EXHIBIT 1.2
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NNN CAPITAL CORP.
a California corporation,
Santa Ana, California
PARTICIPATING BROKER-DEALER AGREEMENT
For Shares of Common Stock Offered By
T REIT, INC.
______________, 1999
Ladies and Gentlemen:
The undersigned, NNN Capital Corp., a California corporation (the "Dealer
Manager"), has entered into an agreement of even date herewith (the "Selling
Agreement") with T REIT, Inc., a Virginia corporation (the "Company"), with
respect to the offering and sale of up to 10,000,000 shares of common stock of
the Company (the "Shares"). The terms of the offering (the "Offering") are set
forth in the Company's Prospectus dated __________, 1999 (with all exhibits,
appendices, addenda and supplements thereto, collectively the "Prospectus").
The Offering will terminate on the first to occur of (i) sale of an
aggregate of 10,000,000 Shares (excluding any Shares sold pursuant to the
Company's Dividend Reinvestment Plan) or (ii) __________, 2001 ("Offering
Termination Date"). If subscriptions for at least 100,000 Shares (the "Minimum
Offering") have not been received and accepted by the Company prior to
__________, 2000, none of the Shares will be sold and all funds tendered for the
purchase of Shares will be refunded in full to each subscriber (plus interest
and without deducting for escrow expenses) in accordance with the Prospectus. No
Shares shall be offered or sold to residents of Pennsylvania, until
subscriptions for at least 1,000,000 Shares have been received and accepted by
the Company. Terms used but not otherwise defined in this Agreement have the
same meanings as set forth in the Prospectus.
You are invited to become one of the broker dealers permitted to solicit
subscriptions for the Shares ("Soliciting Dealers"), by your confirmation
hereof, you agree to act in such capacity and to use your best efforts, in
accordance with the following terms and conditions, to sell the Shares.
1. You hereby confirm that you are (i) a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD"), (ii) qualified and
duly registered to act as a Soliciting Dealer within all states in which you
will sell the Shares, (iii) a broker-dealer duly registered with the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and (iv) hereby required and will maintain all
such registrations and qualifications in good standing for the duration of your
involvement in the Offering.
2. (a) You hereby agree to solicit, as an independent contractor and not
as the agent of the Dealer Manager or of the Company (or their affiliates),
persons acceptable to the Company in its sole discretion to purchase the Shares
pursuant to the Subscription Agreement in the form attached to the Prospectus
and in accordance with the terms of the Prospectus. You hereby agree to
diligently make inquiries as required by this Agreement, as set forth in the
Prospectus, and as required by all applicable laws of all prospective investors
in order to ascertain whether a purchase of the securities is suitable for the
investor. Further, all funds received by you with respect to any Subscription
Agreement shall be transmitted to the Dealer Manager by the end of the next
business day following receipt thereof. The Dealer Manager will be responsible
for the prompt deposit of funds for purchase of Shares with American
International Bank, as escrow agent with such funds held in escrow (the "Escrow
Account ") pursuant to an escrow agreement between the Company and American
International Bank. No Subscription Agreement shall be effective unless and
until accepted by the Company in its sole discretion.
(b) You understand that the offering of Shares is made on a
"minimum-maximum" basis, as described in the Prospectus. You further understand
and agree that payment of compensation to you for the sale of Shares is
conditioned upon sale of at least the Minimum Offering, or in connection with
compensation payable with respect to sales made to residents of the State of
Pennsylvania, at least 1,000,000 shares have been sold in the Offering to
purchasers outside Pennsylvania, and acceptance of said sales by the Company in
its sole discretion, and that the failure to sell at least the Minimum Offering
by such date shall relieve the Dealer Manager or any other party of any
obligation to pay you for any services rendered by you in connection with the
sale of Shares under this Agreement or otherwise.
(c) You agree that prior to participating in the offering of the
Shares you will have reasonable grounds to believe, based on information made
available to you by the Dealer Manager and/or the Company through the
Prospectus, that all material facts are adequately and accurately disclosed in
the Prospectus and provide a basis for evaluating the Company and the Shares.
(d) You agree not to rely upon the efforts of the Dealer Manager,
which is affiliated with the Company, in determining whether the Company has
adequately and accurately disclosed all material facts upon which to provide a
basis for evaluating the Company to the extent required by federal or state laws
or the NASD. You further agree to conduct your own investigation to make that
determination independent of the efforts of the Dealer Manager.
(e) You agree not to execute any sale of the Shares into a
discretionary account without prior written approval of the transaction by the
investor.
(f) You agree to retain in your records and make available to the
Dealer Manager and to the Company for a period of at least six (6) years
following the Offering Termination Date, information establishing that each
person who purchases the Shares pursuant to a Subscription Agreement solicited
by you is within the permitted class of investors under the
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requirements of the jurisdiction in which such purchaser is a resident and the
suitability standards set forth in the Prospectus and the Subscription
Agreement.
(g) All subscriptions solicited by you will be strictly subject to
confirmation by the Dealer Manager and acceptance thereof by the Company in its
sole discretion. The Dealer Manager and the Company reserve the right in their
sole and absolute discretion to reject any such subscription and to accept or
reject subscriptions in the order of their receipt by the Company or otherwise.
Neither you nor any other person is authorized to give any information or make
any representation other than those contained in the Prospectus or in any
supplemental sales literature furnished by the Dealer Manager or the Company for
use in making solicitations in connection with the offer and sale of the Shares.
(h) Upon release by the Dealer Manager, you may offer the Shares at
the offering prices set forth in the Prospectus, subject to the terms and
conditions thereof.
(i) The Dealer Manager will provide you with such number of copies of
the Prospectus, and such number of copies of amendments and supplements thereto
as you may reasonably request. The Dealer Manager may provide you with certain
supplemental sales material to be used by you in connection with the
solicitation of purchasers of the Shares. In the event you elect to use such
supplemental sales material, you agree that such material shall not be used in
connection with the solicitation of purchasers of the Shares unless accompanied
or preceded by the Prospectus, as it may be amended or supplemented in the
future.
(j) The Dealer Manager shall have full authority to take such action
as it may deem advisable with respect to all matters pertaining to the offering
of the Shares. The Dealer Manager shall be under no liability to you except for
lack of good faith and for obligations expressly assumed by it in this
Agreement. Nothing contained in this Section is intended to operate as, and the
provisions of this Section shall not constitute a waiver by you, of compliance
with any provision of the Securities Act of 1933, as amended (the "Securities
Act"), the Exchange Act, other applicable federal securities laws, applicable
state securities laws, the rules and regulations promulgated thereunder and the
Rules of Fair Practice of the NASD.
(k) You agree that you will not offer the Shares for sale to any
investor who has not confirmed to you in writing prior to the offer that such
investor meets the investor suitability standards set forth in the Prospectus.
(l) Except as provided in the "Plan of Distribution" section of the
Prospectus, and in consideration of your services hereunder, the Dealer Manager
will pay you compensation (collectively, "Compensation") as follows: (i) up to
8% of the gross proceeds of the Shares sold by you; (ii) up to 1.5% of the gross
proceeds of the Shares sold by you for expenses actually incurred by you for
wholesaling fees, expense reimbursements, bonuses and incentive compensation,
volume discounts and marketing and due diligence related activities; and, (iii)
if identified by the Dealer Manager, warrants (the "Soliciting Dealer Warrants")
on the basis of one warrant for every 40 Shares sold, each Soliciting Dealer
Warrant permitting the holder to purchase one share of common stock of the
Company at a purchase price of $12.00 prior to
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________, 2004, subject to the terms and conditions described in the Prospectus.
No Compensation of any kind shall be paid with respect to shares issued pursuant
to the Dividend Reinvestment Program and the Director Stock Option Plan, as
described in the Prospectus. Payment of the Compensation shall be subject to the
following conditions:
(i) No Compensation will be payable with respect to any
subscriptions for Shares which are rejected by the Company or the Dealer
Manager in their sole discretion, or in the event the Company terminates
the Offering for any reason whatsoever prior to the Offering Termination
Date.
(ii) No Compensation will be payable unless or until the Minimum
Offering, or in connection with Compensation payable with respect to sales
made to residents of the State of Pennsylvania, until at least 1,000,000
shares, have been sold by the Dealer Manager and the Soliciting Dealers.
(iii) No Compensation will be payable to you with respect to any
sale of the Shares by you unless and until such time as (A) the Company has
received the total proceeds of any such sale from the Escrow Account and
the Dealer Manager has received from the Company the aggregate amount of
Compensation to which it is entitled and (B) a completed and executed
subscription agreement from the investor who satisfies the suitability
standards and minimum purchase requirements set forth in the Prospectus.
All expenses incurred by you in the performance of your obligations
hereunder, including but not limited to expenses related to the offering of the
Shares and any attorneys' fees, shall be at your sole cost and expense, and the
foregoing shall apply notwithstanding the fact that the Offering is not
consummated for any reason.
Once Compensation becomes payable, it will be paid on the first and
fifteenth day of each month, except that the Soliciting Dealer Warrants will be
issued in the manner described in the Prospectus.
(m) For the sale of Shares, you will instruct all prospective
investors to make their checks payable to "American International Bank, N.A. as
Escrow Agent for T REIT, Inc." You agree to be bound by the terms of the Escrow
Agreement dated as of ____________, 1999 between the Company and American
International Bank, N.A.
(n) You agree that in recommending to a prospective investor the
purchase, sale or exchange of the Shares, you shall:
(i) Have reasonable grounds to believe, on the basis of
information obtained from the prospective investor concerning his/her investment
objectives, other investments, financial situation and needs, and any other
information known by you, that:
(A) The prospective investor meets the investor suitability
standards set forth in the Prospectus;
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(B) The prospective investor is or will be in a financial
position appropriate to enable him/her to realized to a significant extent the
benefits described in the Prospectus;
(C) The prospective investor has a fair market net worth
sufficient to sustain the risks inherent in the investment, including loss of
investment and lack of liquidity; and
(D) The investment is otherwise suitable for the prospective
investor; and
(ii) Maintain in your files for six (6) years following the
Offering Termination Date information describing the basis upon which the
determination of suitability was reached as to each investor.
(o) You agree that, prior to accepting a subscription for the Shares,
you will inform the prospective investor of all pertinent facts relating to the
illiquidity and lack of marketability of the Shares, as appropriate, during the
term of the investment.
(p) You hereby undertake and agree to comply with all obligations
applicable to you under all applicable laws, rules and regulations, including
those set forth in the Rules of Fair Practice of the NASD.
3. This Agreement may be terminated by the Dealer Manager at any time
upon written notice to you.
4. In soliciting persons to acquire the Shares, you agree to comply with
any applicable requirements of the Securities Act, the Exchange Act, other
applicable federal securities laws, applicable state securities laws, the rules
and regulations promulgated thereunder and the Rules of Fair Practice of the
NASD and, in particular, you agree that you will not give any information or
make any representations other than those contained in the Prospectus and in any
supplemental sales literature furnished to you by the Dealer Manager for use in
making such solicitations.
5. It is understood and agreed that under no circumstances will you
engage in any activities hereunder in any state other than those for which
permission has been granted by the Dealer Manager to you, as evidenced by
written acknowledgment by the Dealer Manager that such state has been cleared
for offer and sale activity.
6. Nothing contained herein shall constitute the Soliciting Dealers, or
any of them, as an association, partnership, unincorporated business, or other
separate entity. The Dealer Manager shall be under no liability to make any
payment to you except out of the funds received by it from the Company as
hereinabove provided, and the Dealer Manager shall not be under any liability
for, or in respect of, the value or validity of the Subscription Agreements, the
Shares, or
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the performance by any one of any agreement on its part, or for, or in respect
of any matter connected with, this Agreement, except for lack of good faith by
the Dealer Manager, and for obligations expressly assumed by the Dealer Manager
in this Agreement. You agree that the Company shall have no liability or
obligation to you for Compensation hereunder and you shall look solely to the
Dealer Manager for Compensation.
7. Under the Selling Agreement, a copy of which you acknowledge
receiving, the Company has agreed to indemnify the Dealer Manager, the
Soliciting Dealers, and each person, if any, who controls, the Dealer Manager or
Soliciting Dealers (within the meaning of the Securities Act and the Exchange
Act) against certain liabilities under the Securities Act, the Exchange Act,
other applicable federal securities laws, applicable state securities laws and
the rules and regulations promulgated thereunder. Each Soliciting Dealer agrees
to indemnify the Dealer Manager, the Company, its officers, directors and
certain other persons to the same extent and in the same manner as the Dealer
Manager has agreed to indemnify the Company, its officers, directors and certain
other persons as provided in Section 10 of the Selling Agreement and to
indemnify each other Soliciting Dealer to the same extent and in the same manner
as such Soliciting Dealer agrees to indemnify the Dealer Manager, the Company,
its officers, directors and certain other persons. In the execution of the
Selling Agreement, the Dealer Manager shall be deemed to have acted as a
representative for each of the Soliciting Dealers, and the Soliciting Dealers
shall be deemed to be in privity of contract with the Company for purposes of
this Section 7.
8. All representations, warranties, covenants and agreements of the
Dealer Manager and each Soliciting Dealer contained herein shall survive the
delivery, execution and closing thereof.
9. This Agreement shall be governed by, subject to and construed in
accordance with the laws of the State of California. This Agreement constitutes
the entire understanding between the parties hereto and supersedes any prior
understandings or written or oral agreements between them respecting the subject
matter hereof.
10. Any notice from the Dealer Manager to you as Soliciting Dealer shall
be deemed to have been fully given if mailed or sent to you by facsimile at your
address set forth below.
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Please confirm this Agreement to solicit persons to acquire the Shares on
the foregoing terms and conditions by signing and returning the form enclosed
herewith.
Very truly yours,
NNN CAPITAL CORP.
By: __________________________________
Name: _______________________________
Title: _______________________________
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NNN CAPITAL CORP.
0000 X. Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
Re: T REIT, Inc. - Offering of Shares of Common Stock
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Gentlemen:
The undersigned confirms its agreement to act as a Participating
Broker-Dealer as referred to in the foregoing Participating Broker-Dealer
Agreement subject to the terms and conditions of such Agreement. The undersigned
confirms that it is a member in good standing of the National Association of
Securities Dealers, Inc., and is qualified under federal law and the laws of the
states in which sales are to be made by the undersigned to act as a
Participating Broker-Dealer.
Dated: ___________ _____, 199__ __________________________________
(Print Name of Firm)
By:_______________________________
(Authorized Representative)
Address: ________________________
________________________
________________________
Phone: ________________________
Facsimile:________________________
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