EXHIBIT 1.1
G REIT, INC.
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
_________________, 2002
NNN Capital Corp.
0000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
Re: Dealer-Manager Agreement
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Gentlemen:
This letter confirms and comprises the agreement (the "Agreement") between
G REIT, Inc., a Virginia corporation (the "Company"), and NNN Capital Corp., a
California corporation (the "Agent"), regarding the offering and sale by the
Company (the "Offering") of up to 20,000,000 shares (the "Shares") of the
Company's common stock at an offering price of $10.00 per Share through the
Agent and other broker-dealers for whom the Agent will serve as manager (the
"Soliciting Dealers").
l. Appointment of the Agent.
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(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions set forth
herein, the Agent is hereby appointed and agrees to sell the Shares on a "best
efforts" basis. The Agent is authorized to enlist other members of the National
Association of Securities Dealers, Inc. ("NASD") acceptable to the Company to
sell the Shares as Soliciting Dealers.
(b) It is understood and agreed that no sale of the Shares shall be
regarded as effective unless and until accepted by the Company. The Company
reserves the right in its sole discretion to refuse to sell any of the Shares to
any person. The Offering will terminate on the first to occur of (i) the sale of
an aggregate of 20,000,000 Shares (excluding any Shares sold pursuant to the
Company's Dividend Reinvestment Plan) or (ii) __________________, 2004 (the
"Offering Termination Date"). If subscriptions for at least 100,000 Shares (the
"Minimum Offering") have not been received and accepted by the Company by
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Page 2
_________________, 2004, none of the Shares will be sold and all funds tendered
will be refunded in full to each subscriber (plus interest and without deducting
for escrow expenses) in accordance with the Prospectus (as defined in Section
2(c)).
(c) Subject to the performance by the Company of all the obligations to
be performed hereunder, and to the completeness and accuracy of all the
representations and warranties contained herein, the Agent hereby accepts such
agency and agrees on the terms and conditions herein set forth to use its best
efforts during the offering period to find qualified subscribers for the Shares
on the terms set forth in this Agreement and the Prospectus.
(d) The Agent further understands and agrees that the compensation to
the Agent for a sale of Shares described herein is conditional upon the sale of
at least the Minimum Offering and acceptance of said sales by the Company and
that the failure to sell at least the Minimum Offering by that date shall
relieve the Company or any other party of any obligation to pay the Agent for
any services rendered by the Agent in connection with the sale of the Shares
under this Agreement or otherwise. In connection with sales made to residents of
Pennsylvania ("Pennsylvania Investors"), the Agent understands and agrees that
the compensation to the Agent for the sale of Shares described herein to
Pennsylvania Investors is conditional upon the sale of at least 2,000,000 Shares
to non-Pennsylvania Investors (the "Pennsylvania Minimum Offering") and that the
failure to sell at least the Pennsylvania Minimum Offering shall relieve the
Company or any other party of any obligation to pay the Agent for any services
rendered by the Agent in connection with subscriptions for or sale of the Shares
under this Agreement or otherwise to Pennsylvania residents. In connection with
sales made to residents of Oregon ("Oregon Investors"), the Agent understands
and agrees that the compensation to the Agent for the sale of Shares described
herein to Oregon Investors is conditional upon the sale of at least 2,000,000
shares to non-Oregon Investors (the "Oregon Minimum Offering") and that the
failure to sell at least the Oregon Minimum Offering shall relieve the Company
or any other party of any obligation to pay the Agent for any services rendered
by the Agent in connection with subscriptions for or sale of the Shares under
this Agreement or otherwise to Oregon residents.
2. Representations and Warranties of the Company. The Company hereby
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represents and warrants to the Agent that:
(a) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the Commonwealth of Virginia, has
all requisite authority to enter into this Agreement and has all requisite
authority to conduct its business as described in the Prospectus.
(b) No defaults exist in the due performance and observance of any
material obligation, term, covenant or condition of any agreement or instrument
to which the Company is a party or by which it is bound.
(c) A registration statement with respect to the Offering has been
prepared by the Company in accordance with applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the applicable
rules and regulations of the Securities and Exchange Commission (the "SEC")
promulgated thereunder, covering the Shares. Said registration statement, which
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includes a preliminary prospectus, was initially filed with the SEC on or about
______________. Copies of such registration statement and each amendment thereto
have been or will be delivered to the Agent. (The registration statement and
prospectus contained therein, as finally amended and revised at the effective
date of the registration statement are respectively hereinafter referred to as
the "Registration Statement" and the "Prospectus," except that if the prospectus
first filed by the Company pursuant to Rule 424(b) under the Securities Act
shall differ from the Prospectus, the term "Prospectus" shall also include the
prospectus filed pursuant to Rule 424(b).)
(d) The Registration Statement and Prospectus comply with the
Securities Act and the rules and regulations promulgated thereunder and do not
contain any untrue statements of material facts or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading; provided, however, that the foregoing provisions of this
Section 2(d) will not extend to such statements contained in or omitted from the
Registration Statement or Prospectus as are primarily within the knowledge of
the Agent or any of the Soliciting Dealers and are based upon information
furnished by the Agent in writing to the Company specifically for inclusion
therein.
(e) No consent, approval, authorization or other order of any
governmental authority is required in connection with the execution or delivery
by the Company of this Agreement or the issuance and sale by the Company of the
Shares, except such as may be required under the Securities Act, rules of the
NASD or applicable state securities laws.
(f) There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against the Company at law or in equity or
before or by any federal or state commission, regulatory body or administrative
agency or other governmental body, domestic or foreign, which will have a
material adverse effect on the business or property of the Company.
(g) The execution and delivery of this Agreement, the consummation of
the transactions herein contemplated and compliance with the terms of this
Agreement by the Company shall not conflict with or constitute a default under
any charter, bylaw, indenture, mortgage, deed of trust, lease, rule, regulation,
writ, injunction or decree of any government, governmental instrumentality or
court, domestic or foreign, having jurisdiction over the Company, except to the
extent that the enforceability of the indemnity provisions contained in Section
10 of this Agreement may be limited under applicable securities laws.
(h) The Company has full legal right, power and authority to enter into
this Agreement and to perform the transactions contemplated hereby, except to
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Page 4
the extent that the enforceability of the indemnity provisions contained in
Section 10 of this Agreement may be limited under applicable securities laws.
(i) At the time of the issuance of the Shares, the Shares will have
been duly authorized and validly issued, and upon payment therefor, will be
fully paid and nonassessable and will conform to the description thereof
contained in the Prospectus.
3. Covenants of Issuer. The Company agrees that:
-------------------
(a) It will deliver to the Agent such numbers of copies of the
Prospectus and all amendments and supplements thereto, as the Agent may
reasonably request.
(b) It will comply with all requirements of the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), other federal
securities laws, applicable state securities laws and the rules and regulations
promulgated thereunder to permit the continuance of offers and sales of the
Shares in accordance with the provisions hereof and as set forth in the
Prospectus and will amend or supplement the Prospectus as may be required in
order for the Prospectus to comply with the requirements of federal and state
securities laws and regulations, prior to the Offering Termination Date.
(c) If at any time when the Prospectus is required to be delivered, any
event occurs as a result of which the Prospectus would include an untrue
statement of 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, it will promptly notify the Agent thereof, affect the
preparation of an amended or supplemental Prospectus, as the case may be, which
will correct such statement or omission and deliver to the Agent as many copies
of such amended or supplemental Prospectus as the Agent may reasonably request.
(d) The Company will furnish the holders of Shares ("Shareholders")
with certain reports described in the Prospectus under "Reports to
Shareholders," and will deliver to the Agent copies of each such report at the
time that such reports are furnished to the Shareholders, and such other
information concerning the Company, as the Agent may reasonably request from
time to time before and after the Offering Termination Date.
(e) The Company will apply the net proceeds from the Offering received
by it in the manner set forth in the "Estimated Use of Proceeds of This
Offering" section of the Prospectus.
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(f) Subject to the Agent's actions and the actions of others in
connection with the Offering, the Company will comply with all requirements
imposed upon it by federal and state securities laws.
4. Duties and Obligations of the Agent.
-----------------------------------
(a) The Agent will serve in a "best efforts" capacity in the offering,
sale and distribution of the Shares. The Agent may offer the Shares as an agent,
but all sales shall be made by the Company acting through the Agent as an agent,
and not by the Agent as a principal. The Agent shall have no authority to
appoint any person or other entity as an agent or sub-agent of the Agent or the
Company, except to appoint Soliciting Dealers acceptable to the Company.
(b) The Agent shall make no representations to any prospective
investor other than those expressly contained in the Prospectus.
(c) The Agent will limit the offering of the Shares to persons whom
the Agent has reasonable grounds to believe, and in fact believes, meet the
investor suitability standards set forth in the Prospectus and associated
Subscription Agreement.
(d) The Agent will provide each prospective investor with a copy of
the Prospectus and any supplements thereto during the course of the Offering and
prior to the sale, and advise each such prospective investor at the time of the
initial offering to him that the Company and/or its agents and consultants will
during the course of the Offering and prior to any sale, accord said prospective
investor and his purchaser representative, if any, including the Agent, the
opportunity to ask questions of and to receive answers from the Company and/or
its agents and consultants, concerning the terms and conditions of the Offering
and to obtain any additional information, which information is possessed by the
Company, or may be obtained by it without reasonable effort or expense, that is
necessary to verify the accuracy of the information contained in the Prospectus.
(e) Prior to making any sale of the Shares, the Agent will inform the
prospective investor and his purchaser representatives, if any, of all pertinent
facts relating to the liquidity and marketability of the Shares during the term
of the investment.
(f) In recommending the purchase or sale of the Shares, the Agent or
any person associated with the Agent shall:
(1) have reasonable grounds to believe, on the basis of
information obtained from the prospective investor concerning his investment
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Page 6
objectives, other investments, financial situation and needs, and any other
information known by the Agent or an associated person, that:
(i) the prospective investor meets the investor suitability
requirements set forth in the Prospectus;
(ii) the prospective investor has a fair market net worth
sufficient to sustain the risks inherent in an investment in the Company,
including, but not limited to a total loss of his investment, lack of liquidity,
and other risks described in the Prospectus; and
(iii) an investment in the Company is otherwise suitable for
the prospective investor.
(2) maintain in the Agent's files, for a period of six (6) years
following the Offering Termination Date, documents disclosing the basis upon
which the above determination of suitability was reached as to each investor.
(g) The Agent shall not authorize any transaction in which an investor
invests in the Shares in a discretionary account without prior written approval
of the transaction by the investor.
(h) The Agent will comply in all respects with the subscription
procedures and plan of distribution set forth in the Prospectus.
(i) All funds received by the Agent for the sale of Shares shall be
deposited in an interest bearing escrow account denominated "ESCROW ACCOUNT FOR
THE BENEFIT OF SUBSCRIBERS FOR COMMON STOCK OF G REIT, INC.," established by the
Company at PriVest Bank (the "Escrow Agent") by the close of the first business
day following receipt of such funds by the Agent to be held in accordance with
the terms of the Escrow Agreement, dated __________________, 2002, between the
Company and the Escrow Agent (the "Escrow Agreement"). All funds received by the
Agent for the sale of Shares from Pennsylvania Investors shall be deposited in a
separate interest bearing escrow account denominated "ESCROW ACCOUNT FOR THE
BENEFIT OF PENNSYLVANIA INVESTORS (G REIT, INC.)." All funds received by the
Agent for the sale of Shares from Oregon Investors shall be deposited in a
separate interest bearing escrow account denominated "ESCROW ACCOUNT FOR THE
BENEFIT OF OREGON INVESTORS (G REIT, INC.)." The Agent acknowledges receiving a
copy of the Escrow Agreement and agrees to be bound by the terms thereof. Until
such time (if any) as the funds held in escrow are deliverable to the Company
pursuant to the Escrow Agreement, the Agent shall, and shall cause Soliciting
Dealers to, instruct subscribers to make checks for subscriptions payable to the
order of "PriVest Bank, as Escrow Agent for G REIT, Inc." and shall return
checks made payable to another party to the Soliciting Dealer or subscriber who
submitted the check. Thereafter, checks may be made payable to either the Escrow
Agent or the Company.
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Page 7
(j) The Agent will furnish to the Company upon request a complete
list of all persons who have been offered the Shares and such persons' places of
residence and such other information reasonably requested by the Company.
(k) The Agent will immediately bring to the attention of the
Company any circumstance or fact which causes the Agent to believe the
Prospectus, any supplements thereto, or any other literature distributed in
accordance with the Prospectus, or any information supplied by prospective
investors in their subscription materials, may be inaccurate or misleading.
(1) The Agent shall thoroughly review all pertinent organizational
documents of the Company, receipt of which is hereby acknowledged by the Agent.
(m) When Soliciting Dealers are used in the Offering, the Agent
agrees to use its best efforts to cause such Soliciting Dealers to comply with
all the foregoing obligations.
(n) The Agent shall be solely responsible and liable for any
commissions or other payments due to any Soliciting Dealers.
(o) The Agent shall offer and sell Shares only in those
jurisdictions specified in writing by the Company as jurisdictions in which all
necessary approvals have been obtained. No offers or sales shall be made in any
other states or jurisdictions.
(p) The Agent, each Soliciting Dealer, and each salesperson acting
on behalf of the Agent or a Soliciting Dealer shall be duly registered or
licensed in each jurisdiction in which it or he offers or sells the Shares.
5. Representations and Warranties of the Agent. The Agent represents
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and warrants to the Company:
(a) The Agent has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of California, has all
requisite authority to enter into this Agreement and has all requisite authority
to conduct its business as described in the Prospectus.
(b) This Agreement, when executed by the Agent, will have been
duly authorized and will be a valid and binding agreement of the Agent,
enforceable in accordance with its terms.
(c) The consummation of the transactions contemplated herein and
those contemplated by the Prospectus will not result in a breach or violation of
any
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order, rule or regulation directed to the Agent by any court or any federal or
state regulatory body or administrative agency having jurisdiction over the
Agent or its affiliates.
(d) The Agent is, and during the term of this Agreement will be,
duly registered as a broker-dealer pursuant to the provisions of the Exchange
Act, a broker-dealer duly registered as such in California, a member in good
standing of the NASD, and a broker-dealer duly registered as such in any and all
other states or jurisdictions where offers are made by the Agent. The Agent is a
member of the NASD and will comply with all applicable laws, rules, regulations
and requirements of the Securities Act, the Exchange Act, other federal
securities laws, state securities laws and the NASD. Each Soliciting Dealer and
each salesperson acting on behalf of the Agent or a Soliciting Dealer will be
registered with the NASD and duly licensed by each state regulatory authority in
each jurisdiction in which it or he will offer and sell shares.
(e) The Agent has reasonable grounds to believe, based on
information made available to it by the Company, that the Prospectus discloses
all material facts adequately and accurately, and provides an adequate basis for
evaluating an investment in the Shares.
(f) This Agreement, or any supplement or amendment hereto, may be
filed by the Company with the SEC and the NASD, if such should be required, and
may be filed with, and may be subject to the approval of, any federal or state
securities regulatory agencies if required.
(g) All engagements of the Soliciting Dealers will be evidenced by
written agreement in substantially the form of Exhibit A hereto.
6. Compensation. As compensation for services rendered by the Agent
------------
under this Agreement, the Company agrees that it will pay to the Agent selling
commissions in an amount equal to 8% of the gross proceeds of the Shares, as the
case may be, sold by the Agent or the Soliciting Dealers. The Agent solely will
be liable and responsible for all compensation payable to Soliciting Dealers.
Notwithstanding the foregoing, the Company reserves the right, in its sole
discretion, to refuse to accept any or all subscriptions for the Shares tendered
by the Agent or its Soliciting Dealers, and/or to terminate the Offering at any
time prior to the Offering Termination Date. In the event that the Offering is
terminated for any reason prior to the Company's acceptance of subscription
proceeds for the Minimum Offering, the Agent will be entitled to no commission,
payments or amounts whatsoever in connection with its offering or sale of the
Shares. No compensation or other amount will be payable to the Agent unless or
until the Minimum Offering (and in connection with commissions payable with
respect to sales made to Pennsylvania Investors and Oregon Investors, unless or
until the Pennsylvania Minimum Offering and the Oregon Minimum Offering,
respectively) has
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been sold by the Agent and the Soliciting Dealers. Until the Minimum Offering,
the Pennsylvania Minimum Offering and the Oregon Minimum Offering
respectively, are obtained, investments will be held in escrow and, if the
Minimum Offering, the Pennsylvania Minimum Offering, and the Oregon Minimum
Offering, are not obtained, will be returned to investors in accordance with the
Prospectus. No compensation shall be paid or issued with respect to Shares
issued pursuant to the Dividend Reinvestment Plan, the Independent Director
Stock Option Plan, or the Officer and Employee Stock Option Plan, as described
in the Prospectus.
7. Completed Sale. A sale of a Share shall be deemed to be completed
--------------
under Paragraph 6 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 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 Agent 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.
8. Expense Allowances. In addition to the compensation described in
------------------
Section 6 above, the Company will pay the Agent an amount equal to 1.5% of the
gross proceeds of the Shares sold by the Agent or the Agent's Soliciting Dealers
as a nonaccountable marketing support and due diligence expense reimbursement
fee to defray marketing expenses and due diligence costs to be incurred by the
Agent. No allowance shall be paid with respect to Shares issued pursuant to the
Dividend Reinvestment Plan, the Independent Director Stock Option Plan, or the
Officer and Employee Stock Option Plan, as described in the Prospectus.
9. Offering. The Offering of the Shares shall be at the offering price
--------
and upon all the terms and conditions set forth in the Prospectus and the
exhibits, appendices and any supplements thereto and proceeds received from
subscriptions to purchase the Shares will be subject to the Escrow Agreement.
The Agent and the Soliciting Dealers will suspend or terminate the Offering upon
notice from the Company at any time and will resume offering the Shares upon
subsequent request of the Company.
10. Indemnification.
---------------
(a) The Company will indemnify and hold harmless the Agent, Soliciting
Dealers, their officers and directors and each person, if any, who controls the
Agent or the Soliciting Dealers ("Agent Indemnified Parties") within the meaning
of Section 15 of the Securities Act from and against any losses, claims, damages
or liabilities, joint or several, to which the Agent Indemnified Parties may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (a) any untrue statement or alleged untrue statement of a
material fact contained
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Page 10
(i) in any Registration Statement (including the Prospectus as a part thereof)
or any post-effective amendment thereto or in the Prospectus or any amendment or
supplement to the Prospectus or (ii) in any blue sky application or other
document executed by the Company or on its behalf specifically for the purpose
of qualifying any or all of the Shares for sale under the securities laws of any
jurisdiction or based upon written information furnished by the Company under
the securities laws thereof (any such application, document or information being
hereinafter called a "Blue Sky Application"), or (b) the omission or alleged
omission to state in the Registration Statement (including the Prospectus as a
part thereof) or any post-effective amendment thereof or in any Blue Sky
Application a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (c) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus, if
used prior to the effective date of the Registration Statement, or in the
Prospectus or any amendment or supplement to the Prospectus or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and will reimburse the
Agent Indemnified Parties for any legal or other expenses reasonably incurred by
the Agent Indemnified Parties in connection with investigating or defending such
loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of, or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished to the Company or Agent by
or on behalf of the Agent or any Soliciting Dealer specifically for use with
reference to such Agent or such Soliciting Dealer in the preparation of the
Registration Statement or any such post-effective amendment thereof, any such
Blue Sky Application or any such preliminary prospectus or the Prospectus or any
such amendment thereof or supplement thereto; and provided, further, that the
Company will not be liable in any such case if it is determined that the Agent
or Soliciting Dealer was at fault in connection with the loss, claim, damage,
liability or action.
(b) The Agent will indemnify and hold harmless the Company and each
person who has signed the Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act (the
"Company Indemnified Parties"), from and against any losses, claims, damages or
liabilities to which any of the aforesaid parties may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (a)
any untrue statement of a material fact contained (i) in the Registration
Statement (including the Prospectus as a part thereof) or any post-effective
amendment thereof or (ii) any Blue Sky Application, or (b) the omission to state
in the Registration Statement (including the Prospectus as a part thereof) or
any post-effective amendment thereof
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Page 11
or in any Blue Sky Application a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (c) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, if used prior to the effective date of the Registration
Statement, or in the Prospectus, or in any amendment or supplement to the
Prospectus or the omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein in the light
of the circumstances under which they were made not misleading in each case to
the extent, but only to the extent, that such untrue statement or omission was
made in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Agent specifically for use with reference to
the Agent in the preparation of the Registration Statement or any such
post-effective amendments thereof or any such Blue Sky Application or any such
preliminary prospectus or the Prospectus or any such amendment thereof or
supplement thereto, or (d) any unauthorized use of sales materials or use of
unauthorized verbal representations concerning the Shares or the Offering by the
Agent and will reimburse the Company Indemnified Parties, in connection with
investigating or defending such loss, claim, damage, liability or action. This
indemnity agreement will be in addition to any liability which the Agent may
otherwise have.
(c) Each Soliciting Dealer severally will indemnify and hold harmless
the Company, Agent and each of their directors (including any persons named in
any of the Registration Statements with his consent, as about to become a
director), each of their officers who has signed any of the Registration
Statements and each person, if any, who controls the Company and the Agent
within the meaning of Section 15 of the Securities Act from and against any
losses, claims, damages or liabilities to which the Company, the Agent, any such
director, officer or controlling person may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (a) any untrue
statement or alleged untrue statement of a material fact contained (i) in the
Registration Statement (including the Prospectus as a part thereof) or any
post-effective amendment thereof or (ii) in any Blue Sky Application, or (b) the
omission or alleged omission to state in a Registration Statement (including the
Prospectus as a part thereof) or any post-effective amendment thereof or in any
Blue Sky Application a material fact required to be stated therein necessary to
make the statements therein not misleading, or (c) any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, if used prior to the effective date of the Registration Statement,
or in the Prospectus, or in any amendment or supplement to the Prospectus or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
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upon and in conformity with written information furnished to the Company or the
Agent by or on behalf of such Soliciting Dealer specifically for use with
reference to such Soliciting Dealer in the preparation of the Registration
Statement or any such post-effective amendments thereof or any such Blue Sky
Application or any such preliminary prospectus or the Prospectus or any such
amendment thereof or supplement thereto, or (d) any unauthorized use of sales
materials or use of unauthorized verbal representations concerning the Shares or
the Offering by such Soliciting Dealer and will reimburse the Company and the
Agent and any such directors or officers, or controlling person, in connection
with investigating or defending any such loss, claim, damage, liability or
action. This indemnity agreement will be in addition to any liability which such
Soliciting Dealer may otherwise have.
(d) Promptly after receipt by an indemnified party under this Section
10 of notice of a commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 10, notify in writing the indemnifying party of the commencement
thereof. The failure to so notify the indemnifying party will relieve it from
any liability under this Section 10 as to the particular item for which
indemnification is then being sought, but not from any other liability which it
may have to any indemnified party. In case any such action is brought against
any indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled, to the extent it may wish,
jointly with any other indemnifying party similarly notified, to participate in
the defense thereof, with separate counsel. Such participation shall not relieve
such indemnifying party of the obligation to reimburse the indemnified party for
reasonable legal and other expenses (subject to Section 10(e)) incurred by such
indemnified party in defending itself, except for such expenses incurred after
the indemnifying party has deposited funds sufficient to effect the settlement,
with prejudice, of the claim in respect of which indemnity is sought. Any such
indemnifying party shall not be liable to any such indemnified party on account
of any settlement of any claim or action effected without the consent of such
indemnifying party.
(e) The indemnifying party shall pay all legal fees and expenses of
the indemnified party in the defense of such claims or actions; provided,
however, that the indemnifying party shall not be obliged to pay legal expenses
and fees to more than one law firm in connection with the defense of similar
claims arising out of the same alleged acts or omissions giving rise to such
claims notwithstanding that such actions or claims are alleged or brought by one
or more parties against more than one indemnified party. If such claims or
actions are alleged or brought against more than one indemnified party, then the
indemnifying party shall only be obliged to reimburse the expenses and fees of
the one law firm that has been selected by a majority of the indemnified parties
against which such action is finally brought; and in the event a majority of
such indemnified parties is unable to agree
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on which law firm for which expenses or fees will be reimbursable by the
indemnifying party, then payment shall be made to the first law firm of record
representing an indemnified party against the action or claim. Such law firm
shall be paid only to the extent of services performed by such law firm and no
reimbursement shall be payable to such law firm on account of legal services
performed by another law firm.
(f) The indemnity agreements contained in this Section 10 shall
remain operative and in full force and effect regardless of (a) any
investigation made by or on behalf of any Soliciting Dealer, or any person
controlling any Soliciting Dealer or by or on behalf of the Company, the Agent
or any officer or director thereof, or by or on behalf of the Company or the
Agent, (b) delivery of any Shares and payment therefor, and (c) any termination
of this Agreement. A successor of any Soliciting Dealer or of any of the parties
to this Agreement, as the case may be, shall be entitled to the benefits of the
indemnity agreements contained in this Section 10.
11. Compliance. All actions, direct or indirect, by the Agent, its
----------
agents, employees, Soliciting Dealers and affiliates, shall conform to (i)
requirements applicable to broker/dealers under federal and applicable state
securities laws, rules and regulations, and (ii) applicable requirements and
rules of the NASD.
12. Representations and Agreements to Survive Sale and Payment. Except as
----------------------------------------------------------
the context otherwise requires, all representations, warranties, covenants and
agreements contained in this Agreement shall be deemed to be representations,
warranties, covenants and agreements at and as of the Offering Termination Date,
and such representations, warranties and agreements by the Agent or the Company,
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Soliciting Dealer, or any person
controlling any Soliciting Dealer or by or on behalf of the Company, the Agent
or any officer or director thereof, or by or on behalf of the Company or the
Agent, and shall survive the sale of, and payment for, the Shares.
13. Costs of Offering. Except for the compensation payable to the Agent
-----------------
described in Section 6 and the allowances and reimbursements described in
Section 8, which are the sole obligations of the Company, the Agent will pay all
of its own costs and expenses, including but not limited to all expenses
necessary for the Agent to remain in compliance with any applicable federal,
state or NASD laws, rules or regulations in order to participate in the Offering
as a broker-dealer, and the fees and costs of the Agent's counsel. The Company
agrees to pay all other expenses incident to the performance of its obligations
hereunder, including all escrow fees, expenses incident to filings with federal
and state regulatory authorities and to the registration of the Shares under
federal and state securities laws, including fees and disbursements of the
Company's counsel and accountants,
______________, 2002
Page 14
and all costs of reproduction and distribution of the Prospectus and any
amendment or supplement thereto.
14. Termination. This Agreement is terminable by either party at any time
-----------
upon written notice to the other. Such termination shall not affect the
indemnification agreement set forth in Section 10.
15. Construction. This Agreement shall be governed by, subject to and
------------
construed in accordance with, the laws of the State of California without
regard to conflict of law provisions.
16. Severability. If any portion of this Agreement shall be held invalid
------------
or inoperative, then so far as is reasonable and possible the remainder of this
Agreement shall be considered valid and operative and effect shall be given the
intent manifested by the portion held invalid or inoperative.
17. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed to be an original, and together shall constitute one and
the same instrument.
18. Modification or Amendment. This Agreement may not be modified or
-------------------------
amended except by written agreement executed by the parties hereto.
19. Notices. All communications hereunder, except as herein otherwise
-------
specifically provided, shall be sufficiently given or made if sent by United
States mail, first-class, postage prepaid, addressed or sent by facsimile as
follows:
If to the Agent:
NNN Capital Corp.
0000 X. Xxxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: President
If to the Company:
G REIT, Inc.
0000 X. Xxxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: President
____________, 2002
Page 15
The notice shall be deemed to be received on the date of its actual receipt by
the party entitled thereto.
20. Parties. This Agreement shall be binding upon and inure solely to
-------
the benefit of the parties hereto, the controlling persons referred to in
Section 10 hereof and their respective successors, legal representative, heirs
and assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under, in respect of, or by virtue of, this
Agreement or any provision herein contained.
21. Delay. Except as expressly provided otherwise in this Agreement,
-----
neither the failure nor any delay on the part of any party to this Agreement to
exercise any right, remedy, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall a waiver of any right remedy, power, or
privilege with respect to any occurrence be construed as a waiver of such right,
remedy, power, or privilege with respect to any subsequent occurrence.
22. Recovery of Costs. If any legal action or other proceeding is
-----------------
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Agreement, the substantially prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or proceeding
(and any additional proceeding for the enforcement of a judgment) in addition to
any other relief to which it or they may be entitled.
23. No Partnership. Nothing in this Agreement shall be construed or
--------------
interpreted to constitute the Agent as in association with or in partnership
with the Company, and instead, this Agreement only shall constitute the Agent as
a broker-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.
24. No Third Party Beneficiaries. Except as expressly provided
----------------------------
otherwise in this Agreement, 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.
25. Entire Agreement. This Agreement contains the entire understanding
----------------
between the parties hereto and supersedes any prior understandings or written or
oral agreements between them respecting the subject matter hereof.
________________, 2002
Page 16
If the foregoing correctly sets forth the understanding between the Agent
and the Company, as issuer, please so indicate in the space provided below for
that purpose, and return one of the signed copies of this Agreement to the
Company in the envelope provided for this purpose, hereupon this Agreement shall
constitute a binding agreement among us.
Very truly yours,
G REIT, INC., a Virginia corporation
By:______________________________________
Xxxxxxx X. Xxxxxxxx, President
AGREED AND ACCEPTED:
NNN Capital Corp., a California corporation
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
