EXHIBIT 1.1
Form of Managing Dealer Agreement
FORM OF MANAGING DEALER AGREEMENT
THIS AGREEMENT, dated as of ___________, 1997, is made by and between CNL
AMERICAN REALTY FUND, INC., a Maryland corporation (the "Company"); and CNL
SECURITIES CORP., a Florida corporation (the "Managing Dealer").
WHEREAS, the Company proposes to offer and sell up to an aggregate of
16,500,000 shares of common stock in the Company (the "Shares") to the public
pursuant to a public offering;
WHEREAS, the Managing Dealer is registered with the National Association
of Securities Dealers, Inc. as a broker-dealer, and is presently or, prior to
any offers or sales of Shares, will be licensed in all fifty states, the
District of Columbia, and the Commonwealth of Puerto Rico as a broker-dealer
qualified to offer and sell to the public securities of the type represented by
the Shares; and
WHEREAS, the Company desires to retain the Managing Dealer to use its best
efforts to sell the Shares and to manage the sale by others of the Shares, and
the Managing Dealer is willing and desires to serve as the Managing Dealer for
the Company for the sale of the Shares upon the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the Company and the Managing
Dealer agree as follows:
SECTION 1
DEFINITIONS
Whenever used in this Agreement, the following terms shall have the
following specified meanings.
1.1 "NASD" means the National Association of Securities Dealers, Inc.
1.2 "OFFERING" means the offering of up to 16,500,000 Shares of CNL
AMERICAN REALTY FUND, INC. to the public pursuant to the terms and conditions of
the Registration Statement.
1.3 "OFFERING PERIOD" means the period commencing on the effective date of
the Registration Statement and ending on the earliest of the following: (i) the
later of one year after the initial date of the Prospectus or, at the Company's
election, two years after the initial date of the Prospectus; (ii) one year
after the initial date of the Prospectus, unless subscriptions for at least
250,000 Shares are received and accepted within such one-year period (exclusive
of subscriptions from Pennsylvania residents, unless subscriptions for at least
825,000 Shares are received and accepted from all investors); (iii) the
acceptance by the Company of subscriptions for 16,500,000 Shares, with 1,500,000
of such Shares available only to investors who participate in the Company's
dividend reinvestment plan, subject to Paragraph 3.8 hereof; (iv) the
termination of the Offering by the Company; (v) the termination of the
effectiveness of the Registration Statement; or (vi) the termination of the
Company.
1.4 "PARTICIPATING BROKERS" mean those broker-dealers engaged by the
Managing Dealer to participate in the Offering pursuant to Paragraph 3.2.
1.5 "PROSPECTUS" means the final prospectus included in the Registration
Statement, pursuant to which the Company will offer Shares to the public, as the
same may be amended or supplemented from time to time after the effective date
of the Registration Statement.
1.6 "REGISTRATION STATEMENT" means the registration statement pursuant to
which the Company has registerd the Shares with the SEC as provided in the
Securities Act of 1933, as amended, as such registration statement may be
amended or supplemented from time to time.
1.7 "SEC" means the Securities and Exchange Commission.
1.8 "SHARES" mean the shares of Common Stock of the Company, par value
$.01 per share, with a purchase price of $10.00 per share. An aggregate of up to
16,500,000 Shares will be offered pursuant to the Registration Statement.
1.9 "STATE REGULATORY AUTHORITIES" mean the commissions, departments,
agencies or other authorities in the fifty states, the District of Columbia, and
the Commonwealth of Puerto Rico which regulate the offer and sale of securities.
1.10 "COMPANY" means CNL AMERICAN REALTY FUND, INC., a Maryland
corporation.
SECTION 2
APPOINTMENT
Subject to the terms and conditions set forth in this Agreement, including
Paragraph 3.8 hereof, the Company hereby appoints the Managing Dealer as the
managing dealer of the Offering to use its best efforts to sell up to 16,500,000
Shares of the Company and to manage the sale by others of such Shares for the
Company's account. The Managing Dealer hereby accepts such appointment.
SECTION 3
SALE OF SHARES
3.1 BEST EFFORTS. The Managing Dealer shall use its best efforts during
the Offering Period to sell or cause to be sold the Shares in such quantities
and to such persons and in accordance with such terms as are set forth in this
Agreement, the Prospectus and the Registration Statement. Notwithstanding
anything herein to the contrary, the Managing Dealer shall have no obligation
under this Agreement to purchase any of the Shares for its own account.
3.2 ASSOCIATION OF OTHER BROKER-DEALERS. The Company hereby acknowledges
and agrees that the Managing Dealer may engage Participating Brokers to
participate in the Offering, provided that (i) all Participating Brokers are
registered with the NASD and are duly licensed by the State Regulatory
Authorities in the jurisdictions in which they will offer and sell Shares or
exempt from broker-dealer registration with the NASD and the State Regulatory
Authorities, and (ii) all such engagements are evidenced by written agreements,
the terms and conditions of which substantially conform to the form of
Participating Broker Agreement approved by the Company and attached hereto as
Exhibit A (the "Participating Broker Agreement"). The Managing Dealer is
authorized to reallow so much of the commissions which it receives under
Paragraph 4.1 to Participating Brokers as it sees fit.
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3.3 TELEPHONIC SUBSCRIPTIONS.
(a) The Managing Dealer may permit certain Participating Brokers to accept
telephonic or other oral subscriptions for Shares; provided, however, that any
such Participating Broker agrees that: (i) the registered representative and
branch manager of the Participating Broker shall execute the subscription
agreement on behalf of any investor who telephonically or orally subscribes for
Shares; (ii) the Participating Broker shall not charge investors who
telephonically or orally subscribe for Shares any additional fees, including but
not limited to fees relating to opening an account with the Participating
Broker; and (iii) the Participating Broker shall not accept telephonic or oral
subscriptions for Shares from any investor unless such investor has received a
copy of the Company's Prospectus prior to making a decision to invest. The
Managing Dealer shall enter into a written agreement with each Participating
Broker who wishes to accept telephonic or other oral subscriptions for Shares
from investors in certain states more particularly identified in the Prospectus,
pursuant to which the Participating Broker shall agree to explain to such
investor that: (i) the investor shall have the right to rescind such
subscription for a period of ten days following the receipt of the Confirmation
(as hereinafter defined); and (ii) unless the investor rescinds such
subscription within the applicable period of time, the investor shall be bound
by the subscription agreement. The Managing Dealer shall confirm the receipt of
subscriptions for Shares which have been subscribed for by telephone or other
oral instructions by written notice to the investor (the "Confirmation"). Such
Confirmation shall be mailed to the investor not later than seven (7) days after
the date on which the investor's funds are deposited, shall contain a statement
that the investor has a right to rescind his subscription, and shall be
accompanied by a Prospectus and a Subscriber's Signature Page.
(b) Notwithstanding anything to the contrary contained in Paragraph
4.3(a) of this Agreement, in the event that the Company pays any commission to
the Managing Dealer for sale by a Participating Broker of one or more Shares
pursuant to a telephonic or other oral subscription where representatives of
such Participating 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 Company shall decrease the next payment of
commissions or other compensation otherwise payable to the Managing Dealer by
the Company under this Agreement by an amount equal to the commission rate
established in Paragraph 4.1 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 Managing Dealer after such
withdrawal occurs, the Managing Dealer shall pay the amount specified in the
preceding sentence to the Company within ten (10) days following receipt of
notice by the Managing Dealer from the Company stating the amount owed as a
result of rescinded subscriptions.
3.4 SUITABILITY AND MINIMUM PURCHASE REQUIREMENTS.
(a) The Managing Dealer will use every reasonable effort, to the extent it
sells Shares to investors, to assure that any such Shares are sold only to
investors who:
(i) meet the investor suitability standards, including the
minimum income and net worth standard established by the Company, and
minimum purchase requirements set forth in the Registration Statement;
(ii) can reasonably benefit from the Company based on the
prospective investor's overall investment objectives and portfolio
structure;
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(iii) are able to bear the economic risk of the investment
based on each prospective investor's overall financial situation; and
(iv) 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 Real Estate Advisors,
Inc., the advisor to the Company (the "Advisor"); and (F) the tax
consequences of an investment in the Shares.
(b) The Managing Dealer will make the determinations required to be made
by it pursuant to Paragraph 3.4(a) above based on information it has obtained
from a prospective investor, including, at a minimum, but not limited to, the
prospective investor's age, investment objectives, investment experience,
income, net worth, financial situation, other investments of the prospective
investor, as well as any other pertinent factors deemed by the Managing Dealer
to be relevant.
(c) The Managing Dealer shall maintain such records evidencing compliance
with the determination of the investor suitability standards and minimum
purchase requirements set forth in the Registration Statement, as required by
Paragraphs 3.4(a) and 3.4(b) above for a period of not less than six years, or
for such greater time period as shall comply with all applicable federal, state
and other regulatory requirements.
(d) In addition to the foregoing, the Managing Dealer shall comply fully
with all the applicable provisions of the NASD's Conduct Rules and the following
provisions:
(i) the Managing Dealer 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 Managing Dealer, that (A) each
investor to whom the Managing Dealer sells Shares is or will be in a
financial position appropriate to enable him to realize to a significant
extent the benefits (including tax benefits) of an investment in the
Shares, (B) each investor to whom the Managing Dealer sells Shares has a
fair market net worth sufficient to sustain the risks inherent in an
investment in the Shares (including potential loss and lack of liquidity),
and (C) the Shares otherwise are or will be a suitable investment for each
investor to whom the Managing Dealer sells Shares, and the Managing Dealer
shall maintain files disclosing the basis upon which the determination of
suitability was made;
(ii) the Managing Dealer shall not execute any transaction
involving the purchase of Shares in a discretionary account without prior
written approval of the transaction by the investor;
(iii) the Managing Dealer shall have reasonable grounds to
believe, based upon the information made available to it, that all
material facts are adequate and accurately disclosed in the Registration
Statement and provide a basis for evaluating the Shares;
(iv) in making the determination set forth in item (iii) above,
the Managing Dealer shall evaluate items of compensation, properties, tax
aspects, financial stability and experience of the sponsor, conflicts of
interest and risk factors, and any other information deemed pertinent by
it; and
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(v) prior to executing a purchase transaction in the Shares,
the Managing Dealer shall have informed the prospective investor of all
pertinent facts relating to the liquidity and marketability of the Shares.
(e) The Managing Dealer shall comply with the requirements for
determining the suitability of investors who elect to participate in the
Dividend Reinvestment Plan (the "Reinvestment Plan") in accordance with the
procedure set forth in Paragraph 6 of such Reinvestment Plan in the form of
Exhibit A to the Prospectus.
3.5 SALES LITERATURE. The Managing Dealer 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 JURISDICTIONS. The Managing Dealer 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 ESCROW. All funds received by the Managing Dealer for the sale of
Shares shall be deposited in an escrow account established by the Company at
SouthTrust Asset Management Company of Florida, N.A. (the "Escrow Agent"), by
the close of the first business day following receipt of such funds by the
Managing Dealer. Such escrow account shall be denominated "ESCROW ACCOUNT FOR
THE BENEFIT OF SUBSCRIBERS FOR COMMON STOCK OF CNL AMERICAN REALTY FUND, INC."
Until such time (if any) as the funds held in escrow are deliverable to the
Company pursuant to the Escrow Agreement between the Company and the Escrow
Agent, the Managing Dealer shall, and shall cause Participating Brokers to,
instruct subscribers to make checks for subscriptions payable to the order of
"SOUTHTRUST ASSET MANAGEMENT COMPANY OF FLORIDA, N.A., ESCROW AGENT," and shall
return checks made payable to another party to the Participating Broker or
subscriber who submitted the check. Thereafter, checks may be made payable to
either the Escrow Agent or the Company. The Managing Dealer may authorize
certain Participating Brokers which are "$250,000 broker-dealers" to instruct
their customers to make their checks for Shares subscribed for payable directly
to the Participating Broker. In such case, the Soliciting Dealer will collect
the proceeds of the subscribers' checks and issue a check made payable to the
order of the Escrow Agent for the aggregate amount of the subscription proceeds.
SECTION 4
COMPENSATION
4.1 COMMISSIONS.
(a) The Company shall pay to the Managing Dealer, as compensation for
all services to be rendered by the Managing Dealer pursuant to this
Agreement, a commission equal to seven and one-half percent (7.5%) of the
selling price of each Share for which a sale is completed, regardless of
whether such Share is sold by the Managing Dealer or a Participating
Broker; provided, however, that the Company will pay reduced commissions
or may eliminate commissions on certain sales of Shares, including the
reduction or elimination of commissions in accordance with, and on the
terms set forth in, the Prospectus and the following paragraph of this
Paragraph 4.1,
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which reduction or elimination of commissions will not change the net
proceeds to the Company. Shareholders who elect to participate in the
Reinvestment Plan will be charged commissions on Shares purchased for
their accounts on the same basis as investors who otherwise purchase
Shares in the Offering.
(b) A registered principal or representative of the Managing Dealer or
a Participating Broker, employees, officers, and directors of the Company
or the Advisor, any of their Affiliates (and the families of any of the
foregoing persons), and any Plan (as defined in the Prospectus)
established exclusively for the benefit of such persons or entities may
purchase Shares net of 7% commissions, at a per Share purchase price of
$9.30. In addition, clients of an investment adviser registered under the
Investment Advisers Act of 1940, as amended, who have been advised by such
adviser on an ongoing basis regarding investments other than in the
Company, and who are not being charged by such adviser or its Affiliates,
through payment of commissions or otherwise, for the advice rendered by
such adviser in connection with the purchase of the Shares, may purchase
the Shares net of commissions. In addition, brokers that have a
contractual arrangement with their clients for the payment of fees which
is consistent with accepting selling commissions, in their sole
discretion, may elect not to accept any selling commissions offered by the
Company for Shares that they sell. In that event, such Shares shall be
sold to the investor net of all selling commissions, at a per share
purchase price of $9.30.
4.2 MARKETING SUPPORT AND DUE DILIGENCE. The Company shall pay to the
Managing Dealer a nonaccountable fee for expenses incurred in selling and
marketing the Shares and for bona fide expenses incurred in connection with due
diligence activities. This marketing support and due diligence expense
reimbursement fee shall be equal to one-half of one percent (0.5%) of the
selling price of each Share for which a sale is completed, regardless of whether
such Share is sold by the Managing Dealer or a Participating Broker. All due
diligence expense reimbursements shall be paid by the Managing Dealer from this
fee.
4.3 COMPLETED SALE.
(a) A sale of a Share shall be deemed to be completed under Paragraph
4.1 if and only if (i) the Company has received a properly completed and
executed subscription agreement, together with payment of the full
purchase price of each purchased Share, from or, in accordance with
Paragraph 3.3(a), on behalf of an investor who satisfies the applicable
suitability standards and minimum purchase requirements set forth in the
Registration Statement as determined by the Managing Dealer in accordance
with the provisions of this Agreement, (ii) the Company has accepted such
subscription, and (iii) such investor has been admitted as a shareholder
of the Company.
(b) The Managing Dealer hereby acknowledges and agrees that:
(i) the Company, in its sole and absolute discretion, may accept or
reject any subscription, in whole or in part, for any reason
whatsoever, and no commission will be paid to the Managing Dealer with
respect to that portion of any subscription which is rejected;
(ii) unless, within one year after the initial date of the
Prospectus, subscriptions for an aggregate of at least 250,000 Shares
have been received and accepted (exclusive of subscriptions from: (A)
Pennsylvania investors, unless subscriptions for at least 825,000
Shares are received and accepted from all investors; (B) investors who
telephonically or orally subscribe for Shares, but only if payment for
such subscriptions has not
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been on deposit in the escrow account of the Company for at least 15
days; and (C) investors who have not received a prospectus at least
five business days prior to the determination of the number of
available Shares to be released from escrow as evidenced by the date of
execution of such investor's subscription agreement), no subscriber
will be admitted to the Company, and no commission will be paid to the
Managing Dealer pursuant to Paragraph 4.1 for sales of Shares, even
upon subscriptions that initially were accepted; and
(iii) no commission will be paid to the Managing Dealer prior
to acceptance by the Company of subscriptions for the minimum number of
Shares specified in subparagraph (ii) above.
4.4 PAYMEMT. The commissions specified in Paragraph 4.1 for the sale of
any Share shall be payable in cash by the Company, as specified in Paragraph
4.1, no later than the end of the calendar month in which the investor
subscribing for the Share is admitted as a shareholder of the Company. Investors
shall first be admitted as shareholders of the Company within 30 days after
acceptance by the Company of subscriptions for at least 250,000 Shares
(exclusive of subscriptions from (a) Pennsylvania investors, unless
subscriptions for at least 825,000 Shares are received and accepted from all
investors, (b) investors who telephonically or orally subscribe for Shares, but
only if payment for such subscriptions have not been on deposit in the escrow
account of the Company for at least 15 days), and (c) investors who do not
telephonically subscribe for Shares and who shall have executed a subscription
agreement and acknowledged receipt of a Prospectus less than five full business
days prior to the proposed admission date. Thereafter, investors whose
subscriptions for Shares are accepted shall be admitted no later than the end of
the calendar month in which such subscriptions are accepted. The Company will
accept or reject all subscriptions within 30 days after receipt. Notwithstanding
anything to the contrary contained herein, in the event that the Company pays
any commission to the Managing Dealer for sale by a Participating Broker of one
or more Shares and the subscription is rescinded as to one or more of the Shares
covered by such subscription, the Company shall decrease the next payment of
commissions or other compensation otherwise payable to the Managing Dealer by
the Company under this Agreement by an amount equal to the commission rate
established in Paragraph 4.1 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 Managing Dealer after such
withdrawal occurs, the Managing Dealer shall pay the amount specified in the
preceding sentence to the Company within ten (10) days following receipt of
notice by the Managing Dealer from the Company stating the amount owed as a
result of rescinded subscriptions.
4.5 SALES INCENTIVES. The Company or its Affiliates also may provide
incentive items for registered representatives of the Managing Dealer and the
Participating Brokers, which in no event shall exceed an aggregate of $100 per
annum per participating salesperson. In the event other incentives are provided
to registered representatives of the Managing Dealer or the Participating
Brokers, they will only be paid in cash and such payments will only be made to
the Managing Dealer or the Participating Brokers rather than their registered
representatives. Before any such sales incentive program is offered, the Company
agrees to obtain prior approval of the terms of such program from the NASD.
4.6 WHOLESALING COMPENSATION. The Company hereby acknowledges that the
Managing Dealer may pay each of its wholesalers 1% of the gross sales price
(computed at $10.00 per Share) of all Shares sold in such wholesaler's
geographic territory (as the same may be established from time to time by
agreement between the Managing Dealer and one or more of its wholesalers) but
not in excess, in the aggregate, of 1% of the gross sales price (computed at
$10.00 per Share) of all Shares sold, or a maximum of 16,500,000 Shares. The
Company and the Managing Dealer hereby agree that the Company shall have no
obligation to pay any portion of such amounts. The Company hereby agrees to
reimburse reasonable
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out-of-pocket expenses that such wholesalers incur in connection with the
distribution of its Shares from and after such time as at least 250,000 Shares
have been sold for the account of the Company; provided, however, that in no
event will the Managing Dealer or the Company pay any amounts to any person if
(i) such amounts constitute "underwriting compensation," and (ii) payment of
such amounts could cause total underwriting compensation paid to underwriters,
broker-dealers, or affiliates thereof from any source, and deemed to be in
connection with or related to the distribution of the Offering, to exceed
then-applicable compensation NASD guidelines.
4.7 SOLICITING DEALER SERVICING FEE. The Company shall pay to the
Managing Dealer an annual servicing fee (the "Soliciting Dealer Servicing Fee")
of .20% of the Company's Invested Capital (as defined below) on December 31 of
each year, commencing in the year following the year in which the Offering
terminates, subject to any limitations imposed on the Company by the NASD, state
securities regulators or otherwise. The Managing Dealer may reallow all or a
portion of the Soliciting Dealer Servicing Fee to Participating Brokers whose
clients hold Shares on December 31 of the applicable year. In general, Invested
Capital is the amount of cash contributed by shareholders to the Company,
reduced by certain prior capital distributions to the shareholders from the sale
of Company's properties. The Soliciting Dealer Servicing Fee will terminate as
of the beginning of any year in which the Company is liquidated or the Shares
become listed on a national securities exchange or over-the-counter market.
SECTION 5
TERM OF AGREEMENT
5.1 COMMENCEMEMT AND EXPIRATION. This Agreement shall commence as of the
date first above written and, unless sooner terminated pursuant to Paragraph 5.2
or by operation of law or otherwise, shall expire at the end of the Offering
Period.
5.2 TERMINATION. Any party may terminate this agreement at any time and
for any reason by giving 30 days' prior written notice of intention to terminate
to each other party hereto.
5.3 OBLIGATIONS SURVIVING EXPIRATION OR TERMINATION.
(a) In addition to any other obligations of the Managing Dealer that
survive the expiration or termination of this Agreement, the Managing
Dealer, 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
specified in Paragraph 3.7 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 Managing Dealer, at its sole expense, may
make and retain copies of all such records and documents, but shall keep
all such information confidential. The Managing Dealer 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.
(b) In addition to any other obligations of the Company that survive
the expiration or termination of this Agreement, the Company, upon
expiration or termination of this Agreement, shall pay to the Managing
Dealer all commissions to which the Managing Dealer is or becomes entitled
under Section 4 at such time or times as such commissions become payable
pursuant to Paragraph 4.3.
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SECTION 6
COVENANTS OF THE MANAGING DEALER
The Managing Dealer covenants, warrants and represents, during the full
term of this Agreement, that:
(a) it is (i) a corporation duly organized and validly existing under
the laws of the State of Florida, (ii) a member of the NASD, and (iii) a
broker-dealer registered under the securities laws of all fifty states,
the District of Columbia, and the Commonwealth of Puerto Rico.
(b) it will use its best efforts to assure that all Shares are offered
and sold in accordance with (i) the terms of the Registration Statement,
the Prospectus and this Agreement, (ii) the requirements of applicable
federal and state securities laws and regulations, and (iii) the
applicable rules of the NASD, including, without limitation, the NASD's
Conduct Rules;
(c) it will cause the Shares to be offered or sold only in those
jurisdictions specified in writing by the Company;
(d) it will not use any offering or selling materials other than
materials furnished or previously approved in writing by the Company; and
(e) it either (i) will not purchase Shares for its own account or (ii)
will hold all such Shares for investment.
SECTION 7
COVENANTS OF THE COMPANY
The Company covenants, warrants and represents, during the full term of
this Agreement, that:
(a) it will use its best efforts to maintain the effectiveness of the
Registration Statement, and will file, or cause to be filed, such
amendments to the Registration Statement as may be reasonably necessary
for that purpose;
(b) It will use its best efforts to (i) prevent the issuance of any
order by the SEC, any State Regulatory Authority or any other regulatory
authority which suspends the effectiveness of the Registration Statement,
prevents the use of the Prospectus, or otherwise prevents or suspends the
Offering, and (ii) obtain the lifting of any such order if issued;
(c) it will give the Managing Dealer written notice when the
Registration Statement becomes effective and shall deliver to the Managing
Dealer a signed copy of the Registration Statement, including its
exhibits, and such number of copies of the Registration Statement, without
exhibits, and the Prospectus, and any supplements and amendments thereto
which are finally approved by the SEC, as the Managing Dealer may
reasonably request for sale of the Shares, which Prospectus shall not
contain any untrue statement of a material fact required to be stated
therein or omit any material statement necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading;
(d) it at any time any event occurs and becomes known to the Company
prior to the end of the Offering Period, as a result of which the
Registration Statement or Prospectus would
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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
effect the preparation of an amended or supplemented Registration
Statement or Prospectus which will correct such statement or omission;
(e) it will promptly notify the Managing Dealer of any post-effective
amendments or supplements to the Registration Statement or Prospectus;
(f) it will, during the full term of this Agreement, abide by all
applicable provisions of its governing instruments, as the same may be
amended; and
(g) it will 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 jurisdictions as shall be determined by the Company.
SECTION 8
PAYMENT OF COSTS AND EXPENSES
8.1 MANAGING DEALER. The Managing Dealer shall pay all costs and expenses
incident to the performance of its obligations under this Agreement which are
not expressly assumed by the Company under Paragraph 8.2 below.
8.2 COMPANY. The Company shall pay all costs and expenses related to:
(a) the registration of the offer and sale of the Shares with the SEC,
including the cost of preparation, printing, filing and delivery of the
Registration Statement and all copies of the Prospectus used in the
Offering, and any amendments or supplements to such documents;
(b) the preparation and printing of the form of subscription agreement
to be used in the sale of the Shares;
(c) the qualification or registration of the Shares under state
securities or "blue sky" laws of states where the Shares are to be offered
or sold;
(d) the filing of the Registration Statement and any related documents,
including any amendments or supplements to such documents, with the NASD;
(e) any filing fees, and fees and disbursements to counsel, accountants
and escrow agents which are in any way related to any of the above items;
and
(f) the preparation, printing and filing of all advertising originated
by it relating to the sale of Shares.
SECTION 10
INDEMNIFICATION
The Managing Dealer agrees to indemnify, defend and hold harmless the
Company from all losses, claims, demands, liabilities and expenses, including
reasonable legal and other expenses incurred in defending such claims or
liabilities, whether or not resulting in any liability to the Company, which the
Company may incur in connection with the offer or sale of any Shares, either by
the Managing Dealer pursuant to
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this Agreement or any Participating Broker acting on the Managing Dealer's
behalf pursuant to the Participating Broker Agreement which arise out of or are
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 or omission contained in the Prospectus, the Registration Statement,
or any state securities filing which was not based on information supplied to
the Company by the Managing Dealer or a Participating Broker, or (ii) the breach
by the Managing Dealer or any Participating Broker acting on its behalf of any
of the terms and conditions of this Agreement or any Participating Broker
Agreement, including, but not limited to, alleged violations of the Securities
Act of 1933, as amended.
SECTION 10
MISCELLANEOUS
10.1 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: 000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Xx.,
Chairman of the Board
IF TO THE MANAGING DEALER: CNL Securities Corp.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, President
Any party may change its address specified above by giving each other party
notice of such change in accordance with this Paragraph 10.1.
10.2 INVALID PROVISION. The invalidity or unenforceability of any
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
10.3 NO PARTNERSHIP. Nothing in this Agreement shall be construed or
interpreted to constitute the Managing Dealer as in association with or in
partnership with the Company, and instead, this Agreement only shall constitute
the Managing Dealer as a dealer authorized by the Company to sell and to manage
the sale by others of the Shares according to the terms set forth in the
Registration Statement, the Prospectus or this Agreement.
10.4 NO THIRD PARTY BENEFICIARIES. No provision of this Agreement is
intended to be for the benefit of any person or entity not a party to this
Agreement, and no third party shall be deemed to be a beneficiary of any
provision of this Agreement. Further, no third party shall by virtue of any
provision of this Agreement have a right of action or an enforceable remedy
against either party to this Agreement.
10.5 SURVIVAL. Paragraph 5.3 and Section 9 and all provisions of this
Agreement which may reasonably be interpreted or construed as surviving the
expiration or termination of this Agreement shall survive the expiration or
termination of this Agreement.
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10.6 ENTIRE AGREEMENT. This Agreement constitutes the complete
understanding among the parties hereto, and no variation, modification or
amendment to this Agreement shall be deemed valid or effective unless and until
it is signed by all parties hereto.
10.7 SUCCESSORS AND ASSIGNS. No party shall assign (voluntarily, by
operation of law or otherwise) this Agreement or any right, interest or benefit
under this Agreement without the prior written consent of each other party.
Subject to the foregoing, this Agreement shall be fully binding upon, inure to
the benefit of, and be enforceable by, the parties hereto and their respective
successors and assigns.
10.8 NONWAIVER. The failure of any party to insist upon or enforce strict
performance by any other party of any provision of this Agreement or to exercise
any right under this Agreement shall be construed as a waiver or relinquishment
to any extent of such party's right to assert or rely upon any such provision or
right in that or any other instance; rather, such provision or right shall be
and remain in full force and effect.
10.9 APPLICABLE LAW. This Agreement shall be interpreted, construed and
enforced in all respects in accordance with the laws of the State of Florida.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY: CNL AMERICAN REALTY FUND, INC.
By: __________________________________
XXXXX X. XXXXXX, XX., Chairman of the Board
MANAGING DEALER: CNL SECURITIES CORP.
By: __________________________________
XXXXXX X. XXXXXX, President
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