more than $50 million in gross proceeds in any
fiscal year may be reallowed selling commissions of up to 6.2%, rather than
6.0%, with respect to the Shares they sell. The Managing Dealer may reallow to
the Broker, from its due diligence expense reimbursements estimated to be up to
an additional 0.01% on sales of Shares by such Broker as reimbursement for
bonafide due diligence expenses incurred by the Broker, following such Broker's
submission of invoices supporting such expenses. From its marketing support fee,
the Managing Dealer may reallow to any Broker with whom it enters into Addendum
A to this Agreement relating to the marketing support fee of up to 2.0% on sales
of Shares by such Broker. Such commission rates shall remain in effect during
the full term of this Agreement unless otherwise changed by a written agreement
between the parties hereto. A sale of Shares shall be deemed to be completed
only after the Company receives a properly completed subscription agreement for
Shares from the Broker evidencing the fact that the investor had received a
final Prospectus for a period of not less than five (5) full business days,
together with payment of the full purchase price of each purchased Share from a
buyer who satisfies each of the terms and conditions of the Registration
Statement and Prospectus, and only after such subscription agreement has been
accepted in writing by the Company. Provided such compensation has not
previously been received by the Broker pursuant to paragraph 1(f) of this
Agreement, such compensation will be payable to the Broker by the Managing
Dealer after such acceptance of the subscription agreement; provided, however,
that compensation or commissions shall not be paid by the Managing Dealer: (i)
other than from funds received as compensation or commissions from the Company
for the sale of its Shares; (ii) until any and all compensation or commissions
payable by the Company to the Managing Dealer have been received by the Managing
Dealer; and (iii) if the commissions or other compensation payable to any
broker-dealer or salesman exceeds the amount allowed by any regulatory agency.
The Broker shall not reallow
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any commissions or fees to non-NASD members. The Company (and the Managing
Dealer) may pay reduced commissions and fees or may eliminate commissions and
fees on certain sales of Shares, including the reduction or elimination of
commissions and fees in accordance with, and on the terms set forth in, the
Prospectus and the Paragraphs of this Section 2.
The following persons and entities may purchase Shares net of 6.5%
commissions and the 2.0% marketing support fee, at a per Share purchase price of
$9.15 (assuming no other discounts apply): (i) a registered principal or
representative of the Managing Dealer or a Broker; (ii) employees, officers and
directors of the Company or the Advisor, or of the Affiliates of either of the
foregoing entities (and the immediate family members of any of the foregoing
persons, provided that "immediate family members" means such person's spouse,
parents, children, grandparents, grandchildren and any such person who is so
related by marriage such that this includes "step-" and "-in law" relations as
well as such persons so related by adoption), and any Plan (as defined in the
Prospectus) established exclusively for the benefit of such persons or entities;
(iii) a client of an investment adviser registered under the Investment Advisers
Act of 1940, as amended, or under applicable state securities laws; and (iv) a
person investing in a bank trust account with respect to which the
decision-making authority for investments made has been delegated to the bank
trust department. As all sales must be made through a registered broker-dealer,
the investment adviser must arrange the placement of the transaction through a
broker-dealer that will waive compensation or may contact the Managing Dealer
for such assistance. The amount of proceeds to the Company will not be affected
by eliminating commissions and marketing support fees payable in connection with
sales to investors purchasing through such registered investment advisers,
broker/dealers or bank trust departments. In addition, Brokers that have a
contractual arrangement with their clients for the payment of fees on terms that
are inconsistent with the acceptance of all or a portion of the commissions and
the marketing support fee may elect not to accept all or a portion of their
compensation in the form of commissions and the marketing support fees offered
by the Company for Shares that they sell. In that event, such Shares shall be
sold to the investor net of 6.5% commissions and the marketing support fee, at a
per share purchase price of $9.15.
In addition, in connection with the purchases of certain minimum
numbers of Shares, the amount of commissions otherwise payable may be reduced in
accordance with the volume discounts schedule set forth in the Prospectus.
To the extent a Broker is entitled to all or a portion of the 2.0%
marketing support fee, the Broker may elect to defer over time its receipt of
the marketing support fee to which it is entitled. In such event, the marketing
support fee to be reallowed will be paid to the Broker over a period of up to
ten years (which period will be agreed upon by the Managing Dealer and Broker)
until the marketing support fee payable to the Broker has been paid in full.
Further, if the listing of shares of the Company's common stock for trading on a
national securities exchange or over-the-counter market occurs, any remaining
deferred portion of the marketing support fee payable to the Broker will become
immediately due and payable.
The Managing Dealer shall not pay the Broker commissions and marketing
support fees on Shares purchased pursuant to the Company's Reinvestment Plan.
3. Association with Other Dealers.
It is expressly understood between the Managing Dealer and the Broker
that the Managing Dealer may cooperate with other broker-dealers who are
registered as broker-dealers with the NASD and duly licensed by the appropriate
regulatory agency of each state in which they will offer and sell the Shares or
with broker-dealers exempt from all such registration requirements. Such other
participating broker-dealers may be employed by the Managing Dealer as brokers
on terms and conditions identical or similar to this Agreement and shall receive
such rates of commissions and fees as are agreed to between the Managing Dealer
and the respective other participating broker-dealers and as are in accordance
with the terms of the Registration Statement. The Broker understands that, to
that extent, such other participating broker-dealers shall compete with the
Broker in the sale of the Shares.
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4. Conditions of the Broker's Obligations.
The Broker's obligations hereunder are subject, during the full term of
this Agreement and the Offering, to (a) the performance by the Managing Dealer
of its obligations hereunder, and (b) the conditions that: (i) the Registration
Statement shall become and remain effective; and (ii) no stop order shall have
been issued suspending the effectiveness of the Offering.
5. Conditions to the Managing Dealer's Obligations.
The obligations of the Managing Dealer hereunder are subject, during
the full term of this Agreement and the Offering, to the conditions that: (a) at
the effective date of the Registration Statement and thereafter during the term
of this Agreement while any Shares remain unsold, the Registration Statement
shall remain in full force and effect authorizing the offer and sale of the
Shares; (b) no stop order suspending the effectiveness of the Offering or other
order restraining the offer or sale of the Shares shall have been issued nor
proceedings therefor initiated or threatened by any state regulatory agency or
the SEC; and (c) the Broker shall have satisfactorily performed all of its
obligations hereunder.
6. Covenants of the Managing Dealer.
The Managing Dealer covenants, warrants and represents, during the full
term of this Agreement, that:
(a) It shall use its best efforts to prevent the sale of
the Shares through persons other than registered NASD broker-dealers or with
broker-dealers exempt from all such registration requirements.
(b) It shall use its best efforts to cause the Company to
maintain the effectiveness of the Registration Statement and to file such
applications or amendments to the Registration Statement as may be reasonably
necessary for that purpose.
(c) It shall advise the Broker whenever and as
soon as it receives or learns of any order issued by the SEC, any state
regulatory agency or any other regulatory agency which suspends the
effectiveness of the Registration Statement or prevents the use of the
Prospectus or which otherwise prevents or suspends the offering or sale of the
Shares, or receives notice of any proceedings regarding any such order.
(d) It shall use its best efforts to prevent the
issuance of any order described herein at subparagraph (c) hereof and to obtain
the lifting of any such order if issued.
(e) It shall give the Broker written notice when
the Registration Statement becomes effective and shall deliver to the Broker
such number of copies of the Prospectus, and any supplements and amendments
thereto, which are finally approved by the SEC, as the Broker may reasonably
request for sale of the Shares.
(f) It shall promptly notify the Broker of any
post-effective amendments or supplements to the Registration Statement or
Prospectus, and shall furnish the Broker with copies of any revised Prospectus
and/or supplements and amendments to the Prospectus.
(g) To the extent to which the Managing Dealer
has knowledge, it shall keep the Broker fully informed of any material
development to which the Company is a party or which concerns the business and
condition of the Company.
(h) In conjunction with the Company, it shall
use its best efforts to cause, at or prior to the time the Registration
Statement becomes effective, the qualification or registration of the Shares for
offering and sale under the securities laws of such states as the Company shall
elect.
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7. Payment of Costs and Expenses.
The Broker shall pay all costs and expenses incident to the performance
of its obligations under this Agreement, including:
(a) All expenses incident to the preparation, printing
and filing of all advertising originated by it related to the sale of the
Shares; and
(b) All other costs and expenses incurred in connection
with its sales efforts related to the sales of the Shares which are not
expressly assumed by the Company in its Managing Dealer Agreement with the
Managing Dealer.
8. Indemnification.
(a) The Broker agrees to indemnify, defend and hold
harmless the Company, its affiliates and their or its officers, directors,
trustees, employees and agents, including the Managing Dealer, against all
losses, claims, demands, liabilities and expenses, joint or several, including
reasonable legal and other expenses incurred in defending such claims or
liabilities, whether or not resulting in any liability to the Company, its
affiliates and their or its officers, directors, trustees, employees or agents,
which they or any of them may incur arising out of the offer or sale by the
Broker, or any person acting on its behalf, of any Shares pursuant to this
Agreement if such loss, claim, demand, liability, or expense arises out of or is
based upon (i) an untrue statement or alleged untrue statement of a material
fact, or any omission or alleged omission of a material fact, other than a
statement, omission, or alleged omission by the Broker which is also, as the
case may be, contained in or omitted from the Prospectus or the Registration
Statement and which statement or omission was not based on information supplied
to the Company or the Managing Dealer by such Broker, or (ii) the breach by the
Broker, or any person acting on its behalf, of any of the terms and conditions
of this Agreement. This indemnity provision shall survive the termination of
this Agreement.
(b) The Managing Dealer agrees to indemnify, defend and
hold harmless the Broker, its officers, directors, employees and agents, against
all losses, claims, demands, liabilities and expenses, including reasonable
legal and other expenses incurred in defending such claims or liabilities, which
they or any of them may incur, including, but not limited to, alleged violations
of the Securities Act of 1933, as amended, but only to the extent that such
losses, claims, demands, liabilities and expenses shall arise out of or be based
upon (i) any untrue statement of a material fact contained in the Prospectus or
the Registration Statement, as filed and in effect with the SEC, or in any
amendment or supplement thereto, or in any application prepared or approved in
writing by counsel to the Company and filed with any state regulatory agency in
order to register or qualify the Shares under the securities laws thereof (the
"Blue Sky applications"), or (ii) any omission or alleged omission to state
therein a material fact required to be stated in the Prospectus or the
Registration Statement or the Blue Sky applications, or necessary to make such
statements, and any part thereof, not misleading; provided, further, that any
such untrue statement, omission or alleged omission is not based on information
included in any such document which was supplied to the Managing Dealer, the
Company, or any officer of the Company by such Broker. This indemnity provision
shall survive the termination of this Agreement.
(c) No indemnifying party shall be liable under the
indemnity agreements contained in subparagraphs (a) and (b) above unless the
party to be indemnified shall have notified such indemnifying party in writing
promptly after the summons or other first legal process giving information of
the nature of the claim shall have been served upon the party to be indemnified,
but failure to notify an indemnifying party of any such claim shall not relieve
it from any liabilities which it may have to the indemnified party against whom
action is brought other than on account of its indemnity agreement contained in
subparagraphs (a) and (b) above. In the case of any such claim, if the party to
be indemnified notified the indemnifying party of the commencement thereof as
aforesaid, the indemnifying party shall be entitled to participate at its own
expense in the defense of such claim. If it so elects, in accordance with
arrangements satisfactory to any other indemnifying party or parties similarly
notified, the indemnifying party has the option to assume the entire defense of
the claim, with counsel who shall be satisfactory to such indemnified party and
all other indemnified parties who are defendants in such action; and after
notice from the indemnifying party of its election so to assume the defense
thereof and the retaining of such counsel by the indemnifying party, the
indemnifying party shall not be liable to such indemnified party under
subparagraphs (a) and (b) above for any legal or other expenses
-8-
subsequently incurred by such indemnified party in connection with the defense
thereof, other than for the reasonable costs of investigation.
9. Term of Agreement.
This Agreement shall become effective at 8:00 A.M. (Eastern Standard
Time) on the first full business day following the day on which the Registration
Statement becomes effective, or if later, the date on which this Agreement is
executed by the Managing Dealer and the Broker. The Broker and the Managing
Dealer may each prevent this Agreement from becoming effective, without
liability to the other, by written notice before the time this Agreement would
otherwise become effective. After this Agreement becomes effective, either party
may terminate it at any time for any reason by giving thirty (30) days' written
notice to the other party; provided, however, that this Agreement shall in any
event automatically terminate at the first occurrence of any of the following
events: (a) the Registration Statement for offer and sale of the Shares shall
cease to be effective; (b) the Company shall be terminated; or (c) the Broker's
license or registration to act as a broker-dealer shall be revoked or suspended
by any federal, self-regulatory or state agency and such revocation or
suspension is not cured within ten (10) days from the date of such occurrence.
In any event, this Agreement shall be deemed suspended during any period for
which such license is revoked or suspended.
10. Notices.
All notices and communications hereunder shall be in writing and shall
be deemed to have been given and delivered when deposited in the United States
mail, postage prepaid, registered or certified mail, to the applicable address
set forth below.
If sent to the Managing Dealer:
CNL SECURITIES CORP.
CNL Center at City Commons
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, President
If sent to the Broker: to the person whose name and address are
identified in Exhibit A hereto.
11. Successors.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and shall not be assigned or transferred by the Broker by
operation of law or otherwise.
12. Miscellaneous.
(a) This Agreement shall be interpreted, construed and
enforced in all respects in accordance with the laws of the State of Florida
applicable to contracts to be made and performed entirely in said state.
(b) Nothing in this Agreement shall constitute the Broker
as in association with or in partnership with the Managing Dealer. Instead, this
Agreement shall only authorize the Broker to sell the Shares according to the
terms as expressly set forth herein; provided, further, that the Broker shall
not in any event have any authority to act as the agent or broker of the
Managing Dealer except according to the terms expressly set forth herein.
(c) This Agreement, including Exhibit A, Schedule A, and
any Addendum 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.
-9-
(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.
- Remainder of page intentionally left blank -
-10-
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year indicated on Exhibit A hereto.
MANAGING DEALER FOR
BROKER: CNL RETIREMENT PROPERTIES, INC.:
_____________________________________ CNL SECURITIES CORP.
(Name of Broker)
By______________________________
By:__________________________________
Print Name:_____________________
Print Name:__________________________
Title:__________________________
Title:_______________________________
Witness:________________________
Witness:_____________________________
-11-
EXHIBIT A
TO
PARTICIPATING BROKER AGREEMENT
OF
CNL RETIREMENT PROPERTIES, INC.
This Exhibit A dated as of the ___ day of ___________________,
_________, is attached to and made a part of that certain Participating Broker
Agreement, by and between CNL SECURITIES CORP., as Managing Dealer, and
________________________________________________, as Broker.
1. Date of Agreement: ____________________________________________________
2. Identity of Broker:
Name:__________________________________________________________________
Firm NASD (CRD) No:____________________________________________________
Type of Entity:________________________________________________________
(To be completed by Broker, e.g., corporation,
partnership or sole proprietorship.)
State Organized in:____________________________________________________
(To be completed by Broker)
Qualified to Do Business and in Good Standing in the Following
Jurisdictions (including your state of organization) In addition to the
broker licensing requirement, some states also require brokers to be
qualified to do business with their department of state in order to
sell securities in that state. Questions concerning this matter should
be directed to you or your legal counsel:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
(To be completed by Broker)
Licensed as Broker-Dealer in The Following States: ____________________
_______________________________________________________________________
_______________________________________________________________________
(To be completed by Broker)
EXHIBIT A
Page 1 of 2
3. Schedule of Commissions Payable to Participating Broker (see Section 2
of Agreement):
Number of Shares
Purchased In Sales Price As a Percentage
Individual Order To Subscriber of the Sales Price(1) Dollar Amount
---------------- ------------- ------------------ -------------
1 or more $10.00 6.0% $0.60
4. Name and Address for Notice Purposes (see Paragraph 10 of Agreement):
Name: _____________________________________ email:__________________
Title: _______________________________________________________________
Company: ______________________________________________________________
Address: ______________________________________________________________
City, State and Zip Code:______________________________________________
Telephone Number (including area code): _______________________________
------------------------------
(1) Subject to adjustment as set forth in Section 2 of the Participating Broker
Agreement.
EXHIBIT A
Page 2 of 2
CNL RETIREMENT PROPERTIES, INC.
ADDENDUM A TO THE PARTICIPATING BROKER AGREEMENT
The following reflects the marketing support fee as agreed upon between CNL
Securities Corp. (the "Managing Dealer") and the Broker, effective
____________________, 2004.
Each calendar year, the Broker may qualify to receive a fee (the "Marketing
Support Fee") of up to two percent of gross offering proceeds received by CNL
Income Properties, Inc. (the "Company") from sales of the Company's common stock
by the Broker in such calendar year.
Eligibility to receive the Marketing Support Fee is conditioned upon the Broker
reaching a prescribed minimum annual sales volume of shares of the Company's
common stock and the Broker's compliance with one or more of the following
conditions. Any determination regarding the Broker's compliance with the listed
conditions will be made by the Managing Dealer, in its sole discretion.
1. The Broker has internal marketing support personnel
(telemarketers, marketing director, etc.) who assist the
Managing Dealer's marketing team;
2. the Broker has and uses internal marketing communications
vehicle(s) to promote the Company. Vehicles may include, but
are not restricted to, newsletters, conference calls, cassette
tapes, internal mail, etc.;
3. the Broker will respond to investors' inquiries concerning
monthly statements, valuations, distribution rates, tax
information, annual reports, reinvestment and redemption
rights and procedures, the financial status of the Company and
the real estate markets in which the Company has invested;
4. the Broker will assist investors with reinvestments and
redemptions; and/or
5. the Broker will provide other services requested by investors
from time to time and will maintain the technology necessary
to adequately service investors.
IN WITNESS WHEREOF, the parties have executed this Addendum on the date and year
shown above.
BROKER: MANAGING DEALER:
(Name of Broker) CNL SECURITIES CORP.
By: ________________________________ By: ____________________________
Print Name: Print Name:
Title: Title:
Witness: _________________________________ Witness: ____________________________
CNL RETIREMENT PROPERTIES, INC.
ADDENDUM B TO THE PARTICIPATING BROKER AGREEMENT
The following reflects the arrangement by which the Broker shall submit
subscription proceeds net of selling commissions to which the Broker is
entitled, as agreed upon between CNL Securities Corp. (the "Managing Dealer")
and the Broker, effective ____________________, 2004. Unless otherwise
indicated, all defined terms used herein have the same meaning as set forth in
the Participating Broker Agreement.
As set forth in paragraph 1(f) of the Participating Broker Agreement, in
connection with a subscription for Shares, the Broker may withhold the selling
commissions to which it is entitled (pursuant to Section 2 of the Participating
Broker Agreement, Exhibit A to the Participating Broker Agreement and the
Prospectus) from the purchase price for the Shares and forward the balance to
the Managing Dealer for delivery to the Escrow Agent if: (i) the Broker is
legally permitted to do so and the Managing Dealer and the Broker have executed
Addendum B to this Agreement; and (ii) (x) the Broker meets all applicable net
capital requirements under rules of the NASD or other applicable rules regarding
such an arrangement; (y) the Broker forwards the subscription agreement to the
Company and receives the Company's written acceptance of the subscription prior
to forwarding the purchase price for the Shares, net of the commissions to which
the Broker is entitled, to the Managing Dealer for delivery to the Escrow Agent;
and (z) the Broker verifies that there are sufficient funds in the investor's
account with the Broker to cover the entire cost of the subscription.
By executing this Addendum B, the Broker hereby represents and warrants that it
shall only withhold commissions as set forth in paragraph 1(f) of the
Participating Broker Agreement to the extent:
1. the Broker is legally permitted to do so;
2. the Broker meets all applicable net capital requirements under
rules of the NASD or other applicable rules regarding such an
arrangement;
3. the Broker forwards the subscription agreement to the Company
and receives the Company's written acceptance of the
subscription prior to forwarding the purchase price for the
Shares, net of the commissions to which the Broker is
entitled, to the Managing Dealer for delivery to the Escrow
Agent; and
4. the Broker verifies that there are sufficient funds in the
investor's account with the Broker to cover the entire cost of
the subscription.
IN WITNESS WHEREOF, the parties have executed this Addendum on the date and year
shown above.
BROKER: MANAGING DEALER:
(Name of Broker) CNL SECURITIES CORP.
By: _________________________________ By: ____________________________
Print Name: Print Name:
Title: Title:
Witness: _________________________________ Witness: ____________________________
SCHEDULE A
TO
PARTICIPATING BROKER AGREEMENT
OF
CNL RETIREMENT PROPERTIES, INC.
TELEPHONIC SUBSCRIPTION AUTHORIZATION
This Schedule A is attached to and made a part of that certain
Participating Broker Agreement, dated as of the ___ day of ____________________,
________, by and between CNL SECURITIES CORP., as Managing Dealer, and
_____________________________________________, as Broker.
The list of states in which the Broker is permitted to accept
telephonic subscriptions shall be those states identified by Item 2 of Exhibit
A, as amended from time to time, to the Broker Agreement between the parties
hereto, as states in which the Broker is licensed as a Broker-Dealer, EXCEPT FOR
THE FOLLOWING STATES IN WHICH THE BROKER IS SPECIFICALLY PROHIBITED FROM
ACCEPTING TELEPHONIC SUBSCRIPTIONS: California, Florida, Iowa, Maine,
Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Mexico,
North Carolina, Ohio, Oregon, South Dakota, Tennessee and Washington.
Initials: ______________ -- CNL SECURITIES CORP.
______________ -- PARTICIPATING BROKER
