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.
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(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 "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
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(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.
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.
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(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 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.
(t) In the event that the participation of a selling dealer is
required in connection with the sale of Reinvestment Plan Shares, the Broker
agrees that it will serve as the dealer of record for the Reinvestment Plan
Shares on behalf of investors for whom it is the Broker in the Offering. The
Broker understands that if commissions are payable in connection with the sale
of any Reinvestment Plan Shares in future offerings, the Broker will receive
such commissions for sales in which the Broker is deemed to be the dealer of
record.
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 bona fide 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
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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 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.
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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
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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.
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.
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(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.
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
-9-
option to assume the entire defense of the claim, with counsel who shall be
satisfactory to such indemnified party and all other indemnified parties who are
defendants in such action; and after notice from the indemnifying party of its
election so to assume the defense thereof and the retaining of such counsel by
the indemnifying party, the indemnifying party shall not be liable to such
indemnified party under subparagraphs (a) and (b) above for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof, other than for the reasonable costs of investigation.
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.
-10-
(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.
(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 -
-11-
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:__________________________
-12-
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
Retirement 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
